RALEIGH — North Carolina Sen. Kay Hagan Thursday introduced a bipartisan bill to entice U.S. corporations to bring home offshore profits at a sharply discounted tax rate — a move she said could help jump-start a stagnant economy.
At a news conference with Republican Sen. John McCain, Hagan said that offering a tax holiday — a temporary lowering of corporate taxes for offshore profits from 35 percent to 8.75 percent or lower — would encourage companies to hire more American workers.
"More than $1 trillion of American company earnings are stranded outside of America where it is not doing one bit of good for the American economy," said Hagan, a Democrat from Greensboro. "Companies with a North Carolina presence have roughly $200 billion sitting overseas. I want that money back in America and I want it back in North Carolina."
"Our goal," Hagan said, "is enhanced economic growth."
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Large multinational corporations - many with a presence in the state - such as Cisco Systems, Pfizer, Apple, Microsoft and Duke Energy, have lobbied for the tax holiday.
To help build support for her proposal, Hagan has scheduled a news conference for this morning in Durham with Dennis Gillings, CEO of Quintiles; Jim Whitehurst, president and CEO of Red Hat, as well as top North Carolina executives with Cisco, EMC, NCM Capital, the N.C. Chamber and the N.C. Technology Association.
A U.S. Chamber of Commerce study released last month predicted the repatriation tax holiday could result in three million American jobs, could increase the U.S. gross domestic product from 1 percent to 4 percent, and result in only nominal cost to taxpayers.
But the idea has drawn skepticism from both the right and the left, with critics saying a similar tax holiday for corporate offshore profits in 2004 produced windfalls for shareholders, but no jobs and little new investment.
Senate Majority Harry Reid of Nevada said the corporate repatriation proposal would not pass the Senate as a stand-alone bill, but would likely be folded into legislation dealing with infrastructure needs, Bloomberg News reported.
Sen. Charles Schumer of New York has said that Senate Democrats might be open to a corporate repatriation bill, using the expected tax revenues to finance an infrastructure bank.
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