Pfizer (PFE), (GOOG) (MSFT) (CSCO) Get Tax Holiday Door Shut in Faces

Major U.S. companies such as Pfizer (NYSE:PFE), Google (NASDAQ:GOOG) Microsoft (NASDAQ:MSFT) and Cisco (NASDAQ:CSCO) were dealt a setback by the Obama administration concerning the possibility of a tax holiday for income generated by U.S. multinationals overseas.

Treasury officials said they would only consider letting U.S. companies pay a reduced tax rate on as much as $1 trillion of profits earned overseas as part of a broader overhaul of the U.S. corporate tax code.

"It would not be sensible to consider a repatriation holiday outside of that context," Assistant Secretary Michael Mundaca said in a statement published on Treasury's blog. Giving companies a temporary tax holiday on their foreign income could undercut the broader overhaul effort, Treasury officials worry.

Backers of a tax holiday said they would keep trying. House Majority Leader Eric Cantor (R., Va.), who promoted the idea for a separate tax holiday in a speech earlier in the week, believes a broader overhaul will require a longer time and more leadership from the White House to pass, a spokeswoman said. "In the meantime, [a tax holiday] is an option that can be considered immediately" to spur the economy and jobs, spokeswoman Laena Fallon said.

Rep. Kevin Brady (R., Texas) is working on a repatriation bill and hopes to introduce it within a couple of weeks, a spokeswoman said Wednesday, after the Treasury's statement was posted.




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