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Bill could mean billions for tech
USA TODAY
Wednesday, October 13, 2004


SAN FRANCISCO -- The high-tech industry stands to collect a windfall from a major business-tax bill approved overwhelmingly by the U.S. Senate on Monday.
Whether the national economy would benefit from the payout is debatable, critics of the bill say.
A provision in the American Jobs Creation Act of 2004 could provide billions in tax relief to tech companies with large cash stockpiles parked overseas, in hopes they pump the profits back into the USA. The potential bottom line for the national economy: Hundreds of billions of dollars in investments and up to 500,000 new jobs, financial analysts say.
''The new bill removes a disincentive to reinvesting in the U.S.,'' says Dan Kostenbauder, Hewlett-Packard's point person on tax issues. ''It's big not just for Silicon Valley, but the national economy.''
Firms would have one year to reinvest overseas profits in the USA at a tax rate of 5.25% instead of the usual 35%, according to the provision. They would be required to submit to their boards an investment plan for anything from research and development projects to acquisitions and stock buybacks. The money could not be used for executive compensation, however.
The bill, which passed the House last week, is expected to be signed into law by President Bush.
U.S. firms, led by the tech and pharmaceutical industries, have an estimated $650 billion in profit sitting overseas, where most of it has stayed because of high tax rates in the USA. Nearly half that amount, $300 billion, could be reinvested in the USA under the bill's provisions, says a J.P. Morgan report.
The bill would increase a company's ''flexibility on h"