Mr. President, I call up an amendment that is at the desk, No. 3117, Breaux-Feinstein. I ask unanimous consent the reading of the amendment be dispensed with. Mr. President, this is a jobs bill. That is the title of the bill. Presumably a…
Mr. President, I call up an amendment that is at the desk, No. 3117, Breaux-Feinstein.
I ask unanimous consent the reading of the amendment be dispensed with.
Mr. President, this is a jobs bill. That is the title of the bill. Presumably a jobs bill is intended to create jobs and hopefully is created to create jobs in America. That is the legislation that is before us. It is absolutely essential that this legislation be adopted.
But one of the provisions in the legislation gives me great concern. I offered an amendment in the Finance Committee. It was unanimously supported by every single Democrat in the Finance Committee and it lost by a partisan vote because our Republican colleagues at that time did not feel they could support the amendment I offered. It was unanimously supported by every single Democrat member of the Finance Committee.
The question deals with how we treat companies that have earnings they have stashed away in foreign countries. These amounts of money, many of them, are in fact earned overseas. Companies know if they bring those earnings back to the United States, the United States, on a worldwide tax basis, will tax those earnings with a deduction for the amount of tax they have paid in the country in which they earned those revenues. They pay the regular corporate rate minus the tax credit they get for having paid taxes on those earnings in the foreign country. However, there is no tax consequence to those companies if the money in fact stays in the foreign country. That is called deferral. We defer any U.S. tax on foreign earnings as long as the earnings stay in the foreign country in which they are earned.
The legislation before this body now says we are going to give a very special break to U.S. companies that have money overseas, in many cases in tax havens. We are going to let you bring that money back, not as other companies in the past have brought it back,
paying U.S. tax minus what they paid overseas, but we are going to cut you a special sweetheart deal. We are going to give you a sweetheart deal of an 85-percent tax credit by reducing the amount of taxes you would pay if you bring it back to the United States--not to pay what every other corporation pays, 35 percent--we are going to ask you to pay 5 percent, 5.25 percent. That is an 85-percent tax reward to companies that have stashed money in tax havens, in many cases overseas, for the sole purpose of avoiding U.S. taxation.
The IRS has recently cited a number of companies that have these types of tax shelters and overseas tax havens, such as in The Netherlands, Barbados, the Cayman Islands and Bermuda--you name the tax havens. Companies that earn money in one country will bring it over to a tax haven and keep it there, avoiding U.S. taxes. But some now say that is such a great idea, we are going to give them a real tax break and ask them to please bring it back over to the United States. If you do so, we are only going to tax you at about a 5-percent rate.
That is what the legislation says. The legislation says bring it back, you get a huge tax reward for keeping money overseas and now bringing it back to the United States, unlike what other companies have had to do.
Every person we have talked to says we are going to bring it back to create jobs. I say, All right, if that is what you are going to do, bring it back to create jobs in the United States of America, we will let you do the 5-percent tax break. We will allow you to do it.
My amendment simply says two things are different from the bill before the Senate. No. 1, it says you can bring it back for job creation, for hiring more people. If you want to use it for that purpose, OK. If you want to use it for research and development-- pharmaceutical industry or other electronic types of industry--OK, we will let you use it for that. If you want to use it for capital expending, you want to build another plant, OK, we will let you use it for that. If you want to use it for your underfunded pension funds, OK, we will let you use it for that.
But we will not let you use it for something as nebulous as financial stabilization of the company, which is in the bill but not defined. What does that mean? Buy another Gulfstream? Yes, that might financially stabilize the company. Stock buybacks? Yes, that might be a good idea for a few people, but it does not create a lot of jobs, if any.
Second, there has to be an enforcement mechanism, more than filing a plan; and there is no responsibility if you do not follow it.
My amendment says: All right, companies, if you bring it back for those purposes, we want proof you actually use it for those purposes. You can use the next 3 years to take these billions of dollars and use it for legitimate purposes, but we would like some proof. We know it by seeing you have actually spent more in the next 3 years in these areas than in the previous 3 years. That is very important.
Here is an interesting statistic from the Joint Committee on Tax. Where is the money like this coming from? From tax havens: Bermuda, Cayman Islands, Hong Kong, Ireland, Luxembourg, Switzerland. How much money are we going to let flow into the United States at a 5-percent rate when it should come in at the regular corporate rate minus what they pay in the foreign country?
Our legislation, the Breaux-Feinstein amendment, is about responsibility and accountability, about creating jobs in this country, not stock buybacks that enrich a few at the expense of jobs in this country.
