Gordon Smith IMAGE: Michael Alpers

The Pendleton Republican worked this week to push through a bill that would give a massive one-time tax break for the foreign profits of U.S. companies in exchange for a dubious promise of future job growth.

The bill, which passed through the Senate Finance Committee last week, would slash taxes on $300 billion in profits that U.S. companies currently hold overseas, cutting the tax rate on such gains from 35 percent to 5.25 percent. The offer would be good for only one year.

The idea is to create an incentive for companies to remove their cash from overseas tax shelters and invest them at home, boosting the economy and creating as many as 500,000 jobs, according to a J.P. Morgan study. But many see the logic as flawed.

"It doesn't matter if these companies have their money in a U.S. bank account rather than a Singapore bank account," says Bob McIntyre, director of the D.C.-based Citizens for Tax Justice. "They can still use it here for investment. It doesn't make any difference where the money is."

"Phil Knight doesn't leave his money in Third World countries forever," says Chuck Sheketoff, director of the Oregon Center for Public Policy. "Eventually it comes back here. What this is doing is giving it a tax cut."

As for job creation, there's little evidence to support the starry-eyed prognostications of Smith and the bill's seven other co-sponsors. The jobs already moved overseas by multinationals are gone, and this bill won't get them back. In fact, offering lower taxes for foreign-made profits could speed the migration of American jobs.

Critics say all Smith's bill will do is reward Nike, Intel and other multinationals for keeping billions in off-shore banks for years while other companies brought their profits home and paid taxes.

Chris Matthews, a Smith aide, defends his boss's motives. "The bill requires that all of the money will be used for the purposes of job retention and creation," Matthews says. "If they spend the money on executive bonuses, they have to pay the higher rate." Matthews also noted that "the same provision passed the Senate in May as part of the economic stimulus package by 75-25, with all of the West Coast senators voting for it."

Sheketoff is still skeptical. "It's an unbelievable giveaway to these multinational corporations at a time that we can't afford it," he says.