Representative Shelley Berkley, a Nevada Democrat, is the latestlawmaker to consider legislation allowing multinational companiesto send offshore profits to the U.S. at a reduced tax rate.

Her proposal, which was confirmed yesterday by Berkley'scommunications director, David Cherry, would allow companies toreturn profits to the U.S. at a 25 percent tax rate, 10 percentagepoints below the maximum statutory rate. Most companies publiclysupporting a holiday, such as Duke Energy Corp., have spokenfavorably of the 5.25 percent rate that is being offered byRepresentative Kevin Brady, a Texas Republican.

Berkley's openness is a sign of further thawing in Democraticopposition to a repatriation holiday, which they have argued wouldbe a giveaway to companies that wouldn't have to use the money tocreate jobs. As recently as 2009, 48 members of the SenateDemocratic caucus opposed a proposed repatriation holiday.

Under Berkley's proposal, which hasn't been introduced,companies can lower the tax rate on their repatriated profits byincreasing their payroll. The rate could go as low as 5.25 percentif companies increase their payroll by 14 percent. Like Brady and ahost of companies including Cisco Systems Inc. and Pfizer Inc.,Berkley's office is portraying a repatriation holiday as aninducement for companies to create jobs.

'Incentivize' Jobs
The legislation would“incentivize the creation of new jobs at home by directly linkingthe rate at which these earnings are taxed with the expansion of acompany's payroll,” according to a summary of the bill thatBerkley's office has circulated. “Even a portion of this moneyreturning to the United States will result in a sizable boost toour economy.”

Berkley, who is seeking a Senate seat from Nevada and sits onthe Ways and Means Committee, wouldn't restrict how companies usetheir repatriated profits. Companies were criticized for using the2004 holiday to boost dividend payments to shareholders.

“Ms. Berkley's voice is a welcome addition to the growing numberof members, Republican and Democrat, that recognize the need tobring this money home,” said Doug Thornell, a spokesman for the WINAmerica Coalition, which counts Google Inc., Cisco and Pfizer asmembers.

Other Democrats, including Senators Charles Schumer of New York,Kay Hagan of North Carolina and John Kerry of Massachusetts, havesaid they would support a repatriation holiday to stimulate jobcreation. They all voted against a repatriation holiday that wasproposed in the Senate in 2009.

Infrastructure Bank
Schumer has saidSenate Democrats might support a repatriation holiday if the taxrevenue generated went to fund an infrastructure bank.

Brady's bill addresses concerns about job losses by requiringcompanies to add $25,000 to their taxable income each time theyreduce their total work force below the company's averageworkforce. With a 35 percent tax rate, the provision would increasea company's tax bill by $8,750 for each job reduction.

Repatriation supporters must still overcome criticism fromDemocrats, including Representative Lloyd Doggett of Texas, about aholiday's cost. The congressional Joint Committee on Taxation hassaid a repatriation holiday at 5.25 percent would cost $78.7billion in foregone revenue over 10 years.

Bloomberg News

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