If we took a holiday / Took some time to celebrate / Just one day out of life / It would be, it would be so nice.
US multinational companies will be barred from using a one-year tax break for repatriated foreign earnings, passed by Congress last year, to finance stock buybacks or dividend payments, the Treasury Department said on Thursday.There's nothing quite like a tax holiday to make a capitalist's weekend, is there? What is most interesting about this provision is that it is projected to bring tens of billions of dollars in capital to the US. In 2004:III the US balance on capital income was +$5.3bn and on private remittances and other transfers, -$8.3bn. With tens of billions promising to flow into the country in 2005, these figures could rise markedly -- and that would mean yet more room to run yet larger trade deficits! Anyone game for $70bn a month?
Analysts said the rules did little otherwise to restrict how companies could spend the money released by the tax break, estimated at more than $300bn. . . .
Publication of the regulations is expected to trigger a big inflow of capital under the one-time tax break, part of the $137bn corporate tax bill approved by Congress in October. Companies will pay 5.25 per cent tax on repatriated retained foreign earnings rather than the usual 35 per cent. The concession came after lobbying by a coalition of US multinationals eager for a tax holiday to free overseas earnings that have accumulated offshore to avoid corporate taxes.
With more gimmicks like this, the US may be able to go on consuming indefinately . . .