Tax laws discourage bringing earnings home
By Jim Rogers
For the Salisbury Post
At a time when our country’s economy needs a shot in the arm and our federal government can no longer afford stimulus funds, American businesses stand ready to step up and inject $1 trillion trapped overseas by punitive federal tax law.
Duke Energy alone has $1.2 billion held hostage overseas by a tax system that penalizes U.S. businesses that want to bring their foreign earnings to America to create jobs. With the right changes to our tax laws, we can bring that money home to support and accelerate our capital program investments in smart grid technology, retire and replace older coal plants and build natural gas and renewable generation.
America has the second highest corporate tax rate in the world. Our tax system has a strong disincentive to U.S. businesses that want to bring their foreign earnings to America by incrementally taxing these profits — after business has already paid their fair share of taxes to the country where the earnings were generated. We need congressional action now to unlock this cash so it can be put to work here at home to spur our economic recovery in the U.S.
The current system and the folly it encourages leave U.S. global businesses with three bad choices: bring the money home to the U.S. and endure the exorbitant taxes, leave it in foreign banks overseas, or continue to reinvest offshore profits offshore.
A bipartisan group in Congress recently introduced the Freedom to Invest Act, which is gaining bipartisan support from leading economists and organizations across the political spectrum.
Studies show that had we included temporary investment incentives in the 2009 Recovery Act, it would have injected $565 billion into our economy in repatriated earnings, created an additional 2.6 million jobs, including nearly 2.1 million manufacturing jobs and reduced the federal budget deficit by an average of nearly $46 billion a year over five years.
This was an opportunity missed, and these figures underscore how much we stand to gain by making a different choice today.
History strongly supports this approach. Congress enacted a similar measure in 2004 and it had an overwhelmingly positive impact, including reinvesting more than $300 billion into the American economy, creating jobs, financing new plants and research and development projects, increasing federal revenues, increasing GDP and lowering the unemployment rate.
Our economic recovery has floundered in recent months and we must act now to change our broken tax laws that are preventing one of our greatest resources — American enterprise and profits — from providing the economic stimulus our economy so badly needs.
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Jim Rogers is CEO of Duke Energy and was a panelist at an Idea Forum on tax repatriation June 15 in Washington. For information about the forum, visit www.thirdway.org,