Repatriation of $
Repatriation of $ from Center on Budget and Policy Priorities reminds us from 2009:
The Business Roundtable and Chamber of Commerce have proposed resurrecting, as a stimulus measure, the 2004 “dividend repatriation tax holiday,” which allowed firms to bring their foreigngenerated profits back to the United States at a greatly reduced tax rate. The Joint Committee on Taxation estimates this proposal would cost $1 billion over ten years.1
Yet the evidence shows that the 2004 tax holiday did little more than give windfall profits to a small number of large multinational corporations and did not lead to increased investment and jobs in the United States. Indeed, as a recent Goldman Sachs
analysis concluded, this idea is more likely to help corporations’ balance sheets than to stimulate demand.2Resurrecting the tax holiday would also encourage corporations to shift profits and jobs out of the United States by increasing the tax advantages of foreign over domestic investment. That is likely why Congress, when it enacted the 2004 measure,
explicitly stated that it should be a one-time-only tax break that should not be repeated.
“Just this once” Sounds like immigration reform, and the Sudatenland. (with all apoligies for Godwinizing this debate.)
And also a rough analog to “temporary” tax cuts.
As a first approximation, I think one ought to assume that any claim or pledge or hope attached to the promise of a tax cut ought to be assumed to be a lie. Think of all those businesses who encouraged states and municipalities to compete for the new plants based on promises of employment and long tenure in the spot, only to pull up stakes and move when something better came along.
They got away with it once, so why not try again.
I’m convinced the Congress, Treasury, and Federal Reserve are incapable of creating one time events, and precedent is only thing we ever really get.
But I guess we can get unbelievable silly statements with the next rollout attempt. It only costs “1 billion over 10 years”?????
Here’s a poke at the first iteration:
Excerpt:
“Dividend repatriations represent sizable financial flows. In 1999, a year in which US corporations listed in Compustat had after-tax earnings of $516 billion and paid $198 billion in dividends to common shareholders (Grullon and Michaely, 2002), the foreign affiliates of US multinational firms had after-tax earnings of $182 billion and repatriated $97 billion to the United States as dividends. Dividend repatriations are so large that part of the motivation for the partial repatriation tax holiday in 2005 was that the resulting inflow of funds from abroad might be large enough to have positive macroeconomic consequences for the US economy.”
http://findarticles.com/p/articles/mi_m4130/is_1_36/ai_n27335549/
3 moral hazard – it rewards tax evasion and creates a tax payer funded subsiday for off shoring and eliminating the jobs of those same tax payers
IMO, the US is suffering from an incredible episode of cognitive dissonance, an uncomfortable feeling caused by holding conflicting ideas simultaneously. We fear, and are experiencing, the displacement of a jobs overseas, where the wages, environmental policies, workers and civil rights are non-existent, etc. IMO, anyone claiming that our trade policy is not the root cause of our unemployment and economic problems are deluded. In fact, we fear that a communist regime in China will continue to erode our way of life and undermine our democracy. The dissonance is that we have been convinced by the economists, and especially the Ivy league economists, that sales access to our markets should be free, or worse, subsidized.
There have been times in history where contempoary economic thought was useful, but this is not one of them. Economics is one part of a much larger social landscape and their ideas are contravening a much more important social contract in our country. The economists are currently our worst nightmare. The correct position for the US to take is that corporations have to pay for access to the US consumer market. Those corporations that are creating jobs in our society, paying for infrastructure maintenance and enhancements, recieve better access and a larger voice. Those scabs that are moving production offshore, should be taxed for the cost of access to the US market. Period.
Adam Smith never promoted, nor would he agree with the current idiocracy of “globalization”. It is time for America to say no to Germany, China, Japan, South Korea, Canada, and all other countries that are engaged in hosting companies looking to produce for export to the US.
We can’t win a race to the bottom in currency devaluation. We shouldn’t even be trying to win the race to the bottom for wages, benefits, or liberty. The contemporary GOP has put the US at extreme risk, all the while extolling their qualifications as security guards. Cognitive dissonance, indeed.