Tax Law

Another Disgraceful Chapter in Tax History

A recent report by the conservative Heritage Foundation together with a recent report by the liberal Institute for Policy Studies might be too late to save us from being played for fools again, otherwise known as the "repatriation holiday." This holiday (it's not a holiday for you or me) is at the heart of a crusade by U.S. multinationals to return cash stashed overseas to the United States at fire-sale tax rates - at significant cost to the rest of us.

Why am I worked up? Because tomorrow two Senators, Democrat Kay Hagan and Republican John McCain plan to introduce a bill they will call the Foreign Earnings Reinvestment Act to provide a repatriation holiday. They should really call it the Outrageous Grab Under False Pretenses Act.

U.S. tax law allows companies with foreign subsidiaries to keep profits earned abroad offshore without being subject to U.S. taxes. The foreign profits could be subject to foreign taxes, but they are not subject to U.S. taxes until they are returned to the U.S. That's created an interesting game.


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