Repatriation of overseas profits accelerate after GOP tax cuts
They said it wouldn't happen, but it did: The money companies stashed overseas to protect them from high U.S. corporate tax rates is flooding back in, boosting growth, jobs and confidence in the economy. Thank the Trump tax cuts.These so-called fact checks are just the typical briefs for liberalism and it why I am routinely skeptical when I even see the words "fact check." Liberals are the mavens of government greed and they get their power from creating dependency on the government rather than real jobs.
All told, the Bureau of Economic Analysis (BEA) reported, some $305.6 billion returned to the U.S. from overseas accounts. That's a $1.2 trillion annual rate, and far more than the $35 billion one year before.
The BEA's analysts explain why this happened: "The large magnitudes (of inward capital flows) ... reflect the repatriation of accumulated earnings by foreign affiliates of U.S. multinational enterprises and their parent companies in the United States in response to the 2017 Tax Cuts and Jobs Act."
In short, the Trump tax cuts did it.
American companies were commonly estimated to have about $2.6 trillion parked in overseas accounts as of 2017. So in the first three months of 2018 alone, some 12% of that overseas stash came back to the U.S. It's now available here for companies to invest, pay out in dividends and bonuses, hire new workers, purchase new plants and equipment, or just buy back stock.
It's a shot in the arm for the U.S. economy.
Of course, you say. It's entirely logical to suppose that by slashing the top corporate tax rate from 35% to 21% — a 40% reduction — and by giving one-time breaks to those companies that had piles of cash sitting overseas, money would flow back into the U.S. After all, Trump's 21% tax rate is now lower than the current OECD average corporate tax rate of 25%.
But last year, when the tax cuts were still a topic of conversation, some in the media seemed to have trouble with this idea.
"GOP tax bill and overseas profits: Beware the hype," ran a headline on the PolitiFact website.
"Why the GOP tax plan to repatriate offshore profits may flop," said a CBS News topper.
"AP FACT CHECK: Trump and the mirage of overseas profits," yelled the AP's not-so-subtle headline.
Yet the befuddled media keep calling these bullish economic data "unexpected."
Well, these weren't "unexpected" by those who said that tax cuts would work like a charm to boost growth. In the second quarter of this year, GDP growth is almost certain to exceed 3%, again. The Blue Chip consensus of economists expect 3.5% growth, while the Atlanta Fed's "GDPNow" estimate is at 4.7% currently.
This happened only because President Trump slashed taxes, cut regulations and in general pursued powerful supply-side stimulus that lifted the economy's ability to produce goods and services.
For the record, GDP growth never topped 3% in any year of Obama's administration. We were told repeatedly by left-leaning economists and pundits that the days of 3% growth were over. We would have to trim our sails and rein in our expectations for the future.
Donald Trump wasn't listening. He still isn't. The Washington Examiner's Paul Bedard reports Trump recently talked about 5% growth, saying, "You ain't seen nothing yet."