There is a legitimate argument we ought to look at the whole tax system and see whether we should go to a territorial system or not, but that is not before the Senate at this time.
This legislation is absolutely essential if we are going to maintain any credibility on creating jobs instead of enforcing or creating tax havens. We have enough tax havens. We should not encourage more. This amendment helps stop that.
How much time remains?
We have an hour equally divided?
I yield 10 minutes to the distinguished Senator, the cosponsor of the amendment.
Will the Senator from Oregon yield for a question?
Mr. President, would the Senator point out anything in the legislation before this body now that would take any action against any companies if they did not abide by what they said they were going to use it for? Do they lose their tax deduction? Is there anything in the legislation, without my amendment, that would say what would happen to companies if they use it for something totally different from what their plans say they are going to use it for?
Suppose they decided to use it for something totally unrelated to job creation. Is there anything, without my amendment, that says what would happen to those companies?
Trust but verify.
Suppose you have somebody who may not do that. Is there any provision in the bill that says what will happen to the company that does not abide by the plan? I believe in trust but verify. If you don't do what you say you are going to do, you should have consequences. Is there anything in the bill that says they would lose their deduction?
How much time do I have remaining?
Are we going to rotate? Are we just going to hear one side?
Mr. President, I will take 2 minutes off the time.
I wonder if anybody in this body remembers Enron. Let's trust that they are going to do right. They are a U.S. corporation that created more tax shelters than the IRS could count. It took a group of Philadelphia lawyers 2 months to even add up the number of tax shelters they had around the world. They had so many the IRS couldn't even follow it.
If you are going to give people who have tax shelters and a stash in income in foreign tax havens a huge benefit to bring the money back into this country, we ought to make sure they are going to use it for job creation. Without my amendment, they have to file a plan that says this is what they are going to spend it on. Suppose they don't spend one nickel more than they did last year on job creation. Suppose they don't spend one nickel more on capital expenditures than they did last year. Suppose they don't spend one more nickel on pensions for the workers than they did last year, but they comply with what they said they were going to do in their little plan. They are fine. They don't have to spend one nickel more under the committee bill, with all this money they are going to bring back at a 5-percent tax rate, in terms of creating jobs than they did before.
The Breaux-Feinstein amendment says: If you want to bring it back for that purpose, you have to show us that is what you are using it for. That, in fact, you have spent more money in the next 3 years than you would have the previous year on job creation. That is not too much to ask.
When we are giving a multinational corporation an enormous tax gift of having to pay not 35 percent but only 5 percent, at least get a requirement that they are using it for something to do with job creation and that they spend at least something more than they did the year before. Without the Breaux-Feinstein amendment, there is no requirement that they spend one nickel more on job creation than they did previously after bringing this money back.
Guess what. You talk about an incentive to locate overseas. There will be a whole group of people saying: We did it for 1 year. Let's do it next year, a third year; let's continue this. How about making this 5 percent permanent so we can put all the jobs overseas, knowing Congress is going to take care of us every time there is a downturn in the economy and there is another amendment to extend the 5-percent tax break
1 more year. We will just move everything over to the Caymen Islands. We will move everything ever over to a Third World country. Because, guess what, Congress is going to let us bring it back at 5 percent because the pressure will be there, because the economy is not doing well, and all the jobs go overseas. The only thing the Breaux-Feinstein amendment says is, if you are going to bring it back for job creation, prove it, tell us you spent a little bit more than you would have ordinarily. Without Breaux-Feinstein, there is no requirement that they spend one nickel more than they did before. That is a big difference in what we are trying to accomplish.
I reserve the remainder of my time.
Mr. President, how much time remains?
I thank the Chair. I will take 2 additional minutes.
Again, I don't have any basic argument with those who say we ought to let the money come back that has been sitting in tax savings into this country. I will even go along with saying you can bring it back at 5 percent, if you are going to use it for job creation or research and development, for capital expenditures. And If you are going to use it to rebuild your pension fund for workers, OK, let's do it for 1 year at 5 percent. But, by gosh, can't we at least have some standards to be able to enforce it?
Under the committee bill, without the Breaux-Feinstein amendment, there is no obligation that they spend one nickel more on job creation than they did last year or the year before. The only thing they have to do is say, if last year we spent $10 billion on capital expenditures, guess what. We will spend $10 billion this year. They don't have to spend one nickel, one penny more on capital expenditures or job creation or research and development in order to get this huge break. They can spend exactly what they spent last year--no requirement, zip, zero. Yet we are going to give them one of the biggest tax breaks.
