Companies, Trade Associations Ask Congress to Consider Ensign Repatriation Proposal

The U.S. economy is facing a significant challenge, requiring immediate and meaningful stimulus. We therefore applaud the Administration and Congress' bipartisan efforts to develop a stimulus plan. We understand that the current proposal will release approximately $150 billion into the U.S. economy. As a further stimulus, the undersigned companies and trade associations respectfully urge you to include a temporary provision that would encourage repatriation of cash earned by foreign subsidiaries of U.S. companies for use in the U.S. economy. This proposal would inject twice as much (or more) money into the U.S. economy than the above proposal, but at a fraction of the revenue cost.

As you know, in 2004, Congress enacted a temporary reduction in the effective tax rate applicable to dividends paid to U.S. parent companies by their foreign subsidiaries. This led to the repatriation of nearly $360 billion (IRS data), which was invested in the U.S. and which added an estimated $10-20 billion in tax revenues in the first two years following enactment. Inclusion of a similar provision in stimulus legislation would result in comparable, perhaps greater, amounts of repatriation and tax revenues. Such legislation also provides temporary relief to U.S. companies from the challenges imposed by the United States' system of tax -- which imposes the second highest corporate tax rate in the world and taxes foreign earnings of home-based companies unlike most all other countries.

An injection of $360 billion (or more) into the U.S. economy at this time would provide a strong economic stimulus, as well as strengthen U.S. companies' ability to compete and thrive in the global marketplace on a longer-term basis. The stimulus to the economy would be immediate, significant, and far-reaching:

• Injecting sizeable, much-needed capital into the U.S. economy, increasing U.S. banking system liquidity and helping stabilize financial and capital markets;

• Adding federal and state tax revenues to fund critical government priorities, including other elements of the proposed stimulus legislation;

• Strengthening the U.S. economy and financial markets through capital investment, R&D spending, job creation and retention, training, U.S. debt reduction, contributions to pension and other benefit plans, shareholder dividend payments, stock buybacks and other uses previously permitted in U.S. Treasury guidance.

For the foregoing reasons, we urge you to include Senator Ensign's repatriation proposal in the stimulus legislation temporarily reducing the tax rate applicable to repatriation of cash held by foreign subsidiaries of U.S. companies.