Merrill: Repatriated Income Will Have Minor Economic Impact

March 7, 2005
Last year's American Jobs Creation Act notably repealed a U.S. export tax subsidy that the World Trade Organization had ruled was illegal. It also notably included a one-year provision allowing U.S. companies to repatriate income from foreign affiliates ...

Last year's American Jobs Creation Act notably repealed a U.S. export tax subsidy that the World Trade Organization had ruled was illegal. It also notably included a one-year provision allowing U.S. companies to repatriate income from foreign affiliates at reduced rates. Of the about $600 billion that it figures is eligible for repatriation, only about $250 billion will be repatriated, says Merrill Lynch & Co., New York.

"When all the direct and indirect effects are taken into account, and keeping in mind that a non-trivial part of the flows will be directed toward non-economic items, the overall macro impact is far less than generally perceived by the economics community, which assume that a large proportion will be used for capex [capital expenditures] or some facsimile thereof," says Merrill.

Specifically, if the cash goes mainly to reducing company debt and shoring up pension funds and to a lesser extent to job training and capital outlays, the five-year economic impact of repatriation would be to create a total of 600,000 jobs, raise the U.S. savings rate by 1.4 percentage points and add just 0.12 of a percentage point to GDP each year.

Popular Sponsored Recommendations

What Is Your Smart Factory IQ?

Sept. 24, 2023
It’s time to put Smart, data-driven manufacturing operations to the test. In this comprehensive whitepaper we show you how to determine the Artificial Intelligence Quotient (AIQ...

Lean Manufacturing in the Age of the Industrial Internet

Oct. 24, 2023
Read how advanced MES capabilities can help you improve your labor utilization, reduce WIP, and optimize your production. Download the white paper today.

How Digital Twin Technology is Empowering Manufacturers

Sept. 27, 2023
This FAQ delves into why this technology offers business value and considerations toward implementation.

Why DataOps may be the key to unlocking the full potential of digital transformation

Nov. 3, 2023
Read the 2023 market survey conducted by IndustryWeek

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!