Andreas Simon, PhD, CPA, Assistant Professor of Accounting
Permanently Reinvested Earnings: Priceless, 25 Australian Tax Forum 4 (2010); 121 Tax Notes 835, (original publication), with Rodney Mock, (2008).
In this report, the authors discuss the tax and policy issues associated with repatriation under the American Jobs Creation Act of 2004, P.L. No. 108-357, 118 Stat. 1418 (2004) (Jobs Act), and conduct an extensive survey of the financial statements of the top 81 repatriating multinational corporations. The author’s findings suggest that the rate of repatriation by firms was extremely sensitive to the tax burden associated with repatriation, and the rate was further influenced by industry sector, and the amount of permanently rein- vested earnings located in low-tax jurisdictions over- seas. The authors’ data results also evidence that firms repatriated qualifying dividends under section 965 at a U.S. effective tax rate lower than the 5.25 percent initially discussed in literature, and suggest that the amount of permanently reinvested earnings by firms only increased after repatriation. The findings of the article are timely in light of President Trump’s proposed offshore cash plan.
Keywords: accounting, taxes, tax policy, financial statements, tax burden, repatriation