On October 6, 2011 Senators Kay Hagan and John McCain introduced a temporary dividend repatriation amendment to the job creation legislation the Senate is expected to address shortly. According to the press release, “this… legislation will drive up to $1.4 trillion parked overseas back here to the United States…”
According to a summary released by Senator Hagan’s offi ce, the highlights of the proposed repatriation amendment include:
- Tax Rate – the Bill includes an 8.75 % effective rate on foreign earnings brought back to the United States. The rate is achieved through a temporary dividends received deduction of 75 %.
- Job Creation Incentives – the Bill allows fi rms to lower that rate to a 5.25 % effective repatriation rate if they expand their US payroll during 2012. The lowest repatriation rate can be achieved incrementally in accordance with expanding qualifi ed payroll—through net job creation or higher employee pay. In order to receive the lowest repatriation rate, a company would have to increase its “qualifi ed payroll” by 10 %. Qualifi ed payroll includes all wages paid to employees that are subject to payroll tax.
- Penalty for Job Cuts – the Bill would include in a company’s gross income calculation $75,000 per full-time position that is eliminated.