Washington: Giving US corporations a tax break on their overseas profits likely would not boost the economy or jobs, said credit rating agency Fitch Inc on Thursday after two senators unveiled a tax "holiday" bill.
The Fitch statement echoed two other studies released on Tuesday that reached the same conclusion — a stark contrast with the picture painted by Republican Senator John McCain of the legislation he introduced with Democrat Kay Hagan.
The lawmakers appeared at a news conference to discuss their measure, which offers two possible reduced tax rates for repatriating, or bringing into the United States, earnings now stashed abroad avoiding the 35 per cent corporate income tax.
Under the bipartisan Hagan-McCain bill, multinationals could repatriate foreign profits at an 8.75 per cent tax rate or, if they boost hiring, at 5.25 per cent. Corporations are sitting on an estimated $1.5 trillion (Dh5.5 trillion) in overseas profits.
McCain said his bill would be offered as an amendment to President Barack Obama's jobs package when that measure arrives in the Senate, if the Democratic Senate leadership does not explicitly include the tax provision in the jobs package.
The Obama administration reiterated its refusal to consider a foreign profit tax break on its own.
Citing past statements on the issue by US Treasury Secretary Timothy Geithner, a Treasury spokeswoman on Wednesday said, "We won't consider tax relief for repatriated earnings outside the context of broader corporate tax reform."
The Hagan-McCain bill is seen as having little chance of passage as a stand-alone item, but it could be an important bargaining chip.
