Repatriated cash never reached us peasants

PRESIDENT

Trump got one thing right. But then he blew it. As part of the tax-reform bill that the Republicans pushed through Congress last year, companies with profits that were stuck overseas were allowed to bring those earnings back to the US and have them taxed at a very favorable rate.

I’ve written about this profit “repatriation” lots of times. It was the most efficient way to get help for the economy without having the side effect of raising the federal debt.

In fact, allowing companies like Apple and Microsoft to repatriate billions in foreign profits actually increased the tax revenue collected by the feds because those profits were sitting overseas untaxed for years. Debt would go down, although by just a little.

So, that much of the idea was good.

But the next part wasn’t. The Trump administration didn’t attach any strings to the money that was being repatriated. It didn’t, for in- stance, require companies to invest a portion of that repatriated money in new facilities or equipment.

It didn’t — as I suggested a long time ago — make the tax-advantaged repatriation of those foreign profits contingent on those companies creating jobs.

I don’t know who suggested this idea first. But I do know that I can trace my advocacy of profit repatriation at least back to a Sept. 13, 2012, column I did that had the headline: “My 3-step plan to save the US. You’re welcome.”

“A company should be able, for instance, to bring a specific portion of its profits back home at a substantially reduced tax rate if it increases its payroll by a certain amount,” I wrote in that column, which incidentally ran when the debt level was at “just” $16 trillion. (Today, it’s over $21 trillion.)

If a company reneged on expanding and creating jobs, it would have to pay a penalty that would raise the tax to its regular rate in my plan.

Instead, Trump and the Republicans in Congress allowed companies to do whatever they wanted with the repatriated money. No strings. No rules.

So instead of being taxed at up to the 35 percent corporate tax rate, those overseas profits — some $1.4 trillion — were taxed at 8 percent to 15 percent.

Corporate executives cheered. They could use those repatriated profits to buy back their company’s stock. That would raise share prices and make them richer than they already were.

Thank you, American taxpayers, for your generosity!

It hasn’t only been companies with profits stuck overseas that have been buying back shares. Lots of companies have been using the new tax law’s lower rates to buy back shares.

Bank of America, for instance, says that share buybacks were at their highest level ever during the first quarter of 2018 — when the corporate tax cuts went into effect. Its survey found there were $124 billion in stock buybacks in the first quarter compared with just $82 billion in the fourth quarter of 2017 and $66 billion in 2017’s third quarter.

And the funnier thing is this. Even with companies as such large buyers of stock, the overall market has been wobbly.

Independence Day — Wednesday — is a motorist’s nightmare.

A driver not only has to put up with horrible traffic but also has to do so while sitting in a car that’s burning gasoline that is more expensive than it should be thanks to Wall Street speculators.

But here’s the punch line on Wall Street: Despite those speculators and gas station owners price-gouging, gasoline has actually come down in price leading into this Independence Day week.

Even with the US being in the middle of the summer driving season, gas prices fell to a national average of $2.86 a gallon last week, from $2.95 a gallon a month ago,o, according to AAA.

That’s not a big drop. But with Wall Street pushing oil prices to record highs, gasoline should also be reaching new highs.

And you might remember people anticipating $4-agallon gas just a few weeks ago. Well, that didn’t happen.

But don’t worry, the greedy speculators will try again to get prices higher before summer is over.

Well, it’s the end of the second quarter and the Trump administration is talking as if the economy roared to the finish line.

In fact, Trump economic adviser Larry Kudlow was crowing last week that the national deficit was coming down quickly because of the economic growth. I hope so. But just as Kudlow was speaking, the St. Louis Federal Reserve Bank and the Atlanta Fed’s GDPNow were lowering their estimates for second-quarter growth to 4.1 percent.

Consumer spending just wasn’t coming in where the government hoped, despite the tax cut that put mmore money into people’s ppockets. The Atlanta Fed is now predicting that the quarter that ended Saturday will show a 4.1 percent annual growth rate. That’s a nice number but way down from where the Atlanta Fed was just a few weeks ago with its estimate.

Two things to remember: It’s only one quarter, and combined with the first-quarter growth of just 2 percent, it doesn’t mean the economy is growing quickly. And — this is important — we’ve had one-quarter economic spurts before only to see the economy fizzle.