The Trillion-Dollar Zero-Cost Stimulus Program

Want to inject liquidity into the market, support American jobs, and do so without raiding the US Treasury or overheating the printing press? The answer is simple: get out of the way.

Now, some may say that’s a libertarian’s answer for everything. And they’d usually be right. But I’m not signing you up for a precipitous decline in federal revenue. I’m not resorting in protectionist and mercantilist policies destined to impoverish American consumers in favor of American exporters. All I’m asking — or relaying the request of Cisco CEO John Chambers and Oracle President Safra Catz, more accurately — is that the US Government make it easier to bring foreign profits back to our shores:

One trillion dollars is roughly the amount of earnings that American companies have in their foreign operations—and that they could repatriate to the United States. That money, in turn, could be invested in U.S. jobs, capital assets, research and development, and more.

But for U.S companies such repatriation of earnings carries a significant penalty: a federal tax of up to 35%. This means that U.S. companies can, without significant consequence, use their foreign earnings to invest in any country in the world—except here.

The U.S. government’s treatment of repatriated foreign earnings stands in marked contrast to the tax practices of almost every major developed economy, including Germany, Japan, the United Kingdom, France, Spain, Italy, Russia, Australia and Canada, to name a few. Companies headquartered in any of these countries can repatriate foreign earnings to their home countries at a tax rate of 0%-2%. That’s because those countries realize that choking off foreign capital from their economies is decidedly against their national interests.

By permitting companies to repatriate foreign earnings at a low tax rate—say, 5%—Congress and the president could create a privately funded stimulus of up to a trillion dollars. They could also raise up to $50 billion in federal tax revenue. That’s money the economy would not otherwise receive.

The tax picture described is very simple, and it makes American companies make some difficult decisions. A company with overseas profits and a need to reinvest can choose to invest them abroad or here in the US. Those overseas profits can be invested overseas with little or no tax penalty, or they can be invested here with significant tax penalty. The decision becomes simple. It is only smart to invest foreign profits in the US if it is investment that simply cannot be effectively done overseas, because the cost of repatriation is enormous. It’s a trade war, but it’s aiming the artillery inward, not outward.

Anyone who has read my work knows that I am not a fan of government subsidies. I personally think that American corporations and American workers can compete quite handsomely on the world market. We don’t need our government to actively help industry here; we have an educated workforce, developed infrastructure, stable institutions and a strong rule of law. We have everything we need to make it profitable for companies to invest here. We could have a country where overseas profits are re-invested in American workers and the US economy. What we have instead are government policies actively hostile to that end. All I ask is that those policies be rescinded.

America is seen worldwide as pro-business. In many cases, that is true, but certainly not in our corporate income tax system, as described by the Cato Institute here. Rather than being a low-tax laissez-faire bastion of capitalism, we have the highest corporate income tax rate in the developed world:

Reducing the taxes on repatriated profits can be done in a revenue-neutral way. All that is necessary is to choose a tax rate that will balance the tax revenue earned on repatriated earnings at the current rate with the expected revenue earned on the much larger base of repatriated earnings at a lower rate. Some foreign cash is undoubtedly repatriated; as I said there is incentive not to do so, but that incentive in not insurmountable. However, at a lower tax rate it makes sense for more companies to repatriate much larger sums, and I think a baseline rate of 5% as suggested by Chambers and Catz is a good starting point for discussion if remaining revenue-neutral is a goal.

There is up to a trillion dollars out there that could be injected into the US economy without raising the deficit, without spinning up the printing press, and which would go immediately to the entities who have the best ability to invest it in stimulative ways — companies who are already profitable. While many in Congress may not like the idea, as they have little control over how the money is spent, I think that’s a feature — not a bug.

While I’m not a protectionist, I think we should stop government policy designed to hurt American employment and help employment overseas. Of all the policies in which our government engages, one that actively stops capital from flowing into America from overseas seems rather idiotic.

Full Disclosure: I work for a multinational electronics company, with worldwide staff, worldwide production facilities, and worldwide yearly revenue in the billions. My inspiration for this post was a discussion of the tax penalties inherent in my own employer repatriating foreign profits, but I chose to wait until the idea was publicly forwarded by heads of Cisco and Oracle before adding my own thoughts. Undoubtedly my employer would also benefit from such a policy, and I would be remiss to suggest this without disclosure. Also note that the opinions herein (and elsewhere I write on this blog) are purely my own, and are not in any way meant to represent those of my employer.

  • Stephen Littau

    IMHO businesses should be taxed at the nice round rate of 0%. The very notion that individuals or businesses could be taxed 40% or more (and that people think this is justified!) is insane, immoral, and obscene (we should start calling the tax rates obscene rather than private wealth).

