How Far Do You Go To Lure Greenbacks Back Home?

Posted on June 30, 2011. Filed under: Uncategorized | Tags: , , , , , , , , |

How Far Do You Go to Lure Greenbacks Back Home?

Could a national infrastructure bank (Ibank) plan aimed at repatriating to American soil nearly $1 trillion in profits earned by U.S. multinational companies and parked in foreign banks, actually find bipartisan support?

Clearly, Sen. Chuck Schumer (D-NY) believes so. He is working hard to convince his Senate colleagues that marrying the desire of companies like Google, Microsoft and Apple for a corporate tax “holiday” with the urgent need to replace and repair the nation’s crumbling bridges and roads, is a winning combination.

The idea is to entice corporations currently stashing their profits in overseas financial institutions, as a way to avoid paying U.S. taxes, to bring that money back home by temporarily lowering the tax rate to about 5 percent from 35 percent. The taxes collected as a result of this “one-time” gift, err, holiday—about $50 billion—would go into an Ibank with funds being used to rebuild America’s infrastructure.

Who would have thought that once upon a time Schumer was an outspoken opponent of tax holidays for multinational corporations. When Republicans proposed a tax holiday for corporations in 2009 Schumer was one of the 48 Senate Democrats who opposed the idea. And Schumer isn’t alone in changing his position on the tax holiday issue. According to Bloomberg News “several other Senate Democrats, who voted against that measure, including John Kerry of Massachusetts and Kay Hagan of North Carolina, also signaled that they may reconsider their position.”

Senators and Representatives from high population urban states like the Ibank idea because projects of national and regional significance—the phrase used to describe projects that an Ibank would finance—are likely to benefit their constituents.

Federal lawmakers from rural and western states, however, know such projects are very unlikely to be located in their home states and congressional districts and, therefore, are lukewarm to the idea. This rural versus urban divide in Congress has kept an Ibank proposal from moving forward for several years now.

A national infrastructure bank is an idea that is theoretically great, but politically, a very difficult sell.


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