The US has one of the highest corporate tax rates in the industrialized world.
That has led to a lot of US companies keeping some of their cash parked overseas, rather than moving it back to the US.
Apple, for instance, has $230 billion offshore. And the company’s CEO, Tim Cook, says that money is staying put unless a fairer tax rate is implemented.
In total, the amount of American corporate profits abroad stands at a whopping
$2.5 trillion, according to Capital Economics.
According to Terrence Duffy, the CEO of the CME Group, the world’s largest exchange, the US could easily bring some of that money back to the states.
But that’s only if Congress can “get off their high horse” and pass a repatriation bill, which would allow US companies with money overseas to bring it back at a lower rate.
Opponents of such a bill equate it with rewarding bad behaviour. But Duffy has an different interpretation.
In an interview with Business Insider, Duffy said a repatriation bill could bring back $1 trillion to $1.5 trillion back to the states. Depending on the tax rate, that likely translates into hundreds of billions in tax revenues.
According to Duffy, that money could be put to work to rebuild America.
Here’s the relevant passage from the interview:
Turner: Let’s talk about repatriation. There are a lot of companies with a lot of money overseas. How do you expect that to play out?
Duffy: I have been an advocate for a repatriation bill for the last five to 1o years. I just think it needs to be done. Now I understand how some political folks might think that it’s opening Pandora’s box and we will just be condoning bad behaviour.
Everybody who circumvented our laws to go hide money, to not pay the government, we are going to reward them by saying you can come back at a rate that’s reasonable. That’s been the argument. I get it. But at the same time, when we have a crumbling nation, I think that you have to make decisions and get off of your high horse and say, “You know what, it is what it is sometimes.”
We’ve got $20 trillion in debt already, we’ve got anywhere from $1 trillion to $1.5 trillion that could come back here if we bring it back at a rate that’s reasonable. If we take X amount and put it into an infrastructure bill that goes anywhere from $600 billion to $1.5 trillion, we could probably do a pretty good job at rebuilding parts of America without adding to the national debt. I think that is important, and politicians need to come to grips with that.
You know what I relate it to? I don’t want to be sophomoric about this. When they legalised marijuana and it’s still so controversial, it could still be harmful or could lead to people using other drugs, but a bunch of states still legalised it, why is that so different from this? You know what I mean? I don’t want to draw a bad analogy, but I think there’s a point where people need to say, “It’s there. They’re doing it anyway.”
The paperwork costs us more to arrest these people than the harm of the drug, so just allow this to happen and be done with it. And if you lower the tax rate, we don’t have to worry about it going overseas any more. It is a two-step process that needs to be done.
Read the whole interview here.