Economics

Bringing jobs back to America

The American president has a request of Corporate America (via the LA Times):

President Obama on Wednesday urged businesses to bring jobs back from abroad and touted companies that have chosen to do more manufacturing in the U.S. … “Today I am meeting with companies choosing to invest in the one country with the most productive workers, best universities, and most creative and innovative entrepreneurs in the world: the United States of America,” Obama said in prepared remarks to executives at the forum. “And I’m calling on those businesses that haven’t brought jobs back to take this opportunity to get the American people back to work.” The White House said in the coming weeks Obama would propose new tax provisions to reward companies that bring back jobs to the U.S. or make new investments here, and would move to eliminate tax breaks for companies that ship jobs overseas.

What to do … what to do … what to do. Hey, kids, how about this idea from my pal Doug Holtz-Eakin:

H.R. 1834, the “Freedom to Invest Act of 2011” would reduce the tax on repatriated dollars to a maximum of 5.25 percent (from 35 percent). … Cash that would otherwise be trapped overseas would flow back into the United States. J.P. Morgan estimates that at least $1.4 trillion in undistributed foreign earnings are locked abroad; Moody’s warns that U.S. tech companies could hold 79 percent of their cash overseas in the next three years. … The repatriation tax policy would contribute to a lower overall corporate rate at a time when the high U.S. rate harms economic growth, the amount and quality of U.S. investment, and the wages of U.S. workers. As the table indicates, scenarios in which repatriations exceed or fall short of the midpoint scenario generate correspondingly larger or smaller impacts. However, using the midpoint scenario and choosing the middle of the CBO-implied range suggests a rough GDP impact of $360 billion and the creation of 2.9 million jobs.

And here is the table that DHE refers to:

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