Source:
Wall Street JournalBy JOHN D. MCKINNON
WASHINGTON -- A Senate proposal to grant a lucrative temporary holiday from most U.S. taxes on overseas earnings by U.S.-based multinationals has generated one of Washington's hottest debates.
Proponents say the break could induce companies to bring as much as $565 billion of badly needed cash back to the U.S. economy, an amount they say is more than all the government spending contained in the economic-stimulus bill. The corporate cash, currently parked in subsidiaries overseas, could help preserve or generate 425,000 U.S. jobs between 2009 and 2012, backers estimate. They say it also could pay for new investments, as well as government-mandated contributions to pension plans and other needs.
Critics, however, see the plan as a dangerous end run around the U.S. tax system, undermining the government's ability to tax big companies' foreign income. The change could even encourage companies to make use of accounting tactics to stash more U.S.-generated income in offshore tax havens, they say. As for the economic impact, critics believe a one-year experiment with the idea a few years ago suggests that U.S.-based corporations likely would use repatriated money to buy up their own stock rather than to expand or create jobs.
Big businesses are pushing hard for the change, seeing the recession as a perfect opportunity. One major lobbying coalition pushing for the measure -- organized around the Information Technology Industry Council -- includes more than 50 corporations, as well as a dozen or more trade associations.
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http://online.wsj.com/article/SB123370895328845885.html?mod=WSJ_TimesEMEA
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