U.S. companies repatriated over half a trillion dollars in 2018

“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,” Reuters reports. “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,” Reuters reports. “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.”

“But investment bank JPMorgan said the flows were on ‘a rapidly decelerating trajectory,'” Reuters reports. “The current account data shows repatriation in all sectors. Looking at just non-financial companies, JPMorgan calculates $60 billion was repatriated in the third quarter, versus $225 billion in the first quarter and $115 billion in the second quarter… Ireland, which hosts the European hubs of U.S. technology and pharmaceutical companies such as Apple and Pfizer, saw Treasury holdings drop by $40 billion between end-2017 and end-October 2018, TIC data released on Dec. 17 shows.”

Read more in the full article here.

MacDailyNews Take: After years of pent up, accumulating overseas profits, it’s hardly surprising that, after a surge in repatriation, the pace is slowing a year after the Tax Cuts and Jobs Act was signed into law by President Trump on December 22, 2017. Going forward, just normal repatriation of profits — not huge, years-worth of deferrals — will take place.

SEE ALSO:
Apple gives employees $2,500 bonuses after President Trump signed the GOP’s Tax Cuts and Jobs Act – January 17, 2018
Looks like Apple is bringing nearly all of its $250 billion foreign cash back home to America – January 17, 2018
Apple plans to add $350 billion to U.S. economy and create over 20,000 new jobs over next 5 years, pay $38 billion in repatriated taxes, the largest ever made – January 17, 2018
Apple expected to issue less debt in 2018 now that President Trump has signed the Tax Cuts and Jobs Act – January 16, 2018
U.S Treasury: 90% of U.S. workers likely to see more money in take-home pay next month – January 13, 2018
Apple expected to repatriate $214 billion to the U.S.; expect increased buybacks and dividends, not big acquisitions – December 22, 2017
Congressional Republicans deliver epic overhaul of U.S. tax laws to President Donald Trump – December 20, 2017

10 Comments

  1. The jobs act or massive tax cuts for corporations and the wealthy did nothing for the economy. The corporations did not use the tax cuts to stop store closures (tax cuts have nothing to do with job creation), rather they used the money to buy back stocks.

    Meanwhile in 2018, Toy-R-US liquidated – they represent 20% of all toy sales in the US. Ford announced they would stop making cars by 2022. Ford will focus on trucks & SUV’s only for the consumer market. GM announced it would close four US plants and lay-off 15K workers by the end of 2019. They’re also eliminating six car models.

    Also in 2018 Sears/Kmart filed for bankruptcy protection. As part of the bankruptcy and afterwards, Sears/Kmart has announced up to 260 additional store closings going into 2019. They were saved from liquidation at the last minute by it’s owner.

    JC Penny fell last week to under $1.00 in the stock exchange. They’re expected to close stores in 2019

    1. All of the businesses you listed are done because they couldn’t compete with Amazon. Capitalism at work.

      Your automaker examples are simple and obvious production decisions based on buyers wanting SUVs and pickups, not cars. Supply and demand.

      Neither of your example situations occurred due to the Tax Cuts and Jobs Act of 2017.

    2. You claim that “massive tax cuts for corporations and the wealthy did nothing for the economy.” You are wrong.

      The tax cuts in the Tax Cts and Jobs Act of 2017 are not just benefiting the wealthy. Average taxpayers in every congressional district get a tax cut, and lower-income communities get the largest percentage decreases in their tax bills.

      Some low-income congressional districts will see their federal income taxes cut by 20% or more.

      Even the corporate tax cut is benefiting workers significantly. Because more than 75 percent of business taxes are ultimately passed onto workers in the form of lower wages, workers can expect the biggest economic benefits from business tax reform.

      Wage growth for lower-income workers is already outpacing that of their higher-income counterparts.

      These are facts, as opposed to a bunch of mealy-mouthed Dem/Lib/Prog talking points with no basis in fact that sound good to the ignorant, but totally stupid to anyone with even a bit of actual knowledge about the bill and its results.

      1. Fwhatever, every time that I take a long break from MDN, I enjoy the reduction of politicrap in my life. However, when I eventually return to check on Apple news, I inevitably encounter your political posts. As usual, you are a shill for the stupid talking points issued by the current Administration. There is very little depth or validity to your arguments. Your words are full of sound and fury, signifying nothing.

        Don’t talk about percentages. That is foolish and not meaningful in the context of this discussion. Would you rather have a 1% increase on $1M or a 10,000% increase on $1?

        Furthermore, the key issue is buying power, not absolute wages. When wage increases are offset by inflation, there is no net benefit to workers.

        No matter how you slice it, the primary purpose of the so-called Tax Cuts and Jobs Act was to deliver massive amounts of money to the wealthy funded by increased deficit spending. The Republican Party can no longer claim to be the party of fiscal responsibility. Tax cut and spend is the absolute worst fiscal policy for our country.

        1. “. As usual, you are a shill for the stupid talking points issued by the current Administration. There is very little depth or validity to your arguments. Your words are full of sound and fury, signifying nothing.”

          KingSmell, is it possible you can be more clueless?

          Firsty is in credible command of political facts that others like you on the left cannot comprehend.

