U.S. Sen. John Ensign hopes to give technology industries a boost in the economic stimulus package before the Senate. Under a proposal by the Nevada Republican, corporations doing business overseas would receive a large tax break for reinvesting foreign profits in the United States.
Currently, those profits are taxed at a 35 percent rate. Large corporations such as Microsoft, Intel and Hewlett-Packard that operate foreign subsidiaries have been reluctant to bring overseas profits home, Ensign contends, because of the large tax bite. Ensign wants to lower that rate to 5.25 percent for one year.
“If we lower the tax rate, they would bring the money back [into the U.S.],” Ensign said Jan. 30 during the Senate Finance Committee debate on the stimulus package.
Ensign pointed to a similar measure he authored as part of a 2004 corporate tax bill. By reducing the tax on foreign profits, more than $200 billion was “repatriated” back into the country.
“We can do it again and we can do it in the next 60 days,” Ensign said.
The House on Jan. 29 approved a $146 billion stimulus package negotiated with the White House. At a press conference, House Speaker Nancy Pelosi and Republican leader John Boehner urged the Senate not to add new provisions that could delay getting the legislation to President Bush’s desk by Feb. 15.
By hitting that target date, Pelosi and Boehner said, the government could begin sending rebate checks to approximately 111 million Americans by June. The House bill would authorize rebate checks of as much as $600 for individuals and $1,200 for couples. Families with children would receive checks for $300 per child.
The House package also expands investment tax breaks for business and adds capital to the mortgage market by allowing Fannie Mae and Freddie Mac to buy mortgages above the current federal limit.
“It’s important that the package not get overloaded,” Pelosi warned. “Let’s hope that the Senate will take its lead from us and be disciplined.”
But Senate Finance Committee Chairman Max Baucus indicated he favors smaller checks to more people including millions of senior citizens that Baucus said were left out of the House package. The Joint Committee on Taxation said Baucus’ package would cost $161.3 billion.
In addition, other Democrats, including presidential candidate Hillary Clinton, want to add $5 billion to the package for transportation-related projects. Sen. Maria Cantwell also wants the package to include energy tax incentives that the Washington Democrat claims would stimulate $20 billion in 2008.
Bush echoed Pelosi’s and Boehner’s concern that the Senate add-ons would delay passage of a stimulus package.
“The temptation is going to be for the Senate to load it up,” Bush said in a Jan. 29 statement. “We need to get this bill out of the Senate and on my desk so the checks can get in the hands of our consumers, and our businesses can be assured of the incentives necessary to make investments.”