Note: The Skinny blog is written by Rick Smith, editor and co-founder of Local Tech Wire and business editor of WRAL.com.

RESEARCH TRIANGLE PARK, N.C. – John Chambers, chief executive officer and chairman of Cisco Systems, and Safra Catz, president of Oracle, are calling for a new kind of stimulus for the U.S. economy:

Repatriation of profits made by the foreign operations of U.S.-based corporations.

This stimulus would total as much as $1 trillion and would come from the private sector.

But the U.S. would need to change tax policy so the $1 trillion held overseas by U.S.-based companies could be brought home without what they call a “significant penalty” – the 35 percent tax rate.

“One trillion dollars is roughly the amount of earnings that American companies have in their foreign operations—and that they could repatriate to the United States. That money, in turn, could be invested in U.S. jobs, capital assets, research and development, and more,” they wrote in Wednesday’s Wall Street Journal.

“But for U.S companies such repatriation of earnings carries a significant penalty: a federal tax of up to 35%. This means that U.S. companies can, without significant consequence, use their foreign earnings to invest in any country in the world—except here.”

Until a change in tax policy occurs, the money will remain “parked” overseas.

“By permitting companies to repatriate foreign earnings at a low tax rate—say, 5%—Congress and the president could create a privately funded stimulus of up to a trillion dollars,” the executives wrote.

However, the idea of repatriation at lower rates has “apparently been dismissed for no good reason” by the Obama administration, they say.

The two point out that $50 billion gained on repatriated funds at a lower rate could be used to help encourage hiring with a $25,000 tax credit over two years to hire unemployed workers, including recent graduates.

Chambers and Catz believe corporate cash would “come flooding into the country” and would be “larger than the entire federal stimulus package.” The result would stimulate hiring, expansion, research and development, demand for capital, and much more, they say. The overall impact would be to increase confidence in the economy which in turn would encourage companies and consumers to spend.

The overseas cash is not being withheld by companies because the economy is stalled, they stress. “Large cash balances remain on U.S. corporate books because U.S. companies can’t spend their foreign-held cash in the U.S. without incurring a prohibitive tax liability.”

Chambers said earlier this week that he would expand Cisco’s workforce by 10 percent if a tax change was made.

In an interview with the Washington Post, Chambers said he would lobby again in Washington this week for lower tax rates on Cisco’s profits overseas.

“Cisco is one of very few companies that is hiring today, having already added 10 percent to our workforce this past year,” Chambers said. “I’d like to grow our head count another 10 percent in the U.S. if we could repatriate our foreign earnings at a low rate.”

Will anyone on Capitol Hill and at the White House get the message?

For the full WSJ article,

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