If enacted, the holiday would allow U.S. corporations to bring home profits they stashed overseas at a much lower rate - about 5% as compared to the usual 35%.
"Forging consensus on this type of fundamental tax reform will take time, so in the meantime I propose that we allow U.S. multinational companies to bring back almost $1.2 trillion in overseas profits at a lower tax so they invest in our economy here at home," he said.
Many large multinationals, particularly those in the health and tech sectors, say the tax holiday would be the equivalent of a "free" stimulus package: the government would recover tax revenue while the companies would have more money to invest in job creation, factories, equipment, and research and development.
Of course, corporations fed most of the booty from a 2004 tax holiday back to shareholders in the form of dividends and stock buybacks. Critics of the proposal say there is little documentation proving the previous corporate tax break spurred economic growth. They say it would reward companies for holding money overseas.
Money Morning's Chief Investment Strategist Keith Fitz-Gerald went on FoxBusiness' "Bulls & Bears" program Tuesday to discuss whether or not a corporate tax break on foreign earnings would boost the U.S. economy.
To watch that video, please click here.
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