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> Who wants to repatriate 2-4 trillion in liquidity back in the US where its very likely to benefit small business growth? The last time there was a tax holida

> Who wants to repatriate 2-4 trillion in liquidity back in the US where its very likely to benefit small business growth? The last time there was a tax holiday, the money was basically paid back to investors in the form of dividends and share buybacks. Unfortunately the WSJ link is 404'ing, but https://web.archive.org/web/20140117143531/https://online.wsj.com/news/articles/SB10001424052970203633104576623771022129888 https://web.archive.org/web/20140117143531/https://online.ws... you can see the first paragraph: > The 15 companies that benefited the most from a 2004 tax break for the return of their overseas profits cut more than 20,000 net jobs and decreased the pace of their research spending

rayiner 9y ago
That’s a cutting your nose to spite your face argument. Even if every penny of the repatriated cash goes to dividends for investors, that’s strictly better than the money sitting abroad.
- existencebox 9y ago
  That seems untrue. If the margin of benefit to non-shareholders is so small as to be negligable, one can very reasonably not want to "reward" these companies for tax-dodging business practices, and seek reconciliation that actually ensures some sort of effective outcome instead of just hoping; especially given past repatriations as the parent poster notes. To suggest otherwise seems to lead that Trickle Down can be effective, which I believe history has well and truly laid to rest. As a holder of invested capital, I will still speak out against efforts that I think would exclusively benefit that class and not the core participants of the working economy. The latter historically seems to motivate much better long term trends.
  - rayiner 9y ago
    > That seems untrue. If the margin of benefit to non-shareholders is so small as to be negligable, one can very reasonably not want to "reward" these companies for tax-dodging business practices, and seek reconciliation that actually ensures some sort of effective outcome instead of just hoping; especially given past repatriations as the parent poster notes. There is no effective outcome. Countries are engaged in a race to the bottom where it comes to favorable tax treatment for international corporations. We either bring the money back here, or it'll just stay over there.
    - existencebox 9y ago
      By that logic we set corporate tax rate to 0 and throw our hands in the air. Having missed out on some percent of corporate tax revenue does not mean to me that our entire regimen is worth discarding, but could be adapted.
      - harryh 9y ago
        That's exactly what we should do. All taxes are taxes on people. Corporate taxes are an inefficient and not especially progressive tax on people. We'd be better off without them.
        existencebox 9y ago
        Convince me, why should I buy that argument? I've not seen any compelling justification that reducing the corporate tax would do anything but create a further deficit which would need to be filled with a much more direct tax on people less able to pay. What precedent is there for this sort of strategy actually showing long term benefit across the broad economic spectrum, and not just to the upper percentile? (This is fantastic, I can't even get 2 seconds into asking for discussion without being in the negative. This is not the HN I normally applaud. I'd hope readers recognize that I'm actually looking to have my opinion changed here and not just spark an unproductive argument, and am saddened that I have to clarify this.)
        harryh 9y ago
        Yes, if we eliminated corporate taxes we would need to raise individual taxes in order to maintain government revenue. But we could do so in a way that was: A) Far more efficient - The deadweight loss of corporate taxes is higher than individual taxes. Corporate taxes are crazy complicated by necessity and lead to all sorts of crazy behaviors. B) More fair - A millionaire should pay higher taxes on his profits from stock ownership than a middle class person. When a corporation pays its taxes those two people are taxed at the same rate.
sbov 9y ago
In theory dividends and share buybacks will be reinvested by the stockholders. In practice I wonder how much just further inflates various asset bubbles.
- TAForObvReasons 9y ago
  That's the crux of the "trickle down" theory, that eventually money will make its way to normal Americans. Arguably, the rising inequality in the post-Reagan years is proof that the theory is flawed and that very few individuals and small businesses actually see any benefit. Taxation theories aside, parent proposed repatriation as a solution but past experience showed it to be less effective than the proponents claim.
  - bmmayer1 9y ago
    It really doesn't matter where the money goes though. Even if an investor spends the money on golden bathtubs and private jets, the money is being spent in the economy. If they keep it in the bank it's getting leant out to small businesses.
    - KGIII 9y ago
      The sharp influx should even help with the velocity of money. I am not an economist but I've been trying to learn a bit about it and a bit about financial management/investing. I'm currently at the velocity of money stage of my learning. https://en.m.wikipedia.org/wiki/Velocity_of_money https://en.m.wikipedia.org/wiki/Velocity_of_money It's not really the same thing as the trickle down that the parent poster mentioned. From what I can tell, you hit the nail on the head. An influx of money will mean the money moves. Also, when money moves is when the government taxes it. So, the influx will increase the velocity of money and will have an effect on the economy. That's not the same as the parent post implied, where there's a reduction in taxes and that is supposed to result in the money trickling down. That's not the same as an influx of money. One is people keeping their money, the second is people getting more money. If I understand correctly, they are different things. Then again, I may not understand correctly. As I said, I am still learning.
unexpected 9y ago
You and rrggrr are not arguing opposite things. "Theoretically", these investors who have received the profits from dividends and share buybacks will then turn around and invest money back into the economy.
khawkins 9y ago
The 2004 tax holiday was a bad idea for trying to grow the economy. However, there is a clear difference between a short-term tax holiday and a long-term lowering of repatriated fund taxes. The problem is that investment isn't spurred by short-term windfalls, it's a slow, long-term strategy to insure a particular business is competitive. If I was coincidentally looking to invest in something in the US during the tax holiday, I'd be in luck. But if I was looking the previous year or the following year, I'd still be facing a massive 35% burden over leaving the funds overseas. This creates a pervasive attitude that businesses don't even begin thinking about investing foreign funds domestically. http://www.heritage.org/taxes/report/would-another-repatriation-tax-holiday-create-jobs http://www.heritage.org/taxes/report/would-another-repatriat...
DrScump 9y ago
... and immediately went back to stashing profits in overseas tax shelters like Ireland, awaiting the next amnesty.
chibg10 9y ago
And do you think investors just flushed that dividend/share buyback money down the toilet? No, they invest it somewhere else, and for most wealthy investors the best returns can often be found in tech start-ups. So it still makes it easier for start-ups to obtain capital.
- mdorazio 9y ago
  Is it actually difficult for tech startups to obtain capital? My impression is that it's not. Non-tech small businesses are the ones that seem to have more difficulty getting off the ground with loans, and it's not clear to me that shareholders/corporate executives getting fat bonuses from dollar repatriation would put that cash into small businesses.

