WH: No Corporate Tax Holiday

The Hill reports:

The Obama administration on Wednesday reiterated its opposition to allowing corporations to bring overseas profits back to the United States at a reduced tax rate, arguing this should only be considered as part of a broader overhaul of the corporate tax code.

In a blog entry posted Wednesday, Michael Mundaca, the assistant Treasury secretary for tax policy, says the push for a so-called repatriation holiday would take attention away from the bigger goal of corporate tax reform. He also cast doubt on the idea that a repatriation holiday sparks economic growth.

“Comprehensive reform can be done,” Mundaca writes. “We should not allow ourselves to be distracted from that goal.”

The blog post comes two days after Rep. Eric Cantor (R-Va.), the House majority leader, said in a speech that he believes corporations should be allowed to bring overseas profits back to the United States at a reduced tax rate – in part because the corporate tax code could only be revamped after a lengthy debate.

Cisco, Oracle and other companies have started pushing for a repatriation holiday similar to one enacted by Congress in the middle of the last decade, which allowed companies to bring income stashed abroad back to the United States at the reduced rate of 5.25 percent. The current top marginal corporate tax rate is 35 percent.

Supporters of such a plan have said that America’s tax rate on repatriated earnings is vastly higher than many other developed countries' and that, if companies can bring their profits back at a reduced rate, it would result in investments in areas like research and development and create new jobs.

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