Sen. Kay Hagan (D-NC) Thursday introduced a bill she and Sen. John McCain (R-AZ) are co-sponsoring to repatriate foreign tax dollars into the U.S. economy.

The Foreign Earnings Reinvestment Act would offer corporations to pay less in taxes if they wanted to bring their overseas earnings back to the U.S.

Hagan insisted that the increased earnings, which she said amounted to around $1 trillion "stranded" overseas, would allow companies to hire more workers at home and make a dent in the unemployment rate.

"The status quo is unacceptable," Hagan said on a conference call with reporters. "This is clear to everyone outside Washington."

The top corporate rate for repatriation is currently 35 percent. If the bill is passed, the funds could be repatriated at a tax rate of 8.75 percent.

If companies show that they have expanded their workforce by 10 percent in 2012, they could qualify for an even lower repatriation tax of 5.25 percent.

"It's not the only solution to our economic crisis, but that's no reason for inaction," Hagan said. "We need practical, bipartisan action to get our economy growing, and growing now."

A similar tax holiday at the 5.25 percent rate was implemented in 2004 and was not seen as having much impact. Asked why the new tax holiday bill would perform any differently, Hagan cited the dire need for economic growth the U.S. now faces as an incentive for companies to make the most of the bill.

"The 2004 bill came during the 2004 economy," she said. "It was a different time and a different place than we are now."

There are also penalties in the bill for companies that take advantage of the low rate but lay workers off.

"Companies are definitely looking at what they could do with that money if they brought it back," she said.

In a prepared statement this morning, McCain also praised the bill's potential, calling it "common sense legislation."

“While Americans struggle with crushing unemployment and a dismal economy, Congress has the responsibility to come together with solutions to get our nation back on track,” McCain said. “I am proud to join Senator Hagan in introducing the Foreign Earnings Reinvestment Act. Let’s use American dollars to make America’s economy stronger.”

Creative Commons image via flickr user Third Way.