Because it is the best of the bad options.
Do you think that G.E. wants to have billions in cash in Communist China?
Or that Google wants billions in Ireland, gang-raped by the bankers and politicians and desperate for revenue?
They are terrified that they won't be able to repatriate but at the same time don't want to pay any tax on the money.
So they gussie the idea in the cloak of "jobs" or "infrastructure", anything to get the politicians on board to help them get their loot back under the rule of law.
Here's Immelt via Real Time Economics:
GE CEO: Repatriation Tax Holiday Could Help Fund Infrastructure Bank
Coincidentally both GE and Google make the infrastructure stuff that the dedicated funding from the 5% tax would be forced to buy.
Using a repatriation tax holiday — a tax break for companies bringing back overseas profits to the U.S. — to help fund an ‘infrastructure bank,’ would be a good idea, GE Chief Executive Jeffrey Immelt said at the U.S. Chamber of Commerce on Monday. Lawmakers have proposed starting a national infrastructure bank to provide low-interest loans and loan guarantees to build highways, energy projects and water infrastructure.
“We favor repatriation of our foreign cash back into the U.S., where it can do some good,” Immelt said. “I believe Senator Schumer has a good idea: taxes from repatriation could go toward creating the infrastructure bank that in turn creates jobs.”
Sen. Charles Schumer (D., N.Y.) has said that his party would be willing to consider a tax repatriation holiday, provided the companies that benefit from the lower tax rate use the funds to help create jobs....MORE
As to how they'll use the money when it gets back here? The same thing they did in 2004.
Here's a paper from the National Bureau of Economic Research on that experience.
Via the Social Science Research Network:
Watch What I Do, Not What I Say: The Unintended Consequences of the Homeland Investment Act
University of Illinois College of Law
Harvard Business School; National Bureau of Economic Research (NBER)
Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)
April 27, 2010
Journal of Finance, forthcoming
MIT Sloan Research Paper No. 4741-09
CELS 2009 4th Annual Conference on Empirical Legal Studies Paper
Abstract: The Homeland Investment Act provided a tax holiday for the repatriation of foreign earnings. Advocates argued the Act would alleviate financial constraints by reducing the cost to U.S. multinationals of accessing internal capital. This paper shows that repatriations did not increase domestic investment, employment or R&D—even for firms that appeared to be financially constrained or lobbied for the holiday. Instead, a $1 increase in repatriations was associated with a $0.60-$0.92 increase in shareholder payouts. Regulations intended to restrict such payouts were undermined by the fungibility of money. Results indicate that U.S. multinationals were not financially constrained and were well-governed.
Number of Pages in PDF File: 56
Keywords: Repatriations, financial constraints, governance, international taxation, flypaper effect
JEL Classifications: G3, F23, G14, G18, H26
Working Paper Series
I'll be back with more.