Will Repatriation Tax Proposals Create New Jobs?

by Matthew Glans on July 14, 2011

In a new letter, originally published in the Racine Times-Tribune, I discuss the proposed repatriation tax holiday for foreign earnings held by U.S. corporations. Under the tax holiday,  multinational corporations would temporarily be allowed to bring profits held overseas back to the United States and pay tax on them at a rate of only about 5 percent, this would allow the company to bypass the normal tax rate on corporate profits.

A new Heartland Institute Research & Commentary on the issue is available online at: http://www.heartland.org/policybot/results/30408.

In the letter, I argue against the opinion that the companies should be required to use these funds on new jobs. Forcing these funds to be used in a certain way without considering other more economically efficient uses limits the effectiveness of the new capital.

“Your recommendation to require companies to use repatriated earnings on the creation of new jobs would limit the ability of companies to use these funds where they are best suited. It could force inefficient allocation of funds and make a bad economy worse.

A tax holiday is a sound policy and it will work best if it’s flexible.”

My letter, “Bring Home Cash,” is available online at: http://thetimes-tribune.com/opinion/letters/letters-to-the-editor-7-13-11-1.1174507#axzz1S1AZFCmH

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