For over a decade, corporations have hoarded profits overseas, basically blackmailing the country into letting them return the money to the United States at a lower tax rate. Now, with the presentation of President Obama’s budget, virtually everyone in Washington agrees this should happen, to “pay” for public works projects; the only real difference is in the details.
This leads to a strange double standard. When undocumented immigrants get a path to citizenship it’s called “amnesty”; when corporations get to keep profits at a drastically reduced tax rate, a literal amnesty from the law, it’s called a sound jobs policy. But the emerging deal could actually reduce investment and jobs, by indicating to corporations that they can dodge taxes and win a special exemption years later.
The first “repatriation tax holiday” occurred in 2004. The United States, unique among developed nations in taxing foreign corporate profits, only collects the tax when those funds are repatriated into the country. In 2004, Congress allowed corporations to bring that money home at a 5.25 percent rate, well below the 35 percent standard.
Source: Salon/David Dayen