A storied Washington, D.C. think tank has called on US Congress to deliver a national infrastructure bank (NIB) funded by a “onetime repatriation tax holiday”.
Brookings Institution, considered the most influential think tank in the world, said in an eight-page report that “finding a way to build the loan fund” is the “primary barrier” to establishing a bank.
Ninety-seven-year-old Brookings estimates a repatriation tax holiday could generate $25 billion for the envisioned NIB – a “targeted mechanism for financing infrastructure of national significance”.
A previous holiday in 2004, which was introduced via the ‘American Jobs Creation Act’ (AJCA) legislation, has faced criticism on Capitol Hill, but according to Brookings, a similar holiday could “quickly fund” a bank “without direct appropriation”.
A repatriation tax holiday is a corporate tax break in exchange for a return of overseas profits – a measure Brookings defends as “a highly effective way to re-shore overseas corporate profits,” while noting that “short of comprehensive tax reform,” the federal government is limited in recouping the erstwhile revenue.
Brookings in its report goes on to point out that California Senator Barbara Boxer, a Democrat, as well as House Majority Leader Eric Holder, a Republican from Virginia, support a repatriation tax holiday, as do General Electric (GE) and Microsoft Corporation.
President Barack Obama, in his 2011 speech before a joint session of Congress, voiced his support for a national infrastructure bank. Senator Rand Paul, a Kentucky Republican, and John Delaney, a Democratic Congressman from Maryland, have introduced separate legislation to use a repatriation holiday to fund infrastructure.
The Reason Foundation, a ‘right libertarian’ think tank, has credited Delaney for his bill. Delaney has said he was inspired to draft his bill after listening to a speech on repatriation tax by former President Bill Clinton.