Repatriated Earnings: A Carrot, Stick, and Cabbage Approach
9 Pages Posted: 11 Dec 2013
Date Written: June 4, 2012
Abstract
Political and economic forces are creating pressure to make it much more costly for businesses to defer federal income taxes on overseas profits and to provide cash in the United States by encouraging a repatriation of those profits. Accordingly, our approach combines:
• a penalty for not repatriating funds (an interest charge, or stick) with
• a basic reward for repatriating funds that meet an economic trigger (a dividends received deduction, or carrot) and
• an enhanced reward for repatriating funds that meet an enhanced economic trigger (a dividends received deduction that is twice the rate of the basic reward, or cabbage).
Keywords: repatriation, foreign earnings, overseas cash, tax deferral
JEL Classification: K34, E62, H21, H25
Suggested Citation: Suggested Citation