rayiner 9y ago

That’s a cutting your nose to spite your face argument. Even if every penny of the repatriated cash goes to dividends for investors, that’s strictly better than the money sitting abroad.

existencebox 9y ago
That seems untrue. If the margin of benefit to non-shareholders is so small as to be negligable, one can very reasonably not want to "reward" these companies for tax-dodging business practices, and seek reconciliation that actually ensures some sort of effective outcome instead of just hoping; especially given past repatriations as the parent poster notes. To suggest otherwise seems to lead that Trickle Down can be effective, which I believe history has well and truly laid to rest. As a holder of invested capital, I will still speak out against efforts that I think would exclusively benefit that class and not the core participants of the working economy. The latter historically seems to motivate much better long term trends.
- rayiner 9y ago
  > That seems untrue. If the margin of benefit to non-shareholders is so small as to be negligable, one can very reasonably not want to "reward" these companies for tax-dodging business practices, and seek reconciliation that actually ensures some sort of effective outcome instead of just hoping; especially given past repatriations as the parent poster notes. There is no effective outcome. Countries are engaged in a race to the bottom where it comes to favorable tax treatment for international corporations. We either bring the money back here, or it'll just stay over there.
  - existencebox 9y ago
    By that logic we set corporate tax rate to 0 and throw our hands in the air. Having missed out on some percent of corporate tax revenue does not mean to me that our entire regimen is worth discarding, but could be adapted.
    - harryh 9y ago
      That's exactly what we should do. All taxes are taxes on people. Corporate taxes are an inefficient and not especially progressive tax on people. We'd be better off without them.
      - existencebox 9y ago
        Convince me, why should I buy that argument? I've not seen any compelling justification that reducing the corporate tax would do anything but create a further deficit which would need to be filled with a much more direct tax on people less able to pay. What precedent is there for this sort of strategy actually showing long term benefit across the broad economic spectrum, and not just to the upper percentile? (This is fantastic, I can't even get 2 seconds into asking for discussion without being in the negative. This is not the HN I normally applaud. I'd hope readers recognize that I'm actually looking to have my opinion changed here and not just spark an unproductive argument, and am saddened that I have to clarify this.)
        harryh 9y ago
        Yes, if we eliminated corporate taxes we would need to raise individual taxes in order to maintain government revenue. But we could do so in a way that was: A) Far more efficient - The deadweight loss of corporate taxes is higher than individual taxes. Corporate taxes are crazy complicated by necessity and lead to all sorts of crazy behaviors. B) More fair - A millionaire should pay higher taxes on his profits from stock ownership than a middle class person. When a corporation pays its taxes those two people are taxed at the same rate.

