December 27, 2019
One trillion dollars have flowed into the American economy as Trump’s tax law changes allowed companies to repatriate profits without tax penalty
By Thomas Lifson
President Trump’s tax reform has delivered more than a trillion dollars of stimulus to the American economy through corporations repatriating profits held overseas in order to avoid penalties that the tax law had imposed on bringing home the funds earned abroad. Bloomberg reports:
Corporations have brought back more than $1 trillion of overseas profits to the U.S. since Congress overhauled the international tax system and prodded companies to repatriate offshore funds, a report showed Thursday. (snip)
Investment banks and think tanks have estimated that American corporations held $1.5 trillion to $2.5 trillion in offshore cash at the time the law was enacted. Before the overhaul, companies were incentivized to keep profits overseas because they owed a 35% tax when bringing it back and could defer payment by keeping funds offshore. The law set a one-time 15.5% tax rate on cash and 8% on non-cash or illiquid assets.
Compare and contrast the way that Presidents Trump and Obama chose to stimulate the American economy, each of them generating roughly a trillion dollars in “stimulus.â€
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