    One question that occurred to me as I read this post: “If businesses are being taxed at 40%, perhaps the ‘powerful special interest groups’ for big business aren’t quite as powerful as many on the Left would have us believe?”

    But on second thought, it’s also true that this 40% tax is actually absorbed by the consumers so maybe big business isn’t so concerned after all?

  • Wingnut

    The government printed and OWNS those dollars. Dollars have no titles of ownership and each says Federal Reserve Note at the top. The government actually facilitates the pyramid scheme called capitalism (see pyramid scheme symbol on back of USA dollar). The government also allows the laws that make ownership exist, and no other creature on the entire planet uses ownership or money. Its a man-made-up thing.

    So, if the people who created the pyramid scheme coupons… wants some of them sent back (likely so they can buy more contracts with civilian companies that gouge the hell out of the government), then why not? The coupons belong to AmWay (American Way). That pyramid on the back of the dollar… Columbian Freemason? That USA capital… district of Columbia? Just be thankful that the gov even ALLOWS pyramid schemes like capitalism to exist AT ALL. Feel lucky. We American Christian communalists hate the thing and want it gone.

  • procopius

    Doesn’t sound too great to me. First of all, “repatriation of earnings” for any sort of capital investment purposes can be solved by creative accounting. Your subsidiary overseas logs the earnings, then at a later date can give a US subsidiary a “loan” for all that job-creation, factory-building etc.

    Second, what does this even mean?:
    “By permitting companies to repatriate foreign earnings at a low tax rate—say, 5%—Congress and the president could create a privately funded stimulus of up to a trillion dollars. They could also raise up to $50 billion in federal tax revenue. That’s money the economy would not otherwise receive.”

    Not only are those figures a little wonky without any context,statistical landmarks, and serious study, but what exactly is the implication for the comment of a Pres/Congress privately funded stimulus? Was that a figurative notion, or literal?

    My gut tells that while the Fed. govt is happy to do its part to prohibit corporate reinvestment into our country, the corporations themselves embarked on this journey first and enlisted the govt to codify policies that “finished paving the road.”

  • Brad Warbiany


    Actually, much like regulation, my gut instinct is that many of these restrictions actually don’t bother major corporations. The US having such a high corporate income tax actually confers a competitive advantage for multinationals over domestic-only companies. As always, if restrictions hurt Company A slightly but hurt its competitors gravely, it might be a good idea for Company A to support those restrictions.


    I think you overestimate the power of “creative accounting”. But the idea of a “privately funded stimulus” is figurative. To the extent that tax cuts are stimulus, so is this. This is not subsidizing corporations to repatriate earnings and invest them locally — which would be active stimulus — it is simply removing an existing PENALTY for doing so. Rather than offering a helping hand, it’s removing a roadblock.


    If what you said had ANY relation to ANYTHING I was speaking about, I might bother with a response. Instead, I only hope that the nurses drag you away from the unsecured computer you used to find us, and make sure that you get current with your meds. Godspeed, good crazy sir!

  • procopius

    I still see the notion as a sucker’s deal. Did you know that Intel shipped core technology to factories on the Chinese mainland over 3 years ago? Yeah, lower overhead labor is making THE MOST ADVANCED Intel products on the planet in China. That labor comes without any of the wage expectation, or the legacy overhead. The only stuff your major multi-nats would ship back to the United States via the “earning repatriotization tax rate” is very low wage, low intensity production and maintenance infrastructure.

    Given your average Cisco corporate commercial, we have to endure 30 seconds of a young woman being invited into a police station where the cop proudly announces that everything in the city is being watched via camera. That’s just an example of Cisco marketing culture and vision.

    ^That is also an example of the re-gurgitant industry they want to ship back here. Not core technology that American workers would like to get paid well for. Like I said, the core tech facilities are already a fait accompli.

    My p.o.v. must seem irrationally conspiratorial to you, but my common sense tells me that even without this plan, corporations would have most certainly found accounting tricks a long, long time ago to bring “jobs, factories..” the whole 9 yards to American soil with or without a corporate earnings repatriotion clause. It just sounds not only fishy in its purpose, but even a non-issue at this late hour.

  • Wingnut

    Stephen, I thought sure you were wining about corporate tax levels. Well guess what? The owners of the coupons will set any tax level they want, and you’ll cope and deal.

    “I think we should stop government policy designed to hurt American employment and help employment overseas. Of all the policies in which our government engages, one that actively stops capital from flowing into America from overseas seems rather idiotic.”

