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$1.4 Trillion Cash Stash Could Stoke Job Market
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Have a look at this.. I thought it was worth using the karma points to pin for discussion.. Please read the entire article before posting.
[link to www.thefiscaltimes.com]
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A proposal to encourage U.S. multinationals to shift overseas profits back to the U.S. at a bargain-basement tax rate is picking up momentum, with a growing coalition of lawmakers, business leaders, and economists touting it as a way to jolt the economy and create jobs.
U.S. corporations hold at least $1.4 trillion in offshore accounts, according to JPMorgan Chase. But many companies, including Cisco, Apple, Pfizer, General Electric, Microsoft, and Google, say they are prepared to bring those profits home in return for what would essentially be a one-year tax holiday.
Corporations and shareholders like the so-called repatriation initiative because it would allow for stock buybacks and higher dividends since the earnings being held abroad would be taxed at a far lower tax rate than the 35 percent the U.S. normally levies on large multinationals. In fact, the rate would be even lower than what they pay in low-tax jurisdictions like Ireland, which has a 12.5 percent corporate tax.
U.S. multinationals also say a repatriation program would motivate them to direct overseas profits toward job-creation, even if they can’t commit to specific hiring levels. “Do I know how many jobs it’s going to create? I don’t,” GE CEO Jeff Immelt said on 60 Minutes last weekend. “But it can’t intellectually be any good to anybody to have $1.4 trillion outside of the U.S.”
Repatriation got a major endorsement on Thursday when former Clinton economic adviser Laura Tyson released a study showing that a repatriation holiday that lowered the corporate tax rate for one year to 5.25 percent, would create as many as 2.5 million new jobs and increase U.S. GDP by as much as $336 billion. This report follows a similar one released last month by the U.S. Chamber of Commerce, which found that the stock buybacks and dividend payments a temporary repatriation holiday would create 3 million jobs and increase U.S. GDP by $360 billion over eight quarters.
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[link to www.thefiscaltimes.com]
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