Earlier this fall, Senator Carl Levin's (D-Mich.) Permanent Subcommittee on Investigations issued a report claiming that the 2005 low-tax repatriation year was not effective. ATR deconstructed that report at the time.
Not content with his first series of logic and policy errors, Senator Levin is back for more. Today, his committee will issue a follow-up report that basically patches on another point to his first study: much of the money that could be repatriated back to America is already here.
Here is the logic:
- The report admits that $1.4 trillion is available for a round of repatriation
- It points out that unrepatriated funds may be held in U.S. banks, though they remain unavailable to the parent companies unless they want to use the money to buy Treasury debt or stocks
- In fact, 46% of the $1.4 trillion is here now, in U.S. banks. Therefore, this shouldn't count as money which is "locked up," since it's already here.
This is absurd. Money which companies cannot access to create jobs without paying a punitive double-tax is unavailable whether it is physically sitting in Cleveland or Krakow. The fact that some money is at a U.S. bank is simply not material.
The parent company still cannot access it, except for the very narrow portfolio investment choices described above.
The only way that companies will get non-punitively double-taxed access to their own money (short of moving to a full territorial system) is to enact another round of low-tax repatriation. Back in 2005, companies could repatriate for a mere 5.25% effective tax rate. Over $300 billion was freed up to create jobs and invest in America. This time, it's entirely reasonable to expect that figure to approach $1 trillion.
Why not do it, Senator Levin? Why are you so opposed to job creators having more capital to create jobs?