South By North Strategies, Ltd.

TaxVox explains why a temporary tax holiday for firms that return foreign profits to the U.S. is “still a bad idea.”

The reality, sadly, is quite different. There is no evidence that a similar break created any new jobs when Congress tried it in 2004. Instead, most of the repatriated dollars went to shareholders in the form of dividends or stock buybacks (which raise equity prices).
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Yet, multinationals are salivating over the prospect of a holiday. Jesse Drucker over at Bloomberg reports that 160 lobbyists are working the issue. Even Apple and Google—normally bitter corporate rivals—are singing from the same hymnal.
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No wonder. The [Sens. Kay and John] Hagan-McCain bill would allow firms to pay just an 8.75 percent tax to bring home overseas earnings—far lower than the top corporate rate of 35 percent. They can get the rate down to 5.5 percent if they increase payroll in 2012 (not hard if the economy improves as many expect).

And, in an added twist, TaxVox notes the following:

But with corporate tax reform in the wind, a holiday today could provide an extra windfall. Here’s why:
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Corporate tax reform could include both a lower rate and a shift to a territorial system, which would exempt foreign earnings from any U.S. tax (and require overseas firms to pay U.S. tax on what they earn here). But the real key will be the transition from today’s rules to the new system. It is likely, given big budget deficits, that earnings already sitting overseas would be taxed at a rate higher than 5.5 percent or even 8.75 percent. So, savvy multinationals would much rather bring the dough back now at an extremely low rate and avoid paying a bigger transition tax in a couple of years.
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It’s a win-win. Maybe they get lower rates and reform. If not, they’ll get a big break today and perhaps another holiday down the road. Sweet.