U.S. Companies Press for Repatriation Holiday – NYTimes.com

Some of the nation’s largest corporations have amassed vast profits outside the country and are pressing Congress and the Obama administration for a tax break to bring the money home.

The idea is that the year they bring this money home, corporate tax drops from 35% to 5.25% for these rapatriating companies. In theory, that tax on all this money that would otherwise stay overseas would bring all sorts of benefits. Here’s that theory:

“For every billion dollars that we invest, that creates 15,000 to 20,000 jobs either directly or indirectly,” Jim Rogers, the chief of Duke Energy, said at the conference. Duke has $1.3 billion in profits overseas.

Practical reality is likely to be different:

But that’s not how it worked last time. Congress and the Bush administration offered companies a similar tax incentive, in 2005, in hopes of spurring domestic hiring and investment, and 800 took advantage.

Though the tax break lured them into bringing $312 billion back to the United States, 92 percent of that money was returned to shareholders in the form of dividends and stock buybacks, according to a study by the nonpartisan National Bureau of Economic Research.

Fortunately Obama and Geithner have  “been uncharacteristically harsh in its criticism of the idea.”

For now.

via U.S. Companies Press for Repatriation Holiday – NYTimes.com.