3) The magic behind this argument is the same as the magic behind lowering interest rates: cheaper capital results in more investment and more jobs. If you bel

3) The magic behind this argument is the same as the magic behind lowering interest rates: cheaper capital results in more investment and more jobs. If you believe that corporations have a reasonable supply of projects they could fund, that on average funding these projects results in job-creation, and that these projects have varying levels of risk and return, then the argument follows. Based on these assumptions, there are likely to be many projects for which the risk/reward profile would suggest you fund them, except if you have to invest 40-50% more upfront just to repatriate your cash, the economics stop working. If you eliminate the tax, therefore, more of these projects will be funded and jobs will be created. A reasonable follow-up question would be: how many jobs will be created? The $ at stake for the government is knowable I imagine, so it would be interesting to look at $/job or some such cost/benefit metric. This is getting too far down the toy model, but one answer might be: if the NPV of a project is >0, then 35% of that NPV is still positive, so the government should "fund" it by allowing the tax holiday (their discount rate is almost surely lower than everyone else's).