New TechNet Sponsored Study: Hagan-McCain Repatriation Bill Would Increase Federal Revenues by $5.5 Billion, Bring Hundreds of Billions Back

Home » New TechNet Sponsored Study: Hagan-McCain Repatriation Bill Would Increase Federal Revenues by $5.5 Billion, Bring Hundreds of Billions Back

Washington, D.C. – TechNet, the bipartisan policy and political network of technology CEOs that promotes the growth of the innovation economy, today released a new study that estimates the Foreign Earnings Reinvestment Act of 2011 (S.1671), bipartisan legislation introduced by Senators Kay Hagan (D-NC) and John McCain (R-AZ), would deliver an increase of $5.5 billion to the U.S. Treasury, and contrary to Congress’ Joint Committee on Taxation’s (JCT) predictions, would only net a negative long-term cost of $9.7 billion.

The study, conducted by former JCT staff economists at research firm Quantria Strategies, sought to replicate the revenue estimating methodology used by JCT in analyses of the repatriation issue and incorporated two different scenarios of potential behavioral effects and assumptions.  The conclusions show that repatriation would produce a long-term revenue gain of up to $5.5 billion for the U.S. Treasury over 10 years. Under the worst-case scenario, S. 1671 would result in a net decrease in federal tax revenues of no more than approximately $9.7 billion for fiscal years 2012 to 2021.  What’s more, the study shows that the Hagan-McCain measure would enable American businesses to bring home approximately $535 billion in global earnings to the U.S. economy.

“We believe this study shows that we have a tremendous opportunity right now to make a significant investment in America’s struggling economy, create jobs and boost U.S. businesses at a time when we desperately need it,” said Rey Ramsey, President and CEO of TechNet.  “Today, there is over $1 trillion earned by U.S. businesses trapped overseas that could be brought back and invested here in America at virtually no cost to the taxpayer.  None of this is government money and it is twice the size of the President’s American Jobs Act.  We think this study adds to the bevy of data that we can do something to spur our economy that is right in front of us.”

The findings on the net revenue impact in the Quantria study stand in contrast to how JCTassessed the revenue impacts of a temporary repatriation provision similar to the Homeland Investment Act (HIA) enacted in 2004. JCT found that over ten years revenue losses would total $79.7 billion, while Quantria’s estimated a revenue loss of only $9.7 billion. The discrepancy is due to different assumptions on how corporations would respond to the temporary tax rate reduction. JCT’s analysis assumes companies would, with a tax holiday, accelerate location of economic activity overseas, while Quantria, after examining  and incorporating patterns of repatriations observed prior to and after enactment of the 2004 HIA, does not assume such acceleration would occur with the tax rate reduction.

TechNet strongly supports reform of the nation’s overall corporate tax regime and believes it is essential to American competitiveness.  While that is likely a long process, the organization supports measures to help give U.S. businesses the ability to return roughly $1 trillion in global earnings back to the country. Recent studies demonstrate that repatriation would help to create several million new jobs, grow the economy, and generate revenue for the U.S. Treasury.

The full study is available here.

About TechNet:
TechNet is the national, bipartisan network of CEOs that promotes the growth of technology industries and the economy by building long-term relationships between technology leaders and policymakers and by advocating a targeted policy agenda. TechNet’s members represent more than one million employees in the fields of information technology, biotechnology, e-commerce and finance. TechNet has offices in Washington, D.C., Palo Alto, Sacramento, Seattle, Boston and Austin. Web address: <>  <>. You can also follow us on Facebook and Twitter at @technetupdate.

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Contact: Jim Hock, (202) 463-0013 x202 - moc.364null@kcoh.mij