Which is to say that as beneficial as the tax cuts may be for investors, they’re not significant for the U.S. economy. Under the new tax law, companies will just take the money they had been putting into U.S. Treasury and corporate bonds and use it to either pay down their debt, buy back their shares or pay out bigger dividends. But, in any case, the growth in American jobs and investment that is “supposed to follow” will “not occur.”
That is what the Senate Permanent Subcommittee on Investigations said when it looked at what happened after the 2004 tax repatriation holiday. In all, the 15 companies that “brought back” the most money to the United States back then cut their workforces and research and development spending. But they did increase their stock buybacks and boost executive pay. In fact, a group of researchers from the Massachusetts Institute of Technology, Harvard University and the University of Illinois found that for every $1 that was repatriated during that time, shareholder payouts went up 60 to 92 cents.
