US Companies Abroad to Bring $2 Trillion to Economy Under Proposed Act

© AP Photo / Rick ScuteriArizona Senator John McCain
Arizona Senator John McCain - Sputnik International
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The Foreign Earnings Reinvestment Act aims at bringing foreign earnings of US businesses back to the country and is expected to generate approximately $2 trillion, US Senator John McCain says.

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WASHINGTON (Sputnik) — Legislation introduced in US Congress on Thursday aims at bringing foreign earnings of US businesses back to the country and is expected to generate approximately $2 trillion, US Senator John McCain said in a press release.

“The Foreign Earnings Reinvestment Act… would temporarily allow companies to return profits earned overseas to the United States at a reduced tax rate and generate the flow of an estimated $1.9 trillion dollars back into the American economy,” the press release issued on Thursday said.

The bill, introduced in both chambers of US Congress on Thursday, will allow temporary reduction from the current 35 percent corporate rate to an 8.75 percent on foreign earnings brought back to the United States, according to the release.

“Our common-sense legislation would create strong incentives for those companies to invest these earnings in US employees. It would also ensure that innovative businesses… stay in the United States and continue to invest in local economies,” McCain was quoted as saying in the press release.

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Under the new bill, companies will obtain up to a 5.25 percent effective repatriation rate, if they can prove that “they are expanding their payroll by 10 percent through net job creation or higher payroll,” the release read.

In addition, the bill would discourage US companies from staff reduction by adding a $75,000 fine per eliminated full-time position to a company’s gross income calculation, the press release said.

On Wednesday, the Internal Revenue System issued a statement that US taxpayers are using a number of schemes to reduce their taxable income for the 2015 filing season, including abusive tax shelters, filing fake documents to hide income, and falsifying income to claim tax credits.

 

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