Table 3 of Dharmapala, Foley and Forbes.Of course, encouraging investment is not the only reason to implement fiscal measures. If the objective of government policy is to provide a benefit to shareholders at the expense of taxpayers holding the non-action (you know that the income deciles that people would be), then this seems an ideal policy measure .
Some other points of view on the subject: [Donald Marron] [CBPP] and [Tax Policy Center]The paper is forthcoming in the Journal of Finance , hardly a publication from the left. Table 3 on the GT version of the NBER paper shows the impact of returns (normalized by lagged assets), and other control variables, capital investment, employment and R & D. The table can be a bit difficult to read, but the critical point to make is the absence of asterisks in the first row, indicating no statistically significant effect at conventional levels.
capital (and cheap) is a good thing for the U.S. economy, as it helps capital formation. And hey - why not ask how good the dough abroad is going to do for U.S. workers as it is now? N-o-n-e.
I tend to agree that re-patriations unlikey to boost domestic investment substantially in the current environment. The business sector has benefits and Heathly balance sheets in many cases, can not afford to invest in the country if they wish. The problem is the demand for goods and services rather than the availability of funding.
On the other hand, if the return has to dividends, then that is the equivalent of a stimulus program, and may be worth considering on this front. Christmas 2005 brought in some $ 312 billion. Assuming you see that number again is enough material;. Half the size of ARRA
And finally, in general, any policy that prevents the normal re-repatriation of profits is just bad policy, in my opinion.
On the other hand, if the return has to dividends, then that is the equivalent of a stimulus program, and may be worth considering on this front. Christmas 2005 brought in some $ 312 billion. Assuming you see that number again is enough material;. Half the size of ARRA
And finally, in general, any policy that prevents the normal re-repatriation of profits is just bad policy, in my opinion.
Posted by: Steven Kopits to July 6, 2011 3:35 a.m.
This is a truly pathetic display of the first-order thinking. Yes, it's true - if U.S. multinationals can repatriate overseas earnings, without (or little) tax, then return the vast majority of those shareholders. Now let's take the next step! Shareholders of the richest cash suddenly going to do what? Given all the academic research supports the idea of a "home advantage" (see: Japanese government bonds, government), it seems likely that money will be invested broadly across the investment options available in U.S. (With a portion going abroad, it is true), which increases the stock of available capital and reducing its cost.
In general, the more
In general, the more
capital (and cheap) is a good thing for the U.S. economy, as it helps capital formation. And hey - why not ask how good the dough abroad is going to do for U.S. workers as it is now? N-o-n-e.
Posted by: Hmmmm at July 6, 2011 5:42 a.m.
I've never understood the calls for their repatriation. Theoretically, one could imagine a case that is worth the loss of income, but none of the decisions that companies make the politicians look (employment, R & D) are affected by transient sources of liquidity, unless they have poor access to capital markets.
The article was actually published in June 2011 Journal of Finance. Not sure if there are any differences between the versions SSRN and Jof. However, those with access can see here:
http://www.afajof.org/journal/abstract.asp?ref=0022-1082&vid=66&iid=3&aid = 5 & s =- 9999
The article was actually published in June 2011 Journal of Finance. Not sure if there are any differences between the versions SSRN and Jof. However, those with access can see here:
http://www.afajof.org/journal/abstract.asp?ref=0022-1082&vid=66&iid=3&aid = 5 & s =- 9999
Posted by: Lance at July 6, 2011 6:12 a.m.
For example, Merck said received money tax holiday and has created new jobs in the U.S., but employment fell here, so they created some jobs while removes more than that. This may be good for shareholders, but not good for the U.S. or most of the places where Merck is. As to the past, Apple (and now some HP) says "designed in California", although assembled in China from parts from all over Asia. Benefits of Cupertino, as Apple is - at least for now - by this value-added hardware and software work there. Other places to miss because Cupertino is the dog's head, but the body is now in Asia. The same has been happening at HP and other technology companies.
Posted by: jonathan on July 6, 2011 7:00 a.m.
I agree with Hmmmm. Looking only at the hiring decisions of firms, investment and R & D on profits repatriated ignores the social benefits of returning profits to shareholders. The payment of dividends or participation in the stock of capital frees up which can then be put to other uses. The shareholders could either increase consumer spending or otherwise reinvest the money in other assets that may have higher returns. It's a bit naive to think that money is returned to shareholders somehow disappears into a black hole never to benefit the society again.
Posted by: Brian at July 6, 2011 7:26 a.m.
This type of holiday is a temporary subsidy for real change in fiscal policy. Corporations are not very different from people that if they get a temporary benefit that simply pass quickly in a way that will bring the greatest pleasure.
In his "tax cuts" first George Bush provided a tax rebate in an effort to revive the economy. This was dumb. He did nothing to change behavior is simply provide taxpayers with short-term sweetness and everything went right back to the way it was.
This tax holiday will have the same effect. The whole theory is based on the Keynesian theory of economic recovery.
In his "tax cuts" first George Bush provided a tax rebate in an effort to revive the economy. This was dumb. He did nothing to change behavior is simply provide taxpayers with short-term sweetness and everything went right back to the way it was.
This tax holiday will have the same effect. The whole theory is based on the Keynesian theory of economic recovery.
Posted by: Ricardo at July 6, 2011 7:48 a.m.
we need is a way of Obamacare the government passes a law forcing companies to bring this money home and is not paid in dividends to shareholders rich. Better yet, Obama should simply confiscate as some of these executives to fly corporate jets.
give it all to Washington and let the Democrats are distributed to the companions of his union and college professors do not teach students lazy because they are too busy producing increasing amounts of mediocre research. (
give it all to Washington and let the Democrats are distributed to the companions of his union and college professors do not teach students lazy because they are too busy producing increasing amounts of mediocre research. (
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