It’s under consideration, and if you read the article, the NYT isn’t particularly thrilled about it.
Why? Because those nasty corporations didn’t create jobs the last time this was done:
But that’s not how it worked last time. Congress and the Bush administration offered companies a similar tax incentive, in 2005, in hopes of spurring domestic hiring and investment, and 800 took advantage.
Though the tax break lured them into bringing $312 billion back to the United States, 92 percent of that money was returned to shareholders in the form of dividends and stock buybacks, according to a study by the nonpartisan National Bureau of Economic Research.
This money comes from overseas operations and in some cases accounting maneuvers that shift domestic profits to low-tax countries. The study concluded that the program “did not increase domestic investment, employment or research and development.”
My question is, it didn’t increase “domestic investment, employment or research and development” where? Because unless the stockholders took their money and buried it in a coffee can in the back yard, that’s most likely exactly where it went – via a more circuitous route that the NBER didn’t bother to follow. That money didn’t just disappear when it went to share holders. Where did it go?
Well, first remember that share holders are what? Investors. So even if all they did was let that money ride, it was “invested”.
If, in fact, it was invested elsewhere, then one would assume that those companies in which the investment was made may have increased employment or R &D. But you have to chase the money to find that out.
Bottom line, repatriation of overseas profits means more tax revenues, even at the reduced rate that would be found in a “holiday” as is being proposed. And even if shareholders get the lion’s share of the money (and that’s why they’re called “shareholders” NYT, because they own a share of that money), they’re going to spend it, save it or invest it themselves.
If one could get past the first step in the process and look at how money usually flows and is used, they’d realize that whining about “shareholders” getting most of the money is about as ignorant as complaining that if government gives taxpayers a tax break we wouldn’t spend the money properly, ala Bill Clinton.
Injecting billions of dollars of private money into the private economy in times like this isn’t going to hurt anything. But it stands a great chance of helping. But hey, those damn corporations wouldn’t spend it the way the NYT thinks they should, so they’re against it.
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