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RALEIGH — U.S. Sen. Kay Hagan says her proposal to give corporations a tax break on money they bring to the United States from overseas would create jobs and help break partisan gridlock over economic stimulus plans.

Hagan shares lead sponsor status on the measure with Sen. John McCain, an Arizona Republican and 2008 presidential nominee.

But critics point to a similar tax holiday in 2004 that did little to spark the flagging economy. They say Hagan’s bill would encourage companies to pursue more aggressive accounting strategies.

Hagan said North Carolina-based companies alone were holding $200 billion in foreign accounts to avoid the 35 percent tax rate they would pay by bringing the money home.
“I want that money back in America,” she said on a conference call with reporters Thursday.

She plans to visit Quintiles, a Durham-based pharmaceuticals consultant with workers in 60 countries, today to illustrate the need for her bill.

The measure has been pushed by large multinational corporations such as Microsoft and backed by the U.S. Chamber of Commerce, which represents some of the country’s biggest employers.

A study the chamber released in August said bringing an estimated $1.4 trillion in offshore holdings back to the United States could lead to the creation of 2.9 million jobs nationwide.

Similar estimates of the benefits have come from the NDN, a progressive think tank.

Critics on the political right and left dispute that notion, pointing to the tax holiday in 2004 that largely led to corporations buying stock with repatriated earnings rather than investing in new equipment or hiring more workers.

“There really doesn’t seem to be anything in place that would keep it from being the failure the 2004 bill was,” said Edwin McLenaghan, a public policy analyst with the liberal N.C. Budget & Tax Center.

Writers for the conservative Heritage Foundation also criticized the idea, saying the “holiday would have little or no effect on investment and job creation.”

Hagan said the bill she and McCain are proposing is different from the 2004 measure.

Companies that bring back money under the holiday but lay off workers over the next two years would pay a penalty. And the measure would allow companies to further lower their tax rate if they can show they used repatriated funds to hire new workers.

“There is no silver bullet, but that’s no reason for inaction,” Hagan said.

The Hagan-McCain proposal comes as the Occupy Wall Street movement gains traction, with protests popping up across the country. Asked what people who are clearly frustrated with what they see as corporate misbehavior might think of a bill to give tax breaks to large companies, Hagan said her measure would help problems people were protesting about.

“If they could see this will be going toward employment opportunities … this is really going to help that situation,” she said.

The Bloomberg financial newswire has reported comments in which Senate Majority Leader Harry Reid, a Nevada Democrat, said the Hagan-McCain bill would not pass as a standalone measure but would be combined with other measures meant to spark the economy.

Contact Mark Binker at (919) 832-5549 or mark.binker@news-record.com