          So, right back at you a stupid shill for the mindless talking points of the Democrat Party…

      2. That all sounds great …
        … but the Devil is in the Details.

        For example, the absolute dollar amounts of the tax cut really aren’t all that huge, especially after inflation and for the mid/lower class.

        Next, the cut in individual tax rates is only temporary (6 years to go), whereas the cuts for Enterprise are permanent.

        For example, this skews to the wealthy such as by noting that the 20% freebee on passthrough for (select) S Corps & LLCs is permanent, which your typical low/middle-class family doesn’t have…and its part of those permanent changes.

        Sure, there’s the doubling of the STD deduction which should help out the lower income range, but “in the details” is that the Personal exemption was eliminated, so this isn’t as huge of a benefit as it seems: for a couple, the $12K increase in the STD actually nets out to only a $4K break … and it becomes roughly zero at the break-even point of a household of three (four if the dependents are below age 17).

        Next, I see a claim that 75% of the tax reduction in business taxes are passed along to workers (BTW, I think you meant to say “higher wages”, not lower). There were a few token one-time bonuses given out, but permanent raises? Let’s see the numbers supported by a reliable citation, please…and note that the reported National average of IIRC +2.9% … is (a) only +1% after inflation; (b) is an average, not a median, so it includes the raises in pay granted to the VPs & Executive boards.

        Oh, and while I can believe that wage growth for lower (lowest?) income is outpacing, that also needs a citation that accurately attributes the causes. Because while some corporations have raised wages in warehouses because of labor shortages (think of Amazon, Walmart), but some of this raise in pay came with cuts in benefits, which means this is a shell game: let’s examine this by total compensation, not merely wages. Similarly, several States legislated raises in their Minimum Wages, which are just now going into effect, so please resist claiming false attribution.

        Case in point, look up Erik Sherman’s 9 Sept 2018 article at Forbes, entitled: “That 2.9% Wage Growth Is 1% After Inflation: What The News Doesn’t Tell You”.

        Similarly, if the economy is so great, then why did Trump just sign this week (28 Dec 18) an Executive Order to freeze Federal pay, which invokes a requirement to legally declare a condition of “national emergency or serious economic conditions affecting the general welfare”.

        So then, in the face of this formal declaration by the POTUS that the Economy isn’t doing great, how can you claim otherwise?

        1. Trump cares so much about security that he furloughed the Coast Guard. The USA has 3 astronauts in space now but NASA is 95% shuttered. Federal agents in all kinds of security teams are out of the field. The already gutted IRS can’t follow through on tax fraud when they’ve been sent home.

          This is not what GREAT means to me. Trump, befoflip flopping on who to blame, claimed he would be proud to shut down the federal government. He obviously has no understanding what the government actually does. The republicans have held Congress for 7 years and they never figured out how to write a budget or reduce debts or improve efficiency.

          Trump the clown needs to resign ASAP.

          1. The whole ‘wall’ nonsense is merely red meat to his ignorant base. Case in point, the relevant statistics:

            ~95% of illegal drugs similarly aren’t smuggled across the same southern border either: they primarily come in by sea.

            And “most” illegal immigrants don’t enter the USA by breaching the southern border. They arrive in the USA legally on a Visa (many on commercial flights) and then simply don’t leave – that’s a “Visa Overstay”.

            FYI, the stats on Overstays are way out of date, but was gaged at 42% of the total back when illegal border crossing rates were high, and illegal border crossings are down by ~90% since 2000.

            The basic math here is .42 = (O/(C+O), and C’= C/10.

            So if the rate of overstays hasn’t changed, then Overstays today would be roughly 88% of all illegal immigrants.

            Similarly, if Overstays have declined by 50%, then its “merely” 78% of the total.

            Or if Overstays had a 66% decline, then overstays would still be 70% of all illegal immigrants.

            And so on. The only way that Overstays stay at less than half (42%) is if they’ve had a 90% decline too.

            Since 70%-80%-90% of the “problem” has gone away (or is irrelevant) with the current infrastructure, then looking to add to that is an irresponsible waste of taxpayer’s dollars.

  2. “The jobs act or massive tax cuts for corporations and the wealthy did nothing for the economy.”

    How clueless and partisan can one be. You have no accounting idea where over half a trillion dollars of repatriated dollars were spent. Apple announced building more facilities, one example that nullified your post. As to the rest of your brainless partisan talking points, Fred and Firsty said it all…

  3. The Trump Tac Cuts reminds me of the Cheney-Bush Tax Cuts. That was followed by lots of military spending and no increases in the buying power of those on minimum wage. Then the stock market turned to shit and we had the Great Recession. Now another GOP White House and Congress (2 days left for the House) the market is really shaky and (like Cheney/Bush) those at the bottom of the economic scale are still getting the shaft. Recession ahead? Probably, Trump cannot ride Obama’s economic growth for ever and Trump is the dumbest President we have ever had.

    Like the Cheney-Bush FUBAR the Democrats will hopefully reverse out the tax cuts for the rich individuals and companies. That would protect thee Social Security, Medicare and Medicaid that was supposed to pay for the Tac cuts.

    Some companies are using repatriated funds for growth – like Apple with $10 Billion investments in the US. Others will b fading the Executives with big time bonuses and the lower class will get a big time shaft.

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