Repatriation Provision Would Create Over
650,000 New Jobs
New Economic Analysis Released Today
Washington, DC – Today, Senators Gordon Smith (R-OR) and John Ensign (R-NV) released a new report which indicates that legislation encouraging companies to "repatriate" foreign earnings would provide even greater economic benefits than previously forecast. The report was prepared by world-renowned economist, Dr. Allen Sinai, who based his study on provisions inserted by Smith into the Finance Committee-passed Jumpstart Our Business Strength (JOBS) Act. The complete text of the report is available upon request.
"In one short year, this bill could bring $400 billion into our economy," Smith said. "That money is going to create over 650,000 new jobs and get our economy moving again. At the same time, it's going to help reduce the federal deficit."
Currently, U.S. companies are required to pay taxes at a thirty-five percent rate on foreign earnings when these earnings are brought back to America. This creates a massive incentive to keep funds offshore rather than invest surplus earnings at home. Many other countries exclude foreign dividends from domestic taxation under so-called "territorial" tax systems, which encourages domestic investment of surplus foreign earnings.
Smith's JOBS Act provision would provide the U.S. economy with a large near-term increase in domestic investment by lowering, for one year, the corporate tax on repatriated profits to 5.25 percent. To be eligible for the discounted rate, businesses must use the repatriated funds for job creating investments such as research and development, employee hiring and training, and other capital investments.
The Sinai Report released today estimates that the legislation would create 666,000 new jobs while increasing federal tax revenue by $12 billion annually. In addition, it would increase capital spending by an average of $30 billion per year while increase real GDP growth up to 0.9 percentage points.
"Jobs and long-term investments are the key components of an enduring recovery," Smith said. "The report is yet more evidence that although this may be short-term tax relief, its positive impacts are going to last for years to come."
