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Repatriation Games: Wall Street Is at It Again

By Richard Head
Opinion | August 7, 2011

BASEHOR, Kan. - The Wall Street Journal editorial in the August 6-7 edition, titled Repatriation Games, extolls the economic miracles that would abound if U.S. multi-national corporations were allowed to "repatriate" their foreign-earned capital to the United States at atrociously low tax rates. New York Democratic Senator Chuck Schumer, in spite of his everyman-champion image, is a shill for Wall Street and has proposed a one-year, 5.25% repatriation rate. Economist Allen Sinai, in the same editorial, is reported to have estimated that there is more than $1 trillion abroad waiting to be repatriated -- if only the rates go down.

Unfortunately, the editorial leaves out one inconvenient fact when it comes to the argument that repatriation of foreign capital will produce jobs: lack of customer demand.

The Journal's own pages regularly report that U.S. corporations are already awash in cash that they are loath to spend on job creation because lack of demand for goods and services is the single biggest factor holding back new hiring.

Small business owners (and I am one) are reluctant to take out loans to expand their businesses and hire new people because lack of customer demand makes such loans extremely risky when it comes to repayment.

I see this as nothing more than a naked attempt to add cheap money to Wall Street coffers in its attempt to take ever more risks with it--masked as "innovative financial products" of course. And, as former Fed Chairman Paul Volcker once quipped, "I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth--one shred of evidence."


3 Comments

Give 'em their cheap taxes on foreign profits. But, double their personal and business income that is earned here in the states. Put an import tax on the goods they are making overseas and bringing into the U.S.

If they don't like it, maybe they need to just move their citizenship and let the country they are doing business in protect their assets. Much of our foreign involvement is directed at protecting investments in those countries.

If they want to sell the production here, they need to produce it here!

How's that for a no nonsense radical old democrat's opinion?

The 'rich boys' control our government and foreign policy and the poor boys pay the bills and furnish the dough boys to fight their wars.


Ken, you are so right. Your statement, "The 'rich boys' control our government and foreign policy and the poor boys pay the bills and furnish the dough boys to fight their wars," is accurate and has been accurate for several decades. But what is even worse now is that - in the old days - the rich boys would at least give the surviving dough boys jobs when they got back stateside after protecting the rich boys' assets overseas. Not anymore. Now the rich boys just use the dough boys from the US that they don't fund nor employ, but then turn around and give the jobs to the Chinese, Indians or Malaysians. I'm not against the rich boys employing Asians. But I am against the rich boys expecting this country to do its bidding overseas to protect the Asians' jobs.


Just this week Obama had a meeting with several top corporate CEO's to get their advice on how to fix the economy. I'd guess raising taxes on the rich wasn't a recommendation.


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