Currently we do so companies are reluctant to repatriate. Its reported that up to $1 trillion sits overseas waiting for another repatriation holiday.
It was last done in 2004 and this was the result:
So the benefit was limited, created few jobs but did increase wealth.
Now its becoming a campaign issue again. Would corporations pay 25%? I say drop the rate to that permanently and call it a big tax cut and let Obama claim victory.
Right now, few firms repatriate unless they either have to, or they specifically intend to pay that out to shareholders. There’s no reason at all to repatriate otherwise. So the situation now may have nothing to do with the potential situation under discussion.
Do you have a reason for that amount, or was it just picked out of the ether? 25%is probably much too hig. Why give up a quarter of your cash if you can use much cheaper Caribbean banks? Yes, small Caribbean banks are the competition here, and if you want to win money away from them you have to attract it. I’m sure many companies would love to use home office banks for netting* and fund redistribution, but it’s just too expensive, and changing it to 25% is unlikely to change that.
*Netting is the basic procedure used to balance global accouts in international corporations. It quite often uses offshore banking.
If you’re going to pick an amount it should either be a very small flat percentage, or simply require the company to treat the money as income, which will be larger but variable depending on revenue.
Also, while I can’t speak for the OP, I really don’t want to hear any whining about how corporations are “cheating the system” or “not paying their full share” by not repatriating. Amazingly enough, if you tax the shit out of something, people do less of it. Try to change that, and you’ll simply force companies to relocate outside the U.S., hide their accounts, or find new ways to avoid it. In fact, now that I think about it, that’s kinda what happened in Greece.
However, consider what you’d gain by doing so. First, home banks would have a lot more capital, making it cheaper to lend. Banks would be more stable, while offering cheaper capital to U.S.-based businesses and individuals. There’d be more basic banking jobs, while at the same time makin it easier to . And if you nab enough market share and make the U.S. attractive as a financial holding center, you could even see tax revenue from repatriation increase.
I agree that 35% is prohibitive today. Even 25% is high since that cash looks great on your consolidated balance sheet.
There are two issues. One is political. I would like to see President Obama get in front of the GOP on this since there is little downside to promoting a tax cut. I don’t know what rate would attract repatriation.
Secondly there is the practical side. Much of this cash is from tech companies who hide IP profits using Ireland and the Dutch Sandwich treatment.
So we are effectively tax subsidizing multi-nationals who gain an unfair advantage over US-only companies.
I bring this up now because Joe Biden went off on some “world minimum tax” spiel this week that basically confused most everyone who heard it.