Repatriation of profits


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Repatriation of corporate profits or a tax holiday is being proposed in Congress again. When last implemented in 2004, it led to little increase in US jobs; most companies used repatriated profits to buy back their own stock. If implemented now, repatriated corporate profits would be taxed at 8.75% and even less if the company added 10% to its payroll by creating US jobs.

What are repatriated profits? They are the profits brought into the US from earnings abroad that were not previously taxed in the US. They represent money earned abroad by outsourcing US jobs to the forces of globalization. In other words, US tax policy sends US jobs abroad and now US companies want to bring those profits home (repatriate them) at a vastly reduced tax rate.

My response to this is that we should change the tax laws to keep US jobs here. Instead of a tax holiday, I would require that profits abroad be repatriated at say a tax rate of 20% in 2012, with a 10% increase in 2013 to 30% and another 10% in 2014 to 40%. The US taxpayer, you and I, should not subsidize sending our jobs abroad by our tax laws and subsequent tax holidays for companies that are not paying their fair share.

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