Congressman Jim Matheson today introduced bipartisan legislation that removes a barrier to up to $1 trillion in American private sector money coming back onshore to help grow the economy and reduce the federal deficit. Matheson joined Texas Republican Kevin Brady on HR 1834 – the Freedom to Invest Act of 2011.
“Putting more private sector capital in the U.S. economy will strengthen recovery efforts and help reduce the federal deficit,” said Matheson. “Let’s do some good now, for American employers and for the U.S. taxpayer, rather than do nothing by maintaining the status quo.”
Matheson said under existing federal tax law, U.S.-based multinational corporations are allowed to defer paying U.S. corporate taxes on profits made overseas, as long as the profits are invested outside the U.S. That creates a strong disincentive for the money to be plowed back into the domestic economy. He said the Freedom to Invest Act seeks to remove that disincentive.
“Under this measure, companies who would return any foreign profitsвЂ”above and beyond what they would ordinarily returnвЂ”would be taxed at a fraction of the current 35% corporate tax rate. At no cost to taxpayers, the extra money would help companies expand here at home and provide revenue to the federal treasury that it otherwise would not get,” said Matheson.
Matheson said supporters include groups such as the Utah Technology Council. When such a temporary tax relief policy was in place in 2005, over 800 companies chose to bring money back to the U.S., using it to finance new capital spending, pay down their corporate debt or hire and train U.S. employees.
“The U.S. corporate income tax system is not competitive with the tax systems of our major trading partners and should be reformed. As Congress considers tax reform, Microsoft supports bipartisan legislation introduced by Rep. Matheson and Rep. Brady that would allow worldwide American businesses to deploy up to $1 trillion in the United States in the near term. This would be a positive development for Utah’s growing technology sector and economy,” said David Gappmayer, Microsoft’s site leader in Lehi, Utah.
“Adopting this common sense policy would help unlock the power of the American free market, help our companies compete in the global marketplace and strengthen the economy,” said Matheson.