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Permanently reinvested earnings: priceless

Published on 01 Dec 10 by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE

In this article, we discuss the tax policy issues associated with repatriation under the
American Jobs Creation Act of 2004, P.L. No. 108-357, 118 Stat. 1418 (2004) and conduct an extensive survey of the financial statements of the top 81 repatriating U.S. multinational corporations. Our 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 reinvested earnings located in low-tax jurisdictions overseas. Our results also evidence that firms repatriated qualifying dividends under section 965 of the Internal Revenue Code at an effective tax rate lower than the 5.25 percent initially discussed in literature, and suggest that the amount of permanently reinvested earnings and cash holdings by firms only increased after repatriation under the tax holiday.

Author profiles:

Rodney Mock
Rodney is an Assistant Professor, California Polytechnic State University.
Current at 1 December 2010

 
Andreas Simon
Andreas is a Assistant Professor, California Polytechnic State University.
Current at 1 December 2010
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