Tag: Offshore Accounts

Repatriation Of The Dollar

When Trump was running as a GOP candidate he made a few promises that I thought I could get behind (that does not mean that I would have voted for him just that I thought they were good policies)……most of these policies were in the field of diplomacy and international relations….but there was one that I thought was excellent but did not think he could accomplish…..the promise of the return of funds held by American corporations in offshore accounts…..

But I was mistaken….there seems to be a bunch of cash returning to our shores……

U.S. companies have sent home over half a trillion dollars of cash they held overseas in 2018 to take advantage of tax changes, but data suggest the pace is slowing, potentially removing a key source of support for Wall Street.

Dollar repatriation in the July-September period fell to $93 billion, around half of second-quarter volumes and less than a third of the $300 billion or so sent home from January to March, U.S. current account data shows.

The repatriation bonanza followed new regulations that allowed the U.S. government to tax profits accumulated overseas, regardless of where the money was held. Prior rules allowed companies to “defer” U.S. tax on worldwide profits unless they repatriated the money.

The change offered a powerful incentive to bring home some of the $3 trillion U.S. firms were believed to hold in jurisdictions ranging from Ireland to Switzerland, either in cash or in securities such as U.S. Treasuries.

https://www.reuters.com/article/us-us-repatriation-companies-idUSKCN1OU0ME

A good start but I still do not see all that offshore cash coming home……do you?  Plus I have not heard a plan to stop this practice, have you?

Is There A Strong Wind Blowing Offshore?

God knows that I have been an ouspoken critic of some of the Obama programs, not because I dislike them but rather I feel that more needs to be done, especially for the middle class.  But I have to give him his props where they are due.

President Barack Obama’s move to curb overseas tax havens and job out-sourcing was his first major proposal in what promises to be a broad overhaul of the U.S. tax system.

“It’s a downpayment on the larger tax reform we need to make our tax system simpler and fairer and more efficient for individuals and corporations,” Obama said making his tax-have an announcement on Monday.

These tax shelters are giving US companies a way to avoid almost ALL their tax debt.

Tax shelters are countries with corporate tax rates much lower than those of the U.S., which make them popular for U.S. businesses looking to lower their tax bills.

Whereas the U.S. corporate tax rate is 35 percent, Iceland’s is 15 percent and Switzerland’s is just 8.5 percent. Many countries in the Caribbean don’t tax corporations at all. Companies shift profits to subsidiaries in such low-tax countries to avoid paying the Internal Revenue Service.

One of the most popular tactics involves setting up multiple overseas subsidiaries to move profits from high-tax countries to low-tax countries. Under so-called “check the box” rules, companies can register their subsidiaries as separate units that aren’t subject to U.S. tax rules.

In one scenario, a U.S. company could use operations in the Virgin Islands to avoid paying taxes on investments in Sweden. The company does this by setting up three new corporations: a subsidiary in Sweden, a holding company in the Virgin Islands as well as another subsidiary owned by the holding company.

A January report by congressional investigators found that 83 of the 100 largest publicly traded companies in the U.S. operate subsidiaries in tax havens, like the British Virgin Islands and Bermuda, where there is no corporate tax.Use of subsidiaries varies greatly among big corporations. Banking giant Citigroup has more than 4,000 subsidiaries, according to the Government Accountability Office, a nonpartisan investigative arm of Congress.

I will be watching and ranting about how effect the President will be on this important piece of legislature.