CDZ Tax provisions aimed at repatriating foreign cash is ineffective for growing the economy

Discussion in 'Clean Debate Zone' started by Xelor, Dec 1, 2017.

  1. Xelor
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    Xelor Gold Member

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    In 2011, the Congressional Research Service (CRS) evaluated the efficacy of implementing tax reduction provisions with the expectation that doing so would spur economic growth in the U.S. The CRS found that "repatriation provisions to be an ineffective means of increasing economic growth."

    To well informed observers -- people who understand economics and the management/operation of huge multinational corporations -- that finding comes as no surprise because they know damn well that politicians' attestations about how companies that opt to repatriate their overseas cash have a major failing: they assume that by repatriating the money, it will in turn be invested in domestic U.S. endeavors, be it buying infrastructure or increasing wages. Quite simply, corporations don't spend money on anything unless there is a sound business case that doing so will return an acceptable-to-the-company rate of return. Until a thus profitable initiative is identified, companies are content to pay down debt and grow their retained cash via financial investing in the profitable ventures of other organizations.

    Now one might assert that the repatriated money makes more money available for banks to loan. Well, that's a specious assertion because the banks into which the money is deposited are not the creators or controllers of the money supply, which is the sum total of dollars in existence. The Federal Reserve is the only bank that does that. Moreover, commercial banks aren't going to make more loans simply because they have more cash on deposit. To make issue more loans/debt, commercial banks have to receive more loan applications from creditworthy potential customers. The 2008 real estate catastrophe should still be a potent reminder of the disaster that is loaning money to people who cannot repay them.

    So what's the key point of the discussion above? That yet again, we see that a reason -- a line of argument, if you will -- the GOP propone for why we, the electorate, should give our approbation to an initiative/idea they are advancing depends, at best, on wishful thinking and more likely is flat out sophistry.
     
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  2. Xelor
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    Xelor Gold Member

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