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Report: Tax Holiday Would Only Restore One-Fifth Of Overseas Profits To US

A new report suggests that a U.S. tax holiday on corporate profits held overseas could result in some $200 billion returning to the country.

(AP Photo)
(AP Photo)

A newly released report suggests that a U.S. tax holiday on corporate profits held overseas could result in some $200 billion returning to the country.

The analysis by Goldman Sachs, however, also found that about $800 billion of the estimated $1 trillion currently stashed abroad would remain out of the reach of U.S. tax authorities, according to USA Today.

U.S. companies that house their overseas profits in Ireland or other low-tax nations currently face a 35 percent tax rate — minus a credit for any foreign taxes — if they attempt to bring that money back to the U.S.

(AP Photo)(AP Photo)

The Goldman report evaluated the ramifications if the Trump administration and Republican Congress followed through on a proposal to temporarily slash that rate. A House GOP proposal would reportedly cut the tax to 8.75 percent.

Although the bulk of the money would remain abroad, the returning $200 billion would contribute to an estimated $2.6 trillion in extra cash help by U.S. companies next year, Goldman analysts said.

The report also predicted that the returning money, like a 2004 tax holiday, would fuel a jump in stock buybacks compared to more modest increases in dividends, mergers, research and development or capital investments.

The buybacks, USA Today noted, could benefit investors by spreading profits among a smaller number of shares. The paper also found that tech giants Apple, Microsoft and Alphabet — Google's parent — already have more cash than the rest of the companies on the S&P 500 index.

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