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Business coalitions quickly lined up behind a proposal from House Ways and Means Committee Chairman Dave Camp (R., Mich.) released Wednesday to lower the top individual and corporate tax rates and reduce the taxes on profits earned overseas.
A coalition of companies including AT&T Inc. (T), Boeing Co. (BA), Verizon Communications Inc. (VZ) and Intel Corp. (INTC) praised Camp's proposal to lower the top individual and corporate tax rates to 25% from 35% and reduce the taxes companies pay on foreign earnings.
"A substantial reduction in the corporate tax rate, as Chairman Camp outlines in his plan, serves as a catalyst for job creation, economic growth and the boosting of U.S. competitiveness in the global market," the co-chairs of the Reducing America's Taxes Equitably Coalition said in a statement Wednesday afternoon. Other members of the coalition include FedEx Corp. (FDX), United Parcel Service Inc. (UPS), Altria Group Inc. (MO) and Walt Disney Co. (DIS).
In a "discussion draft" released Wednesday, Camp proposed switching to a territorial system in which companies would not pay taxes on 95% of their foreign earnings, but would not be able to indefinitely defer paying taxes on overseas income. The changes would be designed to bring in the same amount of revenue as the current system, Camp told reporters Wednesday.
Under the current worldwide system, U.S.-based companies can leave money abroad if it is reinvested overseas, but must pay U.S. taxes of up to 35% when bringing those funds back home.
As part of the transition to a territorial system, Camp proposed a 5.25% tax on all foreign earnings currently held overseas, regardless of whether companies bring them back to the United States or not, over eight years.
Karen Olick, campaign manager for the WIN America coalition, said in a statement that Camp's proposal reflects building momentum for a tax break on bringing back overseas earnings.
"We look forward to closely reviewing his plan, but this clearly shows that support for bringing global earnings home continues to grow," Olick said. The coalition, which has advocated for a repatriation tax holiday, includes among its members Apple Inc. (AAPL), Google Inc. (GOOG), Microsoft Corp. (MSFT) and Pfizer Inc. (PFE).
Camp said he did not think his repatriation proposal was at "cross-purposes" with other legislation already introduced to establish a one-time tax break on overseas earnings.
"I do believe we need a long-term fix" to address the taxation of overseas profits, he said, adding "otherwise you come back to it again."
-By Kristina Peterson, Dow Jones Newswires; 347-882-7215; email@example.com