Thursday, February 17, 2011

How poor tax policy retards the economy

Tech companies have $1 trillion outside the U.S. that they would repatriate if they didn't have to give 35% of  it to the IRS.

Apple computer already forks over 25% of its considerable profits in taxes.  Isn't that enough?  Especially when GE only pays 3.6%?


JLM said...

As the article notes, most of the repatriated money would likely be used for dividends or stock buybacks.

As an Apple stockholder, I'd love a cash infusion. But I probably wouldn't hire anybody.

Jim Gust said...

As another Apple shareholder, I might hire someone.

Even if all the money goes out as dividends and stock buybacks, that is not a bad thing. $1 trillion in distributions might allow many foundations and endowments to heave a sigh of relief.

My point is, economic decisions should be made for economic reasons, not tax reasons. It can't be good to keep that $1 trillion offshore indefinitely.

I note that the article is silent on the predicted and actual tax revenue from the last repatriation. My impression is that it raised much more money than expected. However, it was probably scored as a revenue loss against the baseline of what would have been collected at "normal" tax rates.