Brady, Neal Highlight Another Reason for Pro-Growth Tax Reform
WASHINGTON, D.C. – Recently, the Joint Committee on Taxation (JCT) responded to a request from Ways and Means Committee Chairman Kevin Brady (R-TX) and Rep. Richard E. Neal (D-MA) for an updated estimate of how much money from America’s job creators is currently trapped overseas. The JCT estimates that there now is $2.6 trillion in “earnings of foreign subsidiaries of U.S. Corporations held offshore”—up from $2.3 trillion in 2012. In other words, many American job creators with foreign subsidiaries are forced to invest their earnings abroad instead of at home due to America’s sky-high corporate tax rate.
“The latest estimate from JCT is further proof that our broken, outdated tax code stands in the way of increased investment and job creation in America, and our global competitors are reaping the trillions of dollars in benefits,” Chairman Brady said. “Our tax code should encourage our job creators to invest in our local communities, not in other countries. That’s why we need a pro-growth, 21st century tax code that encourages businesses to bring stranded income back home to reinvest in our communities—creating new jobs, increasing wages, and growing American businesses.”
“Today’s JCT estimate highlights the need for comprehensive pro-growth tax reform that not only strengthens the economy, but also makes the necessary investments in our infrastructure. For too long, trillions of dollars have been stuck overseas providing no benefit to the American people. Real tax reform must encourage these corporations to bring this money back to the United States to invest in our businesses and increase wages for our workers. I look forward to working with Chairman Brady in a bipartisan way to put these dollars to effective use, while also making our businesses more competitive,” said Congressman Neal.
On August 25, 2016, Ways and Means Committee Chairman Kevin Brady and Rep. Richard Neal requested from the JCT an updated estimate of the total amount of money accumulated deferred foreign earnings of foreign subsidiaries of U.S. corporations that is held offshore. On August 31, 2016, JCT Chief of Staff Thomas Barthold provided two separate estimates. The first estimate of $2.6 trillion (up from $2.3 trillion in 2012) is based on the most recent tax return data with a projection to 2015 based on ordinary growth of the world economies and corporate earnings and profits. The second estimate of $2.4 trillion (up from $1.8 trillion in 2012) is the amount reported by Audit Analytics based on data from financial statements of the publicly traded corporations in the Russell 1000.