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If they repatriate the cash, the company can a) pay dividends, which are taxed on the recipient b) buy back shares, generating a capital gain for the seller,

If they repatriate the cash, the company can a) pay dividends, which are taxed on the recipient b) buy back shares, generating a capital gain for the seller, which is taxed c) park it in a bank, which boosts reserves and indirectly stimulates the economy d) make alternative investments such as corporate venture capital, real estate etc I personally think there should be no corporate income tax. Instead, taxes should be paid by citizens when the money hits their personal bank account. Yes, there would be opportunities for evasion by people incorporating themselves. No, I don't know what the ultimate solution to that is. BUT... right now there is an army of accountants and lawyers who are able to charge companies like Apple exorbitant fees because the potential tax savings is so huge. If you have a $100 million tax liability, using accounting tricks to lower that liability by $20 million justifies paying a lot of lawyers. If those gains were distributed instead of taxed at the corporate level, suddenly those lawyers will find they have to service a thousand, probably tens of thousands of customers to realize the same payoff they get from one big customer. That changes the economics of tax evasion considerably.

mdorazio 10y ago
Thank you for laying out the likely outcomes. My issue is two-fold: 1) we're basically saying "I guess 15% (dividend and long term cap gains tax) at most (probably less) is good enough" instead of the 35% they would normally pay, which just generally seems like bad thinking to me when it comes to setting policy, rather than finding a different solution. And 2) I'm not aware of any evidence that b, c, and d are likely to have a positive outcome for the US as a whole rather than for individuals. (b) assumes that capital gains will be realized and taxed within a short-term time frame, (c) assumes that banks are actually in need of reserves, which I don't believe is true [1], and (d) assumes that alternate investments would actually be pursued that aren't being funded right now, which I'm also not sure is true to any significant extent (ex. Google already has Tech Stars and spends mountains of cash on real estate) [1] https://twitter.com/dallasfed/status/433408941947494400 https://twitter.com/dallasfed/status/433408941947494400
- SilasX 10y ago
  That "15 percent" dividend tax is on top of venture returns that are taxed at 35%. It's like if people were saying you have it easy because you only pay 5% taxes, without mentioning that you have to pay regular income/FICA taxes, before it hits your bank account, and the 5% attaches the second you start to spend it.
solotronics 10y ago
Maybe the whole point is to force corporate profits out of the country, thus giving US companies a motive to purchase assets or companies in other places. The US dollar is different in that it is a reserve currency so there are forces in play here that do not make sense unless you take reserve status into account. I think it is advantageous to keep USD outside the US because it can then circulate in other countries further cementing its position as a reserve currency, its a feedback loop.
- brianwawok 10y ago
  > I think it is advantageous to keep USD outside the US because it can then circulate in other countries further cementing its position as a reserve currency, its a feedback loop. I have never heard of this. Anything I can read or Google about this?

mdorazio 10y ago

Thank you for laying out the likely outcomes. My issue is two-fold: 1) we're basically saying "I guess 15% (dividend and long term cap gains tax) at most (probably less) is good enough" instead of the 35% they would normally pay, which just generally seems like bad thinking to me when it comes to setting policy, rather than finding a different solution. And 2) I'm not aware of any evidence that b, c, and d are likely to have a positive outcome for the US as a whole rather than for individuals. (b) assumes that capital gains will be realized and taxed within a short-term time frame, (c) assumes that banks are actually in need of reserves, which I don't believe is true [1], and (d) assumes that alternate investments would actually be pursued that aren't being funded right now, which I'm also not sure is true to any significant extent (ex. Google already has Tech Stars and spends mountains of cash on real estate) [1] https://twitter.com/dallasfed/status/433408941947494400 https://twitter.com/dallasfed/status/433408941947494400

SilasX 10y ago
That "15 percent" dividend tax is on top of venture returns that are taxed at 35%. It's like if people were saying you have it easy because you only pay 5% taxes, without mentioning that you have to pay regular income/FICA taxes, before it hits your bank account, and the 5% attaches the second you start to spend it.

solotronics 10y ago

Maybe the whole point is to force corporate profits out of the country, thus giving US companies a motive to purchase assets or companies in other places. The US dollar is different in that it is a reserve currency so there are forces in play here that do not make sense unless you take reserve status into account. I think it is advantageous to keep USD outside the US because it can then circulate in other countries further cementing its position as a reserve currency, its a feedback loop.

brianwawok 10y ago
> I think it is advantageous to keep USD outside the US because it can then circulate in other countries further cementing its position as a reserve currency, its a feedback loop. I have never heard of this. Anything I can read or Google about this?