About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 Erica York, Evaluating the Changed Incentives for Repatriating Foreign Earnings 1 (2018)

handle is hein.taxfoundation/evcinvr0001 and id is 1 raw text is: FISCAL FACT No. 615 Sept. 2018 The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and local levels. We are a 501(c)(3) nonprofit organization. ©2018 Tax Foundation Distributed under Creative Commons CC BY NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 Evaluating the Changed Incentives for Repatriating Foreign Earnings Erica York Analyst Key Findings The Tax Cuts and Jobs Act (TCJA) changed the U.S. tax system from one where the worldwide income of U.S. corporations was taxed to one which only taxes income earned within the United States. These changes removed a major barrier to repatriation, or the process by which companies bring overseas earnings back to the United States. Going forward companies do not face the old tax barriers which discouraged repatriation. To transition to the new system, the TCJA imposed a one-time tax of 15.5 percent on liquid assets and 8 percent on illiquid assets, payable over eight years, regardless of whether companies repatriate old overseas earnings. Estimates of the amount of earnings built up overseas under the old system vary, but the headline amount is less important than knowing the composition: how much was reinvested overseas versus how much remained in liquid assets such as cash. Recent estimates show companies held about $1 trillion of overseas earnings in liquid assets. Most of this $1 trillion is invested in dollar-denominated bonds, such as U.S. Treasuries. Repatriation has significantly increased since enactment of the TCJA. More earnings have been repatriated in the first sixth months of 2018 than in 2015, 2016, and 2017 combined. However, it is unclear how much of this repatriation is comprised of current as well as past earnings. Repatriation, or the potential of an inflow of capital into the United States, is not the reason the TCJA is expected to boost investment and grow the economy. The lower corporate tax rate drives the long-run economic growth expected from the TCJA. 202.464.6200 taxfoundation.org

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most