American companies have largely stopped bringing “trapped” foreign profits home, according to new government data released Wednesday.
The Trump administration asserted that last year’s tax-law changes, which got rid of what firms thought was a tax penalty on repatriation, would lead to trillions of dollars returning home quickly to give the domestic economy a shot in the arm.
The third-quarter current account data, released Wednesday, show that corporations actually stockpiled more profits overseas in the third quarter after $218 billion “came home” in the first two quarters of the year.
This is a small fraction of the estimated $2.6 trillion in profits that have been sheltered overseas by U.S. corporations.
Brad Setser, who tracks cross-border capital flows at the Council on Foreign Relations, said on Twitter that “it is starting to look like some firms may have discovered they rather like their offshore cash.”
Tax reform got rid of what firms viewed as the tax penalty on repatriation (the payment of their deferred US tax liability). But there doesn’t seem to be a rush to repatriate … it it starting to look like some firms may have discovered they rather like their offshore cash. pic.twitter.com/Mr5pZFl8Gg
— Brad Setser (@Brad_Setser) December 19, 2018
Some analysts said the Trump tax bill actually made it easier for companies to shift revenue, profit, operations investment and employment to other countries.
Opinion: Republican tax plan will encourage more corporate offshore tax avoidance
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Source : MTV
