US Congress is considering a tax holiday for US companies to repatriate profits earned abroad - a move that could boost the dollar by bringing up to $135 billion (€123 billion) of capital back to the US in its first year.
Congressional aides said that the Homeland Investment Act, introduced last year by Mr Phil English, a Pennsylvania Republican on the tax-writing ways and means committee, was receiving serious consideration by Mr Bill Thomas, the committee chairman. Senate officials said that key senators had yet to take a view.
But the proposal is opposed by the US Treasury, which is calling for a more comprehensive overhaul of the US tax code's international provisions. The Bill would temporarily cut the tax that multinational companies face when repatriating earnings to the US.
Currently, corporations are taxed on the difference between foreign corporation tax rates and the US rate of 35 per cent, causing some to leave profits abroad. A coalition of multinational companies - largely in the pharmaceutical and high-tech sectors - has been lobbying for the measure.
The congressional joint committee on taxation estimated last year that the Bill would cost little, slightly increasing tax revenue in the first year, but losing about $4 billion over 10 years.
They estimated it could mean up to $135 billion - equivalent to about a quarter of the US current account deficit - flowing into the US in the year it was enacted.
