Tech giants like Apple, Microsoft, and Google have tons of cash, but there’s a catch: most of it is offshore.
That means they can either spend their cash abroad or bring it home and hand over up to 35% to Uncle Sam, according to Bloomberg.
Companies can defer paying taxes on revenue earned abroad, so there’s not much incentive to bring it back to the states.
But Senators Barbara Boxer (D-CA) and Rand Paul (R-KY) announced a plan on Thursday that could have Silicon Valley grinning ear-to-ear.
The “Invest In Transportation Act,” would create a repatriation tax holiday allowing companies to pay just 6.5% on cash they bring home — a huge discount.
The tax holiday would go towards the Highway Trust Fund, which pays for state and local infrastructure projects across the country.
The bill, which hasn’t been introduced yet, stipulates that repatriated cash would have to go towards initiatives like R&D, public-private partnerships, and acquisitions. None of it could be used for executive compensation increases or stock buybacks.
The Boxer-Paul plan stems from Congress’ opposition to raising the gas tax, which has traditionally gone towards the Highway Trust Fund.
Fuel-efficient cars and ballooning infrastructure costs have run the Highway Trust Fund dry. It will run out of money in May without Congressional action.
Though tech companies would love it, the idea of a tax holiday has already faced scepticism from Senator Orrin Hatch (R-UT), Chair of the Senate Finance Committee.
“Tax holiday proposals designed to pay for the transportation bill sound great until you look at the details,” Hatch said in a statement to The Hill.
This wouldn’t be the first time Congress passed a repatriation tax holiday — in 2004, companies were able to bring overseas cash home and suffer only a 5.25% rate. However, a study by a congressional subcommittee found that the 15 companies who brought the most money home cut jobs and spent slightly less on R&D from 2004 through 2007.
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.