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Dividend Repatriation Proposal
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Records of the Council of Economic Advisers (George W. Bush Administration)
Harvey Rosen's Files
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2015-0056-F
[
]
Tuesday, April 05, 2016
FOIA Marker
This is not a textual record. This FOIA Marker indicates that material has been removed
during FOIA processing by George W. Bush Presidential Library staff.
Council of Economic Advisers
Rosen, Harvey - - Subject Files
Location or
NARA Number:
FRC ID:
OA Number:
Stack:
Row:
Sect
Shelf:
Pos.:
Hollinger ID:
W
30
13
10
2
5919
18854
4849
5009
Folder Title:
Dividend Repatriation Proposal
Withdrawn/Redacted Material
The George W. Bush Library
DOCUMENT FORM
SUBJECT/TITLE
PAGES
DATE
RESTRICTION(S)
NO.
001
Email
comments on HIA draft - To: Brian Reardon - From:
1
08/21/2003
P5;
Philip L. Swagel
002
Email
RE: Wealth Effect - To: Harvey S. Rosen - From: Brian
2
08/01/2003
P5;
Reardon
003
Email
FW: short report on CEA (Council of Economic
2
07/30/2003
P5;
Advisors) meeting - To: Harvey S. Rosen - From: Pam
Olson
004
Memorandum
The Economics of the Proposaed tax Holiday - To: N.
4
07/17/2003
P5;
Gregory Mankiw - From: Harvey S. Rosen, et al
005
Memorandum
The Economics of the Proposaed Tax Holiday - To: N.
4
07/17/2003
P5;
Gregory Mankiw - From: Harvey S. Rosen, et al
COLLECTION TITLE:
Council of Economic Advisers
SERIES:
Rosen, Harvey - Subject Files
FOLDER TITLE:
Dividend Repatriation Proposal
FRC ID:
5919
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P1 National Security Classified Information [(a)(1) of the PRA]
b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA]
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA]
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advise between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(8) Release would disclose information concerning the regulation of
2201(3).
financial institutions [(b)(8) of the FOIA]
b(9) Release would disclose geological or geophysical information
Deed of Gift Restrictions
concerning wells [(b)(9) of the FOIA]
A. Closed by Executive Order 13526 governing access to national
Records Not Subject to FOIA
security information.
B. Closed by statute or by the agency which originated the document.
Court Sealed - The document is withheld under a court seal and is not subject to
C. Closed in accordance with restrictions contained in donor's deed
the Freedom of Information Act.
of gift.
2015-0056-F
Page 1 of 3
This document was prepared on Wednesday, April 06, 2016
Withdrawn/Redacted Material
The George W. Bush Library
DOCUMENT FORM
SUBJECT/TITLE
PAGES
DATE
RESTRICTION(S)
NO.
006
Email
repatriation memo - To: Beth ann Wilson - From: Kristin
1
07/14/2003 P5;
J. Forbes
007
Email
RE: repatriation stuff - To: Harvey S. Rosen - From:
1
07/15/2003
P5;
James Mackie
008
Handwritten Note Temporary Repatriation
1
N.D.
P5;
009
Memorandum
[Repatriation Proposal] - To: Pam Olson - From: Harvey
2
06/12/2003 P5;
S. Rosen, et al
010
Email
RE: Repatriation Proposal Memo - To: Cesar Conda, et
2
06/12/2003
P5;
al - From: Keith Hennessey
COLLECTION TITLE:
Council of Economic Advisers
SERIES:
Rosen, Harvey - Subject Files
FOLDER TITLE:
Dividend Repatriation Proposal
FRC ID:
5919
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P1 National Security Classified Information [(a)(1) of the PRA]
b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA]
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA]
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advise between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(8) Release would disclose information concerning the regulation of
2201(3).
financial institutions [(b)(8) of the FOIA]
b(9) Release would disclose geological or geophysical information
Deed of Gift Restrictions
concerning wells [(b)(9) of the FOIA]
A. Closed by Executive Order 13526 governing access to national
Records Not Subject to FOIA
security information.
B. Closed by statute or by the agency which originated the document.
Court Sealed - The document is withheld under a court seal and is not subject to
C. Closed in accordance with restrictions contained in donor's deed
the Freedom of Information Act.
of gift.
2015-0056-F
Page 2 of 3
This document was prepared on Wednesday, April 06, 2016
Withdrawn/Redacted Material
The George W. Bush Library
DOCUMENT FORM
SUBJECT/TITLE
PAGES
DATE
RESTRICTION(S)
NO.
