Brookings Institution: As the Trump administration and Congressional Republicans attempt to overhaul the U.S. tax code, one focal point will be how to “repatriate” the $2.6 trillion of overseas profits accumulated by U.S. corporations. Given how we talk about these earnings, you could be forgiven for thinking U.S. companies have stashed their cash inside a mattress in France. They haven’t. Most of it is already invested right here in the U.S.
To clear up a common misconception, ”repatriation” is not a geographic concept, but refers to a set of rules defining when corporations have to pay taxes on their earnings. For instance, paying dividends to shareholders triggers a tax bill, but simply bringing the cash to the U.S. does not. Indeed, nearly all of the $2.6 trillion is already invested in the U.S.
Proponents of the Republicans’ Big 6 Framework are fond of arguing that “bringing earnings home” will increase funds available for domestic investment and growth. That’s not only illogical—it’s disingenuous. Here’s why:
