“Top Senate Democrats and Republicans on Tuesday said they were considering offering American companies a one-time tax break if they repatriate profits stashed abroad,” Emily Stephenson and Patrick Temple-West report for Reuters. “The senators anticipate the proposal would generate a windfall in revenue that would be used to fund federal transportation projects. U.S. Senate Minority Leader Mitch McConnell [R-KY] told reporters in the Capitol that Republicans had discussed a corporate tax repatriation ‘holiday’ idea and ‘it enjoys a good deal of support in our conference. ‘Republican Senator Rand Paul has talked with Democratic Senate Majority Leader Harry Reid about legislation for a repatriation holiday, a spokesman for Paul said.”

“The plan would give companies a one-time reduction in the amount of taxes they pay on profits earned abroad, giving them an incentive to repatriate those earnings. Supporters say that could generate a revenue windfall to bolster the federal Highway Trust Fund, used for construction and repair projects,” Stephenson and Temple-West report. “The fund is expected to run out of funds by late August.”

“Under U.S. law, companies do not have to pay the 35 percent corporate income tax on most of their overseas profits until they are brought into the United States. These earnings can be held offshore indefinitely,” Stephenson and Temple-West report. “When Congress enacted a repatriation holiday in 2004, corporations were allowed bring foreign profits into the United States at a 5.25 percent tax rate – a bargain that hundreds of companies took advantage of to repatriate billions of dollars. In Congress’s latest consideration of a repatriation holiday, the special low tax rate would be revived, but with certain caps on interest deductions that would help raise revenue, a Republican tax lobbyist told Reuters on Tuesday.”

Read more in the full article here.

MacDailyNews Take: Instead of yet another temporary “fix,” how about a clean, new tax code that actually works?

The U.S. corporate tax rate is way too high. Obviously.

Under the current U.S. corporate tax system, it would be very expensive to repatriate that cash. Unfortunately, the tax code has not kept up with the digital age. The tax system handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free flow of capital… Apple has always believed in the simple, not the complex. You can see it in our products and the way we conduct ourselves. It is in this spirit that we recommend a dramatic simplification of the corporate tax code. This reform should be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S. We make this recommendation with our eyes wide open, realizing this would likely increase Apple’s U.S. taxes. But we strongly believe such comprehensive reform would be fair to all taxpayers, would keep America globally competitive and would promote U.S. economic growth.Apple CEO Tim Cook, May 21, 2013

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