The revenue enhancement reform give-and-take includes the persuasion that past times moving to a territorial system, USA companies volition convey lots of coin stranded offshore dorsum to the US, unleashing a moving ridge of investment here. While I intend a territorial arrangement makes sense, every bit does reducing or eliminating the corporate tax, every bit a pure affair of economics, I don't intend this repatriation declaration makes sense.
Here's why. (The next is a story, non a fact most Apple accounting.) Apple sells an Iphone inwards Spain. Apple Espana pays a huge licensing fee on software, owned past times Apple Ireland, so it's non a net inwards Spain. Apple Republic of Ireland thence collects huge amounts of cash from all over the world, taxed at the depression Irish Gaelic corporate revenue enhancement rate. Apple Republic of Ireland deposits this cash inwards an Irish Gaelic bank. (I presume they practice fancier things amongst the money, only I'm telling a floor here). The cash is "stranded" overseas, right?
No. The Irish Gaelic banking enterprise tin lend the coin anywhere. It tin purchase USA mortgage backed securities, it tin lend the coin wholesale to USA banks who lend it out to USA businesses. It tin fifty-fifty lend the coin to Apple US. If Apple or whatsoever other USA fellowship wants to invest, they tin borrow from the Irish Gaelic bank. Conversely, if profits are repatriated to USA banks, those banks tin lend the coin overseas.
If Apple's Irish Gaelic banking enterprise invests alone in, say Castilian condos, too so the Castilian banking enterprise that would choose made the condo loan instead loans to the US. Conversely, fifty-fifty if the profits are "repatriated" to a USA bank, if investment opportunities are improve abroad, that's where the investment volition happen.
You can't avoid 2 key truths: 1) Money is fungible. 2) Savings - Investment = Net Exports.
Yes, at that topographic point are around minute lodge effects. If coin comes dorsum to USA banks, USA banks decease to earn the fees. Internal working capital missive of the alphabet tin hold out cheaper too so external; it's inefficient to post your ain coin to yourself through a bank. But these are minute order, too that's non the declaration existence made.
It's yet a proficient idea, only for other reasons. Reduction or elimination of corporate taxes volition brand USA investment to a greater extent than profitable, too that volition attract coin from abroad. But don't count on a moving ridge of repatriated profits to hateful much to a greater extent than than a big fiscal change. Even if it happens. There are many other reasons to decease along pots of coin overseas these days. Bad arguments for proficient policies are not, inwards the end, a proficient idea.
Here's why. (The next is a story, non a fact most Apple accounting.) Apple sells an Iphone inwards Spain. Apple Espana pays a huge licensing fee on software, owned past times Apple Ireland, so it's non a net inwards Spain. Apple Republic of Ireland thence collects huge amounts of cash from all over the world, taxed at the depression Irish Gaelic corporate revenue enhancement rate. Apple Republic of Ireland deposits this cash inwards an Irish Gaelic bank. (I presume they practice fancier things amongst the money, only I'm telling a floor here). The cash is "stranded" overseas, right?
No. The Irish Gaelic banking enterprise tin lend the coin anywhere. It tin purchase USA mortgage backed securities, it tin lend the coin wholesale to USA banks who lend it out to USA businesses. It tin fifty-fifty lend the coin to Apple US. If Apple or whatsoever other USA fellowship wants to invest, they tin borrow from the Irish Gaelic bank. Conversely, if profits are repatriated to USA banks, those banks tin lend the coin overseas.
If Apple's Irish Gaelic banking enterprise invests alone in, say Castilian condos, too so the Castilian banking enterprise that would choose made the condo loan instead loans to the US. Conversely, fifty-fifty if the profits are "repatriated" to a USA bank, if investment opportunities are improve abroad, that's where the investment volition happen.
You can't avoid 2 key truths: 1) Money is fungible. 2) Savings - Investment = Net Exports.
Yes, at that topographic point are around minute lodge effects. If coin comes dorsum to USA banks, USA banks decease to earn the fees. Internal working capital missive of the alphabet tin hold out cheaper too so external; it's inefficient to post your ain coin to yourself through a bank. But these are minute order, too that's non the declaration existence made.
It's yet a proficient idea, only for other reasons. Reduction or elimination of corporate taxes volition brand USA investment to a greater extent than profitable, too that volition attract coin from abroad. But don't count on a moving ridge of repatriated profits to hateful much to a greater extent than than a big fiscal change. Even if it happens. There are many other reasons to decease along pots of coin overseas these days. Bad arguments for proficient policies are not, inwards the end, a proficient idea.
