Corporations have brought back more than $1 trillion of overseas profits to the United States since Congress passed the Trump administration’s tax reform two years ago, Bloomberg reported.
According to data provided by the Department of Commerce, a total of $1.04 trillion has been repatriated to the United States since the Tax Cuts and Jobs Act (TCJA) was passed in late 2017.
Investment banks and think tanks, cited by Bloomberg, have estimated that American corporations had between $1.5 and $2.5 trillion in cash abroad at the time the law was enacted.
Indeed, although estimates differ as to the amount of cash that was abroad prior to the TCJA, between 40% and 66% has now returned to the United States.
As described by the White House, the TCJA reforms were the largest tax reduction in U.S. history.
Prior to the passage of the law, there was a strong incentive for companies to keep profits abroad because if they repatriated them to the United States they would face a 35% tax rate. Instead, the new regulations set a tax rate of 15.5% on cash and 8% on non-cash or illiquid assets, Bloomberg explained.
The repatriation figures were included in the quarterly report on the current-account deficit, which narrowed by $1.1 billion to $124.1 billion in the July-to-September period.
TCJA also provided tax relief for small businesses by allowing some transfer entities to deduct 20 percent of their qualifying business income. As a result, more than 80 percent of small businesses believe TCJA had a significant impact on the economy and more than 50 percent believe it had a positive effect on their businesses, according to the National Federation of Independent Businesses.
TCJA not only produced great changes in corporate business. People’s real disposable income increased since the end of 2017 by almost $6,000, of which almost half can be attributed to changes in taxes (based on how much wages grew above projections).
By increasing business investment and worker income, TCJA also had a strong impact on the labor market: unemployment slipped to 3.5 percent, the lowest rate in half a century.
“For as much as liberals will try to convince you otherwise, it’s undeniable that the Trump tax cuts worked,” said columnist Matt Palumbo in the Bongino Report.