The House’s chief tax writer is considering higher tax rates on trillions of dollars of overseas income that U.S. companies have stockpiled over the years, according to a person familiar with efforts to revise the House tax bill.
House Ways and Means Chairman Kevin Brady is thinking about boosting the proposed rates in the bill to 14% on income held as cash and 7% on non-cash holdings, said the person, who asked not to be named because final decisions haven’t been made.
The bill that Brady released a week ago proposed rates of 12% and 5% for companies’ offshore cash piles. The tax would be mandatory and would apply to earnings that U.S. companies keep overseas. The amount of those offshore earnings has been variously estimated at $2.6 trillion to $3.1 trillion, though President Donald Trump has said he suspects the amount may be much higher.
Brady’s rethinking is part of a major search for new revenue as he and others attempt to close a revenue hole and address Republican members’ concerns about various pieces of the bill. Provisions that would be included in the committee’s final bill draft remain undecided at this hour.
Under current law, companies are taxed on their global earnings, but are allowed to defer paying taxes on their foreign income until they decide to bring it back to the U.S. Companies would have eight years to pay the new tax, clearing them to return those earnings to the U.S. if they choose to.