521 Dirksen Senate Office Building
Washington, DC 20510
Hagan & McCain Introduce Bipartisan Foreign Earnings Reinvestment Act
Bill would help jumpstart struggling economy and trigger flow of $1 trillion dollars into the U.S.
Thursday, October 6, 2011
WASHINGTON, D.C. - U.S. Senators Kay R. Hagan (D-NC) and John McCain (R-AZ) today introduced the bipartisan Foreign Earnings Reinvestment Act to help reinvigorate the American economy. The bill would trigger the flow of a trillion dollars back into the American economy by temporarily allowing companies to return profits earned overseas to the U.S. at a temporarily reduced tax rate.
"The status quo is unacceptable. After months of anemic growth, one thing is clear - Washington-as-usual partisanship isn't doing anything to help our economy rebound," said Hagan. "Senator McCain and I are working across the aisle to pass the commonsense and bipartisan Foreign Earnings Reinvestment Act that would inject a trillion dollars into the American economy when it is needed most. Our stagnant economy demands practical, creative and bipartisan solutions right now - North Carolina and our country can't wait another day. I urge my colleagues - Democratic, Republican and Independent - to support the bipartisan Foreign Earnings Reinvestment Act."
"While Americans struggle with crushing unemployment and a dismal economy, Congress has the responsibility to come together with solutions to get our nation back on track," said Senator McCain. "I am proud to join Senator Hagan in introducing the Foreign Earnings Reinvestment Act. This common sense legislation will drive up to $1.4 trillion currently parked overseas back here to the United States, boosting our economy when we need it most. Let's use American dollars to make America's economy stronger."
Under the current tax structure, if U.S. companies wish to bring overseas earnings back to the U.S., they must pay a 35 percent tax rate - one of the highest rates among industrialized countries. As a result, there is an estimated one trillion dollars trapped abroad that could be going to work in the U.S. economy. The Foreign Earnings Reinvestment Act offers American companies the chance to temporarily bring back overseas earnings to the U.S. at an effective rate of 8.75 percent.
As an incentive to create jobs, the Foreign Earnings Reinvestment Act allows firms to further lower the tax rate they pay to 5.25 % if the companies grow their domestic pay roll during 2012. Additionally, the bill discourages firms from reducing employment by including in a company's gross income calculation a $75,000 per full time position that is eliminated.
For more information about the bill click here and here.
For the full text of the Foreign Earnings Reinvestment Act, click here.