Will the Republican Tax Bill Be Aimed at the Economic Past, or the Future?
And for companies that see promising opportunities, the booming stock market and low interest rates mean
that capital is readily available on favorable terms already; it’s not clear why a company would invest in a new factory, for example, using repatriated overseas profits but not using money borrowed at a low interest rate by issuing bonds.
“A lot of the reason so much money is socked away overseas is
because of the ability of large multinationals to shift income on paper, so you’re kind of rewarding bad behavior.”
Business lobbyists argue that when companies return money home, they will use it to create jobs and investment in the United States.
Among them: Whether, and how, to incentivize American companies to bring home the trillions of dollars in accumulated profits
that they have kept parked overseas to avoid the 35 percent federal tax they would have to pay by repatriating the money.
“With repatriation at a lower rate, you’re not only providing a tax cut for choices
that have already happened, but you’re rewarding choices that involved heavy tax avoidance and gaming of the tax system,” said Lily Batchelder, a law professor at New York University.
It’s easy to see why the smart thing politically would be to apply the lower rates to 2017; more money
would show up in taxpayers’ refund checks in the spring of 2018, ahead of the midterm elections.
Depending on how it is structured, that could amount to a one-time boon for companies with large overseas profits,
essentially rewarding past success rather than providing the incentives to invest in future growth.