President Trump’s tax reform has delivered more than a trillion dollars of stimulus to the American economy through corporations repatriating profits held overseas in order to avoid penalties that the tax law had imposed on bringing home the funds earned abroad. Bloomberg reports:

Corporations have brought back more than $1 trillion of overseas profits to the U.S. since Congress overhauled the international tax system and prodded companies to repatriate offshore funds, a report showed Thursday. (snip) Investment banks and think tanks have estimated that American corporations held $1.5 trillion to $2.5 trillion in offshore cash at the time the law was enacted. Before the overhaul, companies were incentivized to keep profits overseas because they owed a 35% tax when bringing it back and could defer payment by keeping funds offshore. The law set a one-time 15.5% tax rate on cash and 8% on non-cash or illiquid assets. Compare and contrast the way that Presidents Trump and Obama chose to stimulate the American economy, each of them generating roughly a trillion dollars in “stimulus.”

Under Obama, federal, taxpayers ponied up almost a trillion dollars that was disbursed to various projects deemed worthy. Obama initially claimed that “shovel ready” projects would be the main beneficiaries, only to later realize (or admit) that few such immediate opportunities existed, and that the regulatory jungle meant that new projects would take years to be run through the gauntlet of obstacles that federal, state, and local jurisdictions impose on construction. Instead, the major recipients were government employees whose salaries and benefits were funded by the “stimulus.”

The cost to taxpayers: $831 billion. But schoolteachers and bureaucrats (and their unions) did get paid, and a few worthy projects were built.

President Trump, by contrast, generated additional revenue for the federal budget as companies paid 15.5% to the US Treasury on cash repatriated, and 8% on non-cash repatriations. And more than a trillion dollars entered the country, to be invested by corporations in their projects, or returned to shareholders as dividends, or used as stock buybacks. In all cases, money was put into the hands of people who would use it for investment or consumption. That is part of the reason that economic growth has taken up and wages have risen, especially at the lower skill end of the employment spectrum. Trump’s regulatory reforms (see Obama’s naivete about shovel ready jobs) boosted the economic impact even more.

Bloomberg notes that President Trump initially promised $4 trillion would be repatriated, but this has not proven to be true. OK, he was optimistic and employed hype. But I am not going to complain that he both generated tax revenue (unlike Obama’s stimulus which spent taxpayers’ funds) and increased corporate investment and job opportunities for Americans, thereby increasing the net national wealth.

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