Fool Me Twice?

Published: October 23, 2010

The law required that companies use the repatriated money for productive purposes like research and hiring. That did not matter. Money being fungible, firms could easily claim they were not using “those” dollars on stock buybacks and executive pay.

American multinationals are at it again. In an op-ed article in The Wall Street Journal, the chief executive of Cisco, John Chambers, and the president of Oracle, Safra Catz, estimated that American companies have about $1 trillion in profits stashed abroad that they could repatriate for the greater good of the American economy if taxes on that money were lowered to about 5 percent.

Congress should not be fooled again. Tax amnesties are extremely expensive. And what big corporation will ever repatriate profits at the standard rate when every few years it can expect to get another “special” break?

Large multinationals are not refraining from investing in the United States because their money is locked up abroad. Many have large piles of cash in the United States, too. Interest rates are near historic lows, and banks will trip over themselves to lend to big multinationals sitting on mountains of cash. If they are not investing, it is because of the uncertain economic outlook.