A group of companies are preparing to launch a campaign on the Hill for a temporary tax break. Big biz: How about a tax holiday?

What politician would vote against a trillion-dollar economic stimulus plan at little cost to taxpayers?

Probably not too many.


And that's just how a group of multinational tech, drug and energy companies are framing the pitch as they prepare to launch a coordinated campaign on Capitol Hill for a temporary tax break on overseas profits they bring back to the U.S.

Politically, the so-called repatriation tax holiday could be a tough sell to a public wary of giving big business a free lunch – let alone a smorgasbord. President Barack Obama also has made clear he’s not interested in piecemeal tax measures, insisting on a comprehensive overhaul. And critics say there’s scant evidence the last tax reprieve of this kind in 2004 spurred much investment or hiring.

But Cisco, Oracle, Microsoft, Apple, Qualcomm, Pfizer, Kodak, CA Technologies, Duke Energy and other proponents believe they have a winning hand — and the right people to play it.

They've brought on as lead lobbyists former GOP Rep. Jim McCrery, the ex-ranking member of House Ways and Means, and Jeffrey Forbes, former chief of staff to Senate Finance Chair Max Baucus (D-Mont.). SKDKnickerbocker, the PR firm led by former Obama senior communications director Anita Dunn, is handling media strategy.

The tax holiday is an idea that draws bipartisan support from tax-cutting Republicans and pro-business Democrats. And with unemployment stuck in the high-single digits and economic growth still frustratingly slow, the prospect of drawing hundreds of billions of dollars parked overseas back to the United States may become increasingly difficult for skeptics to resist.

“The states are getting ready to lay off thousands of people, the Middle East is burning, unemployment is stuck at 9 percent,” Jason Mahler, a lobbyist for Oracle and former chief of staff to Rep. Anna Eshoo (D-Calif.), told POLITICO. “What else are you going to do in terms of stimulus that’s of any consequence? The quiver is empty.”

Members of the yet-unnamed coalition have been meeting regularly over the past month and are a few weeks away from a public announcement, sources say. But after that the campaign may go below the radar, at least in the early stages. No raucous rallies at the Capitol. No TV ads during primetime.

That’s partly because large corporations seeking favorable tax treatment aren’t the stuff of a populist movement. Members also may be wary of inspiring an opposition campaign when the issue of tax repatriation is probably too wonky to draw foes on its own.

Instead , the companies hope for a snowball effect as they take their case to individual members of Congress, paying special attention to moderate Senate Democrats and House Republicans.

Their argument is straightforward. Multinational firms have roughly $1 trillion in overseas accounts that they are loathe to bring back because doing so would mean paying up to 35 percent in taxes to Uncle Sam. The corporations can avoid taxes indefinitely by keeping the money abroad, but many want easier access to what amounts to huge — but largely untapped — cash reserves.

The solution, say repatriation proponents: drop the tax on repatriated funds to 5 percent for one year. If the full $1 trillion is repatriated, it would net $50 billion in extra tax revenues up front. Longer term, the move would likely add to the deficit, but only marginally – by around $30 billion over 10 years, extrapolating from the Joint Committee on Taxation’s scoring of past repatriation proposals.

“Congress and the president could create a privately funded stimulus of up to a trillion dollars,” Cisco Chairman and CEO John Chambers and Oracle President Safra Katz wrote in a November Wall Street Journal op-ed. “They could also raise up to $50 billion in federal tax revenue. That's money the economy would not otherwise receive.”

Some economists argue the idea is tax policy at its worst. They say it amounts to a handout to big corporations.

Some $315 billion was repatriated during the 2004 holiday, according to IRS data, and there are conflicting accounts of how the money was used. But some studies suggest that much of it went for stock repurchases and dividend payouts, not hiring and domestic spending.

Critics also say that another repatriation holiday would create a perverse incentive for corporations to shift more U.S. earnings and jobs abroad, knowing it would be just a matter of time until Congress granted the next tax reprieve.

“It was a failure the first time and it would be worse this time,” said Chuck Marr, director of federal tax policy at the Center on Budget and Policy Priorities and a onetime economic adviser to former Democratic Senate Majority Leader Tom Daschle. “It has nothing to do with putting Americans back to work. But they're using high unemployment as a triggering event.”

Repatriation proponents acknowledge that comprehensive tax reform is the better approach. Privately, however, they say there’s no sign a tax code overhaul will happen any time soon. A repatriation holiday now, they say, beats doing nothing. Even if some of the repatriated money goes to stockholders, they say, that’s better than it remaining overseas.

For many Silicon Valley companies, there is no bigger issue on their Washington agenda.

When asked to name Oracle’s top D.C. priorities, Mahler responded with the mantra: “Repatriation, repatriation and repatriation.”

Sens. Barbara Boxer (D-Calif.) and John Ensign (R-Nev.) led the last successful push for a repatriation tax holiday in 2004. One of the Senate’s staunchest liberals, Boxer remarked at the time that it wasn’t every day that she stood on the Senate floor to argue for a tax cut.

Though Boxer’s Silicon Valley ties make her a special case among Democrats, her position shows that broad, bipartisan support in Congress isn’t out of the question. When Boxer tried in 2009 to attach a repatriation holiday to the stimulus bill – an effort that failed badly, caught up in larger political forces surrounding the stimulus measure – Majority Leader Harry Reid (D-Nev.) and Sen. Ben Nelson (D-Neb.) voted in favor of it.

Democrats up for reelection next year are eager to revive the economy and may come to view repatriation as a low-risk, low-cost option, proponents say.

The unlikelihood of any serious opposition campaign, they say, also boosts their hopes of success.

That’s not to say it will be an easy lift. Treasury Secretary Tim Geithner said last month that the administration would only consider repatriation as part of a corporate tax overhaul.

Democratic senators also could stand in the way.

“Such tax holidays not only reduce U.S. tax revenue in the long run, but create new incentives for U.S. multinationals to send more jobs, funds and facilities offshore,” Sen. Carl Levin (D-Mich.) said in 2009.

It’s unclear whether supporters will try to get repatriation through Congress as a standalone measure or attach it to a bigger bill. Also unknown is whether they’ll wait for a debate over broad tax reform to play out before making a move.

One possibility may be to attach it late this year to a measure to extend the R&D tax credit, which expires at the end of 2011 and also ranks high on the tech industry’s priority list.

“Bringing this money back into our economy,” said Rey Ramsey, president and CEO of the high-tech lobby TechNet, will “help create jobs with virtually no cost to the taxpayer.”