sbov 9y ago

In theory dividends and share buybacks will be reinvested by the stockholders. In practice I wonder how much just further inflates various asset bubbles.

TAForObvReasons 9y ago
That's the crux of the "trickle down" theory, that eventually money will make its way to normal Americans. Arguably, the rising inequality in the post-Reagan years is proof that the theory is flawed and that very few individuals and small businesses actually see any benefit. Taxation theories aside, parent proposed repatriation as a solution but past experience showed it to be less effective than the proponents claim.
- bmmayer1 9y ago
  It really doesn't matter where the money goes though. Even if an investor spends the money on golden bathtubs and private jets, the money is being spent in the economy. If they keep it in the bank it's getting leant out to small businesses.
  - KGIII 9y ago
    The sharp influx should even help with the velocity of money. I am not an economist but I've been trying to learn a bit about it and a bit about financial management/investing. I'm currently at the velocity of money stage of my learning. https://en.m.wikipedia.org/wiki/Velocity_of_money https://en.m.wikipedia.org/wiki/Velocity_of_money It's not really the same thing as the trickle down that the parent poster mentioned. From what I can tell, you hit the nail on the head. An influx of money will mean the money moves. Also, when money moves is when the government taxes it. So, the influx will increase the velocity of money and will have an effect on the economy. That's not the same as the parent post implied, where there's a reduction in taxes and that is supposed to result in the money trickling down. That's not the same as an influx of money. One is people keeping their money, the second is people getting more money. If I understand correctly, they are different things. Then again, I may not understand correctly. As I said, I am still learning.

unexpected 9y ago

You and rrggrr are not arguing opposite things. "Theoretically", these investors who have received the profits from dividends and share buybacks will then turn around and invest money back into the economy.

khawkins 9y ago

The 2004 tax holiday was a bad idea for trying to grow the economy. However, there is a clear difference between a short-term tax holiday and a long-term lowering of repatriated fund taxes. The problem is that investment isn't spurred by short-term windfalls, it's a slow, long-term strategy to insure a particular business is competitive. If I was coincidentally looking to invest in something in the US during the tax holiday, I'd be in luck. But if I was looking the previous year or the following year, I'd still be facing a massive 35% burden over leaving the funds overseas. This creates a pervasive attitude that businesses don't even begin thinking about investing foreign funds domestically. http://www.heritage.org/taxes/report/would-another-repatriation-tax-holiday-create-jobs http://www.heritage.org/taxes/report/would-another-repatriat...

DrScump 9y ago

... and immediately went back to stashing profits in overseas tax shelters like Ireland, awaiting the next amnesty.

chibg10 9y ago

And do you think investors just flushed that dividend/share buyback money down the toilet? No, they invest it somewhere else, and for most wealthy investors the best returns can often be found in tech start-ups. So it still makes it easier for start-ups to obtain capital.

mdorazio 9y ago
Is it actually difficult for tech startups to obtain capital? My impression is that it's not. Non-tech small businesses are the ones that seem to have more difficulty getting off the ground with loans, and it's not clear to me that shareholders/corporate executives getting fat bonuses from dollar repatriation would put that cash into small businesses.