011
Email
RE: Reducing tax on domestic reinvestment of foreign
4
06/11/2003
P5;
earnings - To: Harvey S. Rosen, et al - From: Nicholas
G. Mankiw
012
Email
RE: Temporary repatriation proposal - To: Nicholas G.
2
06/10/2003 P5;
Mankiw - From: Randall S. Kroszner
013
Email
RE: Foreign dividend repatriation proposal - To: Nicholas
4
06/09/2003
P5;
G. Mankiw - From: Pam Olson
COLLECTION TITLE:
Council of Economic Advisers
SERIES:
Rosen, Harvey - Subject Files
FOLDER TITLE:
Dividend Repatriation Proposal
FRC ID:
5919
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P1 National Security Classified Information [(a)(1) of the PRA]
b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA]
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA]
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advise between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(8) Release would disclose information concerning the regulation of
2201(3).
financial institutions [(b)(8) of the FOIA]
b(9) Release would disclose geological or geophysical information
Deed of Gift Restrictions
concerning wells [(b)(9) of the FOIA]
A. Closed by Executive Order 13526 governing access to national
Records Not Subject to FOIA
security information.
B. Closed by statute or by the agency which originated the document.
Court Sealed - The document is withheld under a court seal and is not subject to
C. Closed in accordance with restrictions contained in donor's deed
the Freedom of Information Act.
of gift.
2015-0056-F
Page 3 of 3
This document was prepared on Wednesday, April 06, 2016
Message
Page 1 of 1
Rosen, Harvey S.
From: Viard, Alan D.
Sent:
Thursday, October 02, 2003 9:38 AM
To:
Mankiw, Nicholas G.; Rosen, Harvey S.
Subject: BNA's coverage of repatriation holiday
Controversy on Repatriation
However, the repatriation provision was vigorously debated, with an amendment from Sen. John Breaux (D-La.)
that would have tightened language requiring the repatriated funds to be reinvested in the United States failing by
a narrow margin.
As passed by the committee, the reduced 5.25 percent rate applies only to repatriations in excess of the
taxpayer's average repatriation level over three of the five most recent taxable years, throwing out the highest and
lowest of those five years.
In order to qualify for the reduced rate, dividends must be described in a domestic reinvestment plan approved by
the taxpayer's senior management and board of directors, and used for worker hiring and training, infrastructure,
research and development, and financial stabilization for the purposes of job retention or creation.
Breaux protested that the phrase "financial stabilization" leaves open a wide window for companies to use the
repatriated income for stock repurchase and other financial bolstering activities. He proposed an amendment that
would have required the funds be used only for increasing the number of workers, capital expenditures, research
and development, and contributions to pension trust funds for workers.
The amendment was defeated by an 11-10 vote. Treasury Assistant Secretary for Tax Policy Pamela Olson, who
was present at the markup, said the administration remains opposed to the idea of a one-year lower rate for
repatriated income.
"The companies with income overseas knew what the tax rules were when they made their investments," Olson
said. "This would give them a tax holiday from their decisions, and that is unfair to other taxpayers who pay
taxes."
Olson said Treasury remains skeptical about the amount of income that would return to the United States, which
some business stakeholders have predicted would be between $200 billion and $300 billion. "We feel it's going to
undermine the belief of American taxpayers in the fairness of the system," she said.
10/2/2003
Withdrawal Marker
The George W. Bush Library
FORM
SUBJECT/TITLE
PAGES
DATE
RESTRICTION(S)
Email
comments on HIA draft - To: Brian Reardon - From: Philip L. Swagel
1
08/21/2003
P5;
This marker identifies the original location of the withdrawn item listed above.
For a complete list of items withdrawn from this folder, see the
Withdrawal/Redaction Sheet at the front of the folder.
COLLECTION:
Council of Economic Advisers
SERIES:
Rosen, Harvey - Subject Files
FOLDER TITLE:
Dividend Repatriation Proposal
FRC ID:
FOIA IDs and Segments:
5919
2015-0056-F
OA Num.:
5009
NARA Num.:
4849
RESTRICTION CODES
Presidential Records Act [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P1 National Security Classified Information [(a)(1) of the PRA]
b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA]
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA]
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advise between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(8) Release would disclose information concerning the regulation of
2201(3).
financial institutions [(b)(8) of the FOIA]
b(9) Release would disclose geological or geophysical information
Deed of Gift Restrictions
concerning wells [(b)(9) of the FOIA]
A. Closed by Executive Order 13526 governing access to national
Records Not Subject to FOIA
security information.
