The Commerce Department has released figures that show $1 trillion dollars have been repatriated back to the U.S. since 2017. After taking office the President passed new tax rates to make it more desirable for companies to hold their assets in the U.S. Bloomberg explains:
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.
Obama has long sought to clamp down on the practise of companies move profits offshore. His strategy was to penalise such companies with higher taxes and higher penalties.
However, the repatriation of assets has been slower than some expected. The Wall Street Journal explained taxes are not the only reason companies move profit offshore:
Some companies, such as Chevron Corp. and Archer Daniels MidlandCo. , have long plowed foreign profits into foreign factories, equipment and other assets that aren’t likely to move. Other companies said they need funds overseas for acquisitions, debt retirement and expansion in growing markets. Moreover, foreign regulators require banks and other financial companies to maintain substantial capital reserves abroad. Those corporations don’t plan to bring much cash home.
Even without the federal government taxing new foreign income as it comes home, costs remain to moving cash across borders. Some U.S. states tax repatriated profits, and some countries impose taxes on dividends paid to parent companies.
Read More: Breitbart