Accounting News

Monday, October 10, 2011
New Tax Holiday Bill

A new bill has been introduced that would provide a tax break for corporations that repatriate their foreign earnings.The legislation is sponsored by John McCain of Arizona and Kay Hagan of North Carolina. It is estimated that $1 trillion of earning from the subsidiaries of US multinationals could be taxed. The rate for corporations that take part in the program would be 8.75%. This is far less than the current rate for corporate income of 35%. If the company increased their domestic payroll they can bring the rate down even further to 5.25%.

The Obama Administration is not so keen on the idea. They cite the American Job Creation Act of 2004 that aimed to do the same thing. However, most of the repatriated money was only used to pay shareholders and not add to their payrolls.