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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsDespite Trump's $4 trillion promise, corporate profits are mostly staying abroad
Despite Trumps $4 trillion promise, corporate profits are mostly staying abroad
New data from the Commerce Department show corporations aren't repatriating nearly as much money as the president predicted.
RYAN KORONOWSKI at Think Progress
https://thinkprogress.org/trump-4-trillion-corporate-profit-promise-new-report-reality-much-smaller-f51c045820e2/
"SNIP.....
The tax law imposed a one-time 15.5 percent tax rate on liquid assets (and 8 percent on illiquid assets), whether or not the money came back to the United States, instead of applying the normal corporate tax rate on any repatriated profits earned abroad. The ostensible goal was to encourage companies to invest their profits and assets in the United States, building infrastructure, hiring workers, and paying for local services.
While there was a brief increase in the beginning of 2018, it has since faded, with nowhere near the massive economic impact of $4-5 trillion in capital returning to the country that Trump predicted.
Another equally important data point from the Commerce Department report is that the current-account deficit how much investment, services, and goods are flowing in and out of the country increased yet again last quarter. The trade balance deficit was $126.6 billion in the third quarter, rising 6 percent to $134.4 billion in last quarter. In 2018, the deficit reached $488.5 billion, which is the highest its been since 2008.
Trump made shrinking the trade deficit a top promise in his campaign and a top priority as president.
.....SNIP"
Kurt V.
(5,624 posts)unblock
(52,317 posts)in particular, businesses (such as apple) with huge profits overseas found ways to achieve the same effect as bringing it back to the u.s. without actually doing it, thereby avoiding the repatriation tax consequences.
for example, they would simply borrow in america using the overseas cash stash as collateral. yes, the richest company in the world, one that hoards massive amounts of cash, borrowed money in america. they paid virtually no interest for it as the banks were taking negligible risk and money is so cheap anyway.
point is, they were able to make money appear in america through a means other than directly moving the overseas cash to america.
which then means when they did the stupid tax break, all they needed to do, if they wanted to, was to bring the overseas money to america, pay the lowered tax, and use the rest to pay off the loan. the net effect is simply to substitute the actual cash for the loaned cash. the net cash in america doesn't increase because *they had already increased it*.
so, as usual, the tax break was effectively merely a gift to giant corporations who hoarded cash overseas and waited for a corrupt president like donnie to give them their gift.