We already passed tax cuts of $3 trillion for job creation. Are we much better off today after all of that, some of which I supported? That is a debatable issue. Let's not make the same mistake and say we are going to give them an 85-percent tax cut if they are doing business overseas and if they bring some of that money back and spend it on job creation. And by the way, there is no requirement that you do anything more than you did last year. What kind of nonsense is that, as far as trying to create more jobs in this country, instead of providing a huge incentive to locate overseas, bring workers overseas, and we are going to have Congress let us bring it all back at 5 percent? How unfair is that to the people who play by the rules, to other companies who do business and hire people in this country.
There is no requirement, without the Breaux-Feinstein amendment, that companies that bring this money back at a 5-percent rate spend one dime more than they have in the past on the creation of jobs. They can spend what they spent last year. In fact, they can spend less than they spent last year. The only thing they have to show is they have a plan--no enforcement, nothing.
The Senator from Nevada has a sign up that says 660,000 jobs. Suppose they decide not to create one more job than they did last year. They will still get the 5-percent tax break. There is no requirement that they create six jobs. If they created six last year, they can do that this year. They only have to show that the money is used for job creation. They can take all the money they spent on capital expenditures last year and not spend any of it next year. They can just use this overseas money and not do one thing more than they did the year before. There is no enforcement that they do what the plan says. There is no penalty if they don't. They don't lose their tax deduction. They still get it and they do not have to spend one nickel more in any category without the Breaux-Feinstein amendment.
We say: Look what you did in the last 3 years, and what you are going to do in the future 3 years, and see if you did more than you did in the past. If you did, you get the 5-percent break. But, by golly, if you don't, you don't get it. I think that is fair. I withhold the remainder of my time.
Mr. President, how much time do we have?
I yield myself 3 minutes.
It is interesting that they said Louisiana would gain 10,000 jobs if this passed. We probably lost 50,000 jobs with people moving overseas. So with this legislation, we are still 40,000 jobs short.
What we are doing in this legislation is rewarding companies that operate overseas. We say, if you operate overseas and you hire foreign workers in foreign countries and put your money in a tax haven, somehow that is good policy, and we are going to let you take those earnings and only pay 5-percent tax on that. What kind of logic is that? That is a huge incentive to continue to hire workers overseas knowing Congress is going to let you bring earnings back, not at 35 percent, which every other company that hires U.S. workers in my State or any other State has to pay. No, if you do it overseas, you are only going to have to pay 5 percent if you give us a plan that tells us you will use the money for the financial stabilization of the corporation, whatever the heck that means.
If we are going to create so many jobs and if we are going to reduce the deficit, when you look at this and score it impartially, why does the Joint Committee on Taxation say this is going to cost the Treasury $3.7 billion? If we are going to create so many more jobs and so many more people are going to pay taxes, why does this provision in the current bill cost the U.S. taxpayers $3.7 billion? That is the score from the Joint Committee on Taxation when they looked at this provision. It is not going to reduce the deficit. It is going to cost the taxpayers almost $4 billion.
When someone makes the point that the IRS will audit these companies, audits are down on corporate America by over 60 percent. They are doing 60 percent fewer corporate audits. One wonders why Enron got away with everything? Because the Treasury does not have the wherewithal to do the audits they need.
The principal argument I have with the Breaux-Feinstein amendment is simply this: If people say they are going to bring it back at a 5- percent rate and they are going to use it to create more jobs, I say, OK, let them do it, but let's have some mechanism to ensure they really do create more jobs than they created in the past. That is all the Breaux-Feinstein amendment really says. It says: Show us, Mr. Corporate America, that, in fact, you are creating more jobs than you did before. And if you did, fine, you are off the hook; you get a 5-percent tax rate, but if you do not create any more than you did in previous years or you create less, then something is wrong with this proposition, and we are not going to let you pay only 5-percent taxes.
It is an enforcement mechanism. I agree, use it for pensions, use it for research and development, use it for capital expenditures, use it for job creation, but please show us that it was used for that purpose.
I reserve the remainder of my time.
Parliamentary inquiry: What is the status on remaining time?
I will close on my amendment.
Mr. President, I close on this amendment with the following comments: In this legislation, we are giving U.S. companies that hire foreign workers in foreign countries and putting their money that they earned in tax savings the opportunity, the gift, to bring back to this country those earnings and not pay what every other U.S. corporation pays in taxes but to give them an 85-percent tax cut because they operated overseas and hired foreign workers and made products in foreign countries. We are going to give them an 85-percent tax cut over current law if they bring the money back over here.
