Tax Breaks Proposed For US Companies

October 6, 2011 Taxation in USA

Company Tax Break in the USWASHINGTON – A new bill has been introduced in the US to encourage national companies to repatriate profits earned overseas back to the USA, and employ more US citizens.

In a press release published on October 6th US Republican Senator for Arizona John McCain and a US Democratic Senator for North Carolina Kay Hagan revealed that they have introduced a new bill which would significantly reduce the tax obligations for US companies repatriating their profits back to the USA from the countries in which their subsidiaries operated in.

The Senators proposed that a temporary repatriation program should be instated as part of the Obama administration’s job creation plan. Under conditions set out in the bill, US companies repatriating their overseas profits would only be taxed at a rate of 8.75 percent, compared to the current rate of 35 percent. John McCain said that if the proposal is instated, the USA could see an extra USD 1.4 trillion in tax revenues as a result of the implementation of the new tax measures.

In addition to the reduced tax rate, companies would be offered further reductions to their tax obligations if the repatriated profits are used for the creation of new workplaces in the USA. If companies taking part in the program can show that they have expanded their payrolls by 10 percent, they will be eligible to enjoy a tax rate of 5.25 percent on all repatriated profits.

To discourage companies from reducing their employment levels in the USA, the new bill will require them to add an extra USD 75 000 to their gross income calculations for every full-time employee that is laid off.

The Senators’ bill will be brought to Senate as a proposed amendment to the American Jobs Act recently introduced by President Obama.

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