The largest US corporations are pushing hard for a repatriation tax holiday, which would cut the income tax from 35 percent to 5.25 percent for one year. This allows these corporations to bring the money back to the US and, in theory, generate billions in tax revenues that would otherwise remain unrealized. David Kocieniewski, writing for the New York Times, reports that “Apple has US$12 billion waiting offshore, Google has US$17 billion, and Microsoft, US$29 billion.”
Former President George W. Bush tried this in 2005 and a total of US$312 billion was repatriated. The problem, Kocieniewski writes, is that “92 percent of that money was returned to shareholders in the form of dividends and stock buybacks, according to a study by the nonpartisan National Bureau of Economic Research.
Here’s an idea: A reverse repatriation tax holiday, raising the corporate income tax from 35 percent to 50 percent, or even 65 percent, for one year starting 1 January 2012. Want to get really creative? Put some teeth behind and close the loopholes in the laws governing what these corporations are allowed to do with the money they repatriate.
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