American investors and the CEOs of major corporations are pulling money back from overseas, bringing American cash back to American shores at what economists are saying is the biggest pullback on record.
According to Fox Business, more than $300 billion in foreign investments has been “repatriated” in just the first quarter of 2018, largely because CEOs and other business bigwigs are taking advantage of a Republican tax reform measure that passed last December with the support of President Donald Trump.
There are a few notable exceptions — Harley-Davidson, for example, announced Monday that they would be moving factories overseas to avoid new steel tariffs — but many corporations are repatriating their investments — and their manufacturing — despite the Trump administration’s strong line on “fair trade.”
“U.S. firms that used to build their factories overseas in order to avoid U.S. taxes, they stopped in their tracks because of the tax bill, they are bringing all the money home,” the chair of the president’s Council of Economic Advisers told Fox Business Tuesday.
The “repatriation” means an additional $45 billion in tax revenue for the American government, something even Democrats should be happy about (though they probably won’t be).
Under the Obama Administration, major corporations suffered under a penalty which taxed companies on their foreign earnings when they returned to the United States. As a result, many companies moved their manufacturing overseas, even while they maintained corporate headquarters stateside — a practice that has come to be known as a “tax inversion.”
By eliminating the penalty, Republicans encouraged companies to return manufacturing operations to the United States, and in turn attracted not just jobs, but major expansions and new investment. Since economists anticipate that corporations saving money with tax breaks will either return that to their workers or expand hiring, the news of returning foreign investments has caused some economists to upgrade GDP projections by at least 3%.
There’s still more to bring back, too. Businesses are hoping that Republicans can make the tax cuts permanent, and they may reward Americans for the effort by returning even more overseas money. Currently, Fox Business reports, there’s more than $45 trillion in assets “parked overseas” waiting to return to the United States when conditions are right.