    Really? What do you think those overseas people spend their money on? USA goods maybe? But moreover, you make it sound like you are in competition with people outside USA borders. They’re on the same planet as you, ya know? Care about THEIR success, or only yours? Wake up, my man. You need to get OFF your meds, competition-addicted one. Have ya got a little US vs THEM warring mentality going, ya think?

    But geez, make up your mind at what you want to blame. Keep in mind that corporations run your government. Thus, you won’t be able to tell WHO is an US and WHO is a THEM… and we can tell you are already suffering that dilemma. Just hit anything. Here, take this hammer in your right hand and smack your left hand. There ya go. Sad.

  • Wingnut

    Sorry, that was suppose to be to Brad. Edit at will and delete this correction at will.

  • Jeff Molby

    I think the rationale for pointing the guns inward is to prevent the outsourcing in the first place. “Don’t send operations over there or we’re going to hammer you when you try to bring the profits back!” It’s bullshit, but I don’t like your chances of getting this one past the protectionists.

  • Wingnut

    Not only that, but this US vs THEM warring/competition (protectionism) happens at every single “nation unto self” layer. Sometimes, the next door house is the THEM, sometimes the next door town is the THEM, sometimes its the next door county, sometimes the next door state, often the next door nation. Liberals, conservatives, rightists, leftists, centrists, democrats, republicans, communalists, buyers, sellers, gov, business, no matter what the labeling, the US/THEM war mongers will join and unjoin various big and small us-groups in order to create and participate-in ANY two-sided arguing/war. It has to be a two sided-situation or else they/we can’t deal with it. I know this phenomena well. I try to insert “the use of economies is to blame” into US vs THEM war mongers like the one seen authoring this thread, and they/we can’t deal with blaming THAT. HOW can economy.ownership usage be to blame? IMPOSSIBLE (most say). That would mean everyone is to blame for signing aboard, condoning, and promoting economy usage (except for those of us who strive for the abolishing of economies).

    Later (but soon), when the truth finally comes to the surface, we will ALL see that money and ownership are the tools of the warring, and without them… things would be quite different. I like to use the idea that Earth is a spaceship, and the first step to flying the thing… is managing to get its Earth-wide crew to get along with each other and cooperate instead of compete. But as long as tug-o-warring over money, ownership, ideals, borders, and the empowerments those devices allow and promote, the crew of the spaceship Earth won’t be going anywhere but down the tubes.

    Competition is NOT healthy, and never was. Get back to love thy neighbor instead of bill and distrust thy neighbor. The neighbors are NOT thems or theys, they are other we and us. Everytime you gouge someone that you think is a them, you’ve hurt us, and yourself. Everyone on the planet being on the same team, is better. Ask the USA military. They (THOSE we) know about non-competing over survival supplies and empowerments. They use custodianship instead of ownership, and freely-handed-out requisition forms instead of money. They are a commune. Smart.

    Capitalism would be better if everyone worked for one giant Earthwide company, too. But somebody would surely put up a border between labor and management, and the (class) warring would start all over again. The lesson has not yet been learned. When doing pyramid schemes like capitalism, the loving strong bottom layer is the most important layer of all, but capitalists don’t think that way. As I said before, the upper layers of the pyramid are so far heads-in-the-clouds that they can’t even see the pile of dead bottom-layer folk, speak nothing of appreciating them for their willingness to hold tons of weight on their backs.

    Work on stopping pyramiding… and if successful, a whole lot of other problems (like the monetary resent seen nearly everywhere) will evaporate. My suggestion… try Christian socialism/communalism… instead of capitalism.

    A message to the meek non-competers: Our time is coming… stay pure. Our reward is the inheritance of a very cool spaceship… and without the fighting over Earth resources and profits (without capitalism), we’ll be able to fly wonderfully… and easily ascend to dimension 4. The materialists/owners won’t be doing that anytime soon.

  • Brad Warbiany


    Yes, Intel is doing production overseas. I’m not claiming everything will come back. But do you not agree that more profits will come back here at a 5% tax rate than at a 35% tax rate? And that this is not a negative for the government, because at 35% most of those profits won’t come here (to be taxed) anyway?

    The fact that some jobs have already gone overseas is no reason to continue the policies that send them there.

  • Brad Warbiany


    I suspect we’re arguing from wildly different first principles here: you’re a Christian socialist, and I’m an atheist anarcho-capitalist.

    We can disagree on the morality of competition, but at the very least I think we can agree that it does lead to technological innovation. The very fact that you and I can have instant debate over long distances wouldn’t have occurred without the competition inherent in capitalism. You may claim that such technological advancement is not necessary to live in communion with Christ, but I don’t think you can make a credible claim that such technology would exist outside of a capitalist framework. The example of every place that has tried socialism/communism stands against the notion.