Thursday, October 23, 2003
Copyright © Las Vegas Review-Journal

Ensign pushes business tax cut

GOP senator says proposal could create 666,000 jobs

"Do you want to create jobs in the United States or do you want that money to work in other countries?" SEN. JOHN ENSIGN R-NEV.

WASHINGTON -- Sen. John Ensign, R-Nev., has mounted a new push for a corporate tax break he said will flood the economy with investment and new jobs by encouraging U.S.-based multinationals to reinvest foreign earnings back home.

Ensign favors a one-year "tax holiday" for companies like Intel, Nike and Hewlett-Packard to return profits from their foreign subsidiaries to the United States.

The sudden surge of billions into homeland investment would jump-start the economy and create more than a half-million jobs, he contends.

Ensign, leader of a Republican high-tech task force, said the goal would be achieved by a bill he has sponsored that would temporarily cut the top tax rate from 35 percent to 5.25 percent on money that is repatriated.

Ensign said he knew of no Nevada companies that would qualify for the benefit.

But he said the state's travel-based economy would be helped as much as anyone by an infusion of investment and jobs that supporters say would be created by the bill.

On Tuesday, Ensign and other supporters of the bill promoted a new study that concluded the plan would create 666,0000 jobs in two years, more than estimated by earlier analyses.

New York economist Allen Sinai said anywhere from $265 billion to $406 billion would be repatriated "relatively quickly" after passage. The research was sponsored by a pro-industry group, the American Council for Capital Formation.

Sinai concluded the plan would boost the business sector, increasing private capital spending by $78 billion in 2005 and increase corporate dividends an average of $14.2 billion over five years.

"You never get so much economic activity generated for so little cost," an estimated $3.8 billion over 10 years, Ensign said.

Armed with the study, Ensign and Rep. Phil English, R-Pa., tried to sell the idea to Treasury Secretary John Snow and Commerce Secretary Don Evans. They were lukewarm, he said.

Earlier this month, a version was folded by leaders of the Senate Finance Committee into a bill that would provide more than $100 billion in corporate tax cuts over the next 10 years.

The bill awaits action by the Senate as lawmakers begin looking ahead to adjourning for the holidays in a few weeks.

"There's a lot of heavy lifting left to do." Ensign said.

The Bush administration has been tepid on the bill. Pamela Olson, assistant treasury secretary for tax policy, has told senators she questions its economic benefits.

Olson also has advanced an argument for fairness. Why should companies that have sheltered money overseas gain a benefit when others have kept their profits at home?

Ensign said he looks at it another way.

"It is absolutely fair that we bring the money back rather than letting it create jobs overseas," he said. "Do you want to create jobs in the United States or do you want that money to work in other countries?"

Nonetheless, Ensign said, Bush officials "are not crazy about the idea but they are committed to working with us."

Ensign said he was told the administration would get behind the measure if it grows in popularity and becomes a key to passing the overriding corporate tax bill.