By Bill Wilson
Not less than a week after a $26.1 billion bailout to bankrupt states like New York and California was stripped from a must-pass war supplemental, it has returned.
Senate Democrats had failed to muster the 60 votes needed for passage of a House version of the war supplemental — which included the funding for the troubled states. So, instead the House passed the Senate version that did not.
But, not to deny one of Barack Obama’s top domestic spending priorities, Senate Democrats are once again bringing the states bailout back.
This time, Senate Majority Leader Harry Reid is attaching the $10 billion for state public teachers unions and $16.1 billion for state Medicaid spending to tax legislation that will enable the government to double-tax U.S. companies that do business overseas. The bill will limit the use of the Section 956 foreign income tax credits for profits generated overseas.
According to a U.S. Chamber of Commerce letter to Congress, Section 956 “allows companies to repatriate cash to the United States in a tax efficient manner.” This prevents companies from paying taxes overseas on profits, then repatriating those profits and having them taxed again by the federal government. The Chamber says that the Section has been “particularly beneficial during the recent economic downturn and ensuing credit crunch when it was necessary for American worldwide companies to repatriate significant funds in order to meet the financial needs of their U.S. businesses.”
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