521 Dirksen Senate Office Building
Washington, DC 20510
At Quintiles, Hagan Announces the Hagan-McCain Foreign Earnings Reinvestment Act
Bipartisan bill would help jumpstart struggling economy and trigger flow of $1 trillion dollars into the U.S.
Friday, October 7, 2011
Durham, N.C. - U.S. Senators Kay R. Hagan (D-NC) and John McCain (R-AZ) yesterday introduced the bipartisan Foreign Earnings Reinvestment Act to help reinvigorate the American economy. Hagan was joined by North Carolina business leaders today at Quintiles in Durham to announce the bill. The Foreign Earnings Reinvestment Act 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 yesterday in Washington. "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. $200 billion of that total belongs to companies with a North Carolina presence. 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.
Here's what North Carolina business leaders have to say about the Foreign Earnings Reinvestment Act.
"Across the country and here in North Carolina, businesses of all sizes will benefit greatly from a reduced repatriation tax rate. We applaud Senators Hagan and McCain for introducing this legislation. By giving businesses the freedom to bring their earnings back home, the state economy will receive a sorely-needed injection of private sector capital and American businesses will be more competitive in the global economy."
-Lew Ebert, President & CEO, North Carolina Chamber of Commerce
"Duke Energy alone has $1.2 billion held hostage overseas by our tax system that penalizes U.S. businesses that want to bring their foreign earnings to America to create jobs. By passing the Foreign Earnings Reinvestment Act, we can bring that money home to create jobs and support and accelerate our capital program investments in smart grid technology, retire and replace older coal plants, and build natural gas and renewable generation."
-Jim Rogers, Chairman, President & CEO, Duke Energy
"Technology businesses like our members are leading the way in the economic recovery, and taxing repatriation at a reduced rate is a commonsense measure that would allow companies to bring home their earnings so they can invest them here. We strongly support this bill and thank Senators Hagan and McCain for introducing this bipartisan legislation."
-Brooks Raiford, President & CEO, North Carolina Technology Association
"The Foreign Earnings Reinvestment Act would provide a strong boost to the local economy here in the Triangle area. Many of our businesses are competing on a global scale, and the current tax rate puts them at a significant disadvantage. We applaud Senators Hagan and McCain for their leadership and for working to promote a climate that allows America's businesses to do business in our state, hiring our workers and investing in our local infrastructure. We strongly encourage North Carolina's congressional delegation to follow Senator Hagan's lead and support this measure."
-Harvey Schmitt, President & CEO, Greater Raleigh Chamber of Commerce