The Trump administration is doing the right thing in considering a plan to allow corporations to bring back — “repatriate,” it is called — some $2.6 trillion in corporate profits that were earned overseas and left there because the companies didn’t want to pay US taxes.
I advocated this repatriation a long, long time before it became fashionable.
But Trump is only planning to give these corporations a tax break. So he’s missing out on a way to make an impact on the whole economy.
The way Trump is proposing it, that extra money coming back to the US will probably be used by the companies that benefit to buy back stock (which enriches corporate executives and other shareholders) and increase dividends (which benefits the same group.)
And maybe — just maybe — some companies will decide to spend a few bucks to expand their businesses and create jobs.
That’s the part the Trump administration is getting wrong. Any company that is allowed to repatriate money at a low tax rate should be required — no ifs, ands or buts — to use a certain portion of the money for expansion and job creation. If they don’t, then the tax rate should jump back up to what it would have been.
This is a great chance to improve economic growth, but it’s a chance the White House is about to miss.