Historically, Revenue Repatriation Has Not Been Effective (Congress, holidays, companies)

[AeroGuyDC]

JCT, Congress' official scorekeeper on tax matters, recently analyzed the potential effects of a repatriation tax holiday on tax receipts and the economy.[4] The analysis drew on information from companies' current financial positions and recent behavior as well as extensive evidence from the 2004 American Jobs Creation Act, which established a one-year holiday similar to a number of the current proposals. JCT found that a second repatriation holiday would have three separate effects on revenues, compared to what would happen in absence of a holiday:

• It would encourage corporations to repatriate foreign earnings that they would otherwise have kept overseas over at least the medium term. This would increase revenues in the short term.
• It would give companies a large tax break for other foreign earnings that they would have repatriated even without a holiday. This would decrease revenues.
• It would increase incentives for companies to shift jobs, profits, and investments overseas in anticipation of future holidays. This, too, would decrease revenues.

The combined effect of these three factors is that a holiday would raise revenues initially but would cost the Treasury considerably more in later years — for a ten-year net revenue loss of $79 billion (see Figure 1).

In theory, I like the idea of Revenue Repatriation (ie. Tax Holiday). But it doesn't appear that it's all that effective, considering the results of the massively overstated and wildy underperforming Repatriation of 2004.

I believe the CBPP is a left-leaning organization, but this is not the first time i've read about issues concerning Repatriation.

What's your opinion?

Repatriation Tax Holiday Would Increase Deficits and Push Investment Overseas — Center on Budget and Policy Priorities