The argument is that somehow that is going to create more jobs over here. But there is no requirement that a single additional job be created. They do not have to create one more job or spend one more dollar on research and development than they did last year under the current bill without the Breaux-Feinstein amendment.
The Breaux-Feinstein amendment seeks to install responsibility that says: All right, if corporations want to bring it back for those purposes, even though it is going to cost the taxpayer $3.7 billion-- some people outside of Washington may think that is a lot of money; I think it is a lot of money--$3.7 billion is the cost of this legislation without the Breaux-Feinstein amendment. The bottom line is there is no guarantee that they will spend one dollar more on creating a job, capital expenditures, or research and development than they did last year. The Breaux-Feinstein amendment says, yes, corporations can do this and we will give them this huge tax break if they spend more on job creation and create more jobs than they did in the past. That is our only requirement, and that is not too much of a requirement.
They already say that is what they are going to do. The only thing our amendment says is, yes, they have to do that, and if they do not they are not going to get the break.
Without the Breaux-Feinstein amendment, they do not have to create one single additional job more than they did in previous years. We have an enforcement mechanism that says: Look, if they do not spend it for what they say they are going to spend it, then they are not going to get the tax break. They are going to have to give it back. They are going to have to be treated as any other company that does business in this country.
They call this a poison pill. I think it is more a vitamin pill to a deficient bill to try and help improve it to give it some strength, to give it some credibility, to say, yes, we agree, let's do it for this purpose, but please have a requirement that it is actually used for that purpose.
The legislation does not have that. The only thing they have to do is come up with a description, a domestic reinvestment plan that does not require it be spent. It certainly does not require that they spend more in the future than they did in the past. But if the corporations put what they are thinking about doing in a domestic investment plan, then they are OK, but there is no requirement that they spend a nickel more than they did in the past. That is the real principle that we are trying to address with the Breaux-Feinstein amendment. I think it makes sense.
It still allows money to come back, but it only requires that they, in fact, use those dollars for what they said they were going to use them. If they do that, if they create more jobs, do research and development, make capital expenditures, do things that they say they are going to do with it, let's please have some mechanism in the legislation that really requires them to do what they say they are going to do.
The history of this country with regard to recent scandals in corporate America show that we have to be vigilant and diligent, and we have to have some pretty clear parameters about what people can and cannot do. This legislation, without the Breaux-Feinstein amendment, falls short in that particular provision.
I reserve the remainder of my time.
How much time remains?
Mr. President, we are saying if corporate America wants to get this huge tax gift, OK, let's do it. But let's make sure they use it for the right purpose. Let's make sure they actually use it for job creation. Breaux-Feinstein simply says they have to show that they spend more in future years, the next year, and the next year than they did in the previous years in terms of job creation and doing what they said they were going to do.
Without the Breaux-Feinstein amendment, the only thing a company has to do is file a plan. If they do not follow the plan, well, too bad; they do not get audited, too bad. There is no requirement that more money is spent to create jobs, and we are talking about a jobs bill that creates jobs in this country, I thought, not in a foreign country.
I do not think we can go back home to our constituents and say we are going to give corporate America an 85-percent break for money they earned overseas. If they want to bring it back for job creation, OK, but let's make sure that is what it is used for.
I understand there is 1 minute for the proponents of the Breaux-Feinstein amendment.
Regular order, Mr. President.
Mr. President, it is interesting that the authors, the Senators who oppose the amendment, say the bill is going to create 660,000 jobs. If it is going to create 660,000 jobs, there is no problem. The people would be able to bring the money back and pay 5 percent. The Breaux-Feinstein amendment simply says if companies are going to get a huge, enormous tax break by bringing money out of tax shelters in foreign countries and saying they want to use it for job creation, fine. Let's make sure that is what it is used for. Let's have a standard by which if more jobs are created, they get 5 percent. But if they don't create more jobs, if they don't spend it for that purpose, they are not going to get the 5-percent tax break. That is all it says.
It says, if you spend the money to create more jobs, you can bring it back at a 5-percent tax rate, and we will allow that to happen. But if you use it for something else, you will not get a 5-percent tax rate. You will pay the regular corporate rate like any other American corporation. Without my amendment, this costs $3.7 billion to the American taxpayer.
Mr. President, I ask for the yeas and nays.