There is an enormous amount of capital that US corporations have overseas, mostly stashed away as cash in bank accounts, a recent article in by Steve Goldstein published at Market Watch gives a pretty detailed account of what the total dollar figure is and what it means. By any number of estimates, the dollar value sits at about $2 trillion, which in turn represents $700 billion in potential tax revenue for the US government – at the flat 35% corporate tax rate, a vast sum that would be a handy windfall for Washington. While this might sound like a battle between the Government with their hands out and free market capitalism, if you read the article more closely, there are two interesting comments made:
One: “Even so, much of that $2 trillion is not being put to work, and that’s why both companies and policy makers alike are eager for some action.”
Two: “We support adopting a competitive international system because it would encourage U.S. multinationals to pursue sales around the world and would make it easier for them to reinvest earnings at home, both of which we believe are good for the U.S. economy and U.S. employment” – GE.
So it seems less a battle between greedy government and greedy corporations and more, corporations asking Washington to come up with a reasonable long term solution. Very clearly GE has stated they want to bring their cash back they want to re-invest at home and they want to create jobs at home. But they also don’t want a one time tax holiday, they want a permanent solution that they can plan around.