Reality Check: Why progressives and conservatives can't agree on repatriation of corporate money
(FOX19) - One to three trillion dollars. That is how much money American corporations are holding in overseas accounts.
Tax laws allow corporations to hold that money overseas without paying the 35 percent corporate tax rate charged by the IRS.
Just about everyone agrees getting those companies to bring that money back to the U.S. and spend it here would go a long way to helping our economy. But the big difference in ideology between conservatives and progressives is deciding just how to do that.
One of the first places this discussion came up was actually from a Fox news host, Eric Bolling who said he had a plan for how to get more money into the economy.
His plan, to give a tax holiday to those corporations, Encouraging them to repatriate that money to the U.S. and waive the 35 percent tax rate. That's right, let the corporations have that money without any tax.
But there would be strings attached. This is what Bolling suggests.
"What I suggest is that, give it to them for free. Bring it back here put $3 trillion back here. But, not 35 but take 25 percent of it and you have to use it for either hiring new hires or buying equipment. And it would absolutely stimulate the economy and every one of them would do it because they are investing in their own business and it would certainly help the economy." says Bolling.
So, under Bolling's plan, corporations would pour 10's of billions of dollars back into the economy by hiring workers and purchasing equipment, all without using tax dollars to stimulate the economy.
But there are always two sides. President Obama and some Democrats have latched on to a similar idea. But here's what some Democrats like Sen. Chuck Schumer are supporting.
They want a repatriation of corporate profits from overseas. Through a tax holiday, that would drop the 35 percent tax rate to, as Sen. Schumer suggests, maybe 5 percent.
Take that 5 percent in tax money, which some estimate could be as much as 30 billion dollars and invest it into an infrastructure bank. The money from that fund would go to repair highways, bridges and airports.
Here's what you need to know.
This repatriation holiday idea may not be a major issue right now. But the ideology behind it is very important to understand. That is because this issue is really a microcosm of the divide between conservatives and progressives in this country.
The conservative says, the best way to handle the economy and create jobs is to give small businesses, and yes, those "evil corporations" their own money with the incentive to create jobs, because they can do the best job. Government will just waste it.
Progressives say, those corporations are greedy and will spend the money only on themselves and corporate bonuses. It is only by putting the money in the hands of government agencies that we can guarantee that money will be fairly distributed to projects and people who need it.
This is the defining difference in world view that will shape our next election and the future trajectory of our country.