B. Closed by statute or by the agency which originated the document.
Court Sealed - The document is withheld under a court seal and is not subject to
C. Closed in accordance with restrictions contained in donor's deed
the Freedom of Information Act.
of gift.
This Document was withdrawn on 4/6/2016
by DRS
Withdrawal Marker
The George W. Bush Library
FORM
SUBJECT/TITLE
PAGES
DATE
RESTRICTION(S)
Email
RE: Wealth Effect - To: Harvey S. Rosen - From: Brian Reardon
2
08/01/2003
P5;
This marker identifies the original location of the withdrawn item listed above.
For a complete list of items withdrawn from this folder, see the
Withdrawal/Redaction Sheet at the front of the folder.
COLLECTION:
Council of Economic Advisers
SERIES:
Rosen, Harvey - Subject Files
FOLDER TITLE:
Dividend Repatriation Proposal
FRC ID:
FOIA IDs and Segments:
5919
2015-0056-F
OA Num.:
5009
NARA Num.:
4849
RESTRICTION CODES
Presidential Records Act [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P1 National Security Classified Information [(a)(1) of the PRAJ
b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA]
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA]
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advise between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(8) Release would disclose information concerning the regulation of
2201(3).
financial institutions [(b)(8) of the FOIA]
b(9) Release would disclose geological or geophysical information
Deed of Gift Restrictions
concerning wells [(b)(9) of the FOIA]
A. Closed by Executive Order 13526 governing access to national
Records Not Subject to FOIA
security information.
B. Closed by statute or by the agency which originated the document.
Court Sealed - The document is withheld under a court seal and is not subject to
C. Closed in accordance with restrictions contained in donor's deed
the Freedom of Information Act.
of gift.
This Document was withdrawn on 4/6/2016
by DRS
JPMorgan
Economic & Policy Research
J.P. Morgan Securities Inc.
May 2, 2003
Special report
Introducing the Homeland Investment Act
A tax change is proposed that temporarily reduces obstacles to
repatriating accumulated foreign earnings of US corporations
Legislation to produce results; repatriation estimated at $300 billion
Survey suggests that firms would use funds for varied purposes;
shoring up corporate finances is the top priority
Estimated increase in business spending to lift GDP growth 0.5%
Budget impact is negligible
Introduction
Amid the current flurry of activity on US tax policy, it is easy to neglect the
Homeland Investment Act. This tax proposal, which has bipartisan support,
would remove many of the tax obstacles that inhibit repatriation of foreign earn-
ings by US corporations. The intention of this legislation is to make it less costly
to repatriate earnings that might be used for investment spending and hiring in the
United States.
However, there is little analysis available that bears on the likely impact of this
legislation. To fill this gap, this special report draws on existing company infor-
mation and provides new survey material to give rough guidance as to the poten-
tial effects of the Homeland Investment Act. The analysis suggests that there is a
large pool of reinvested foreign earnings that would be repatriated if this legisla-
tion were passed. JPMorgan estimates that the gross flow that would result from
the passage of the pending legislation is roughly $300 billion. This number is
more than twice the estimate of the Joint Committee on Taxation made in 2001.
A survey of firms suggests that this money would be put to varied use... Shoring up
balance sheets would be a central priority. JPMorgan estimates suggest that the
Anne Swope
(1-212) 834-7566
legislation would lead to a roughly 3% reduction in nonfinancial corporate debt.
[email protected]
An important part of the funds would be used to increase business activity. Esti-
JPMorgan Chase Bank
mates suggest a 2-3% increase in capital spending over two years, during which
Bruce Kasman
the GDP level would likely be boosted by roughly one-half of a percentage point.
(1-212) 834-5515
The impact of the legislation on the Federal Budget is likely to be negligible.
[email protected]
JPMorgan Chase Bank
Introducing the Homeland Investment Act
Robert Mellman
(1-212) 834-5517
Legislation was recently introduced in both the House (H.R.767) and Senate
[email protected]
(S.596) to temporarily change the tax treatment of US subsidiaries foreign earn-
JPMorgan Chase Bank
www.morganmarketscom
May 2, 2003
Economic & Policy Research
IPMorgan
Introducing the Homeland Investment Act
JPMorgan Chase Bank, New York
Page 2
Anne Swope (1-212) 834-7566
[email protected]
ings. These bills, the Homeland Investment Act of 2003 and
A stylized example of tax law proposal
Invest in the USA Act of 2003, would temporarily reduce
the US tax rate on foreign subsidiary earnings that are dis-
in this example, Acme International earns $100 abroad and Days
tributed to the United States parent company. Although the
$10 in foreign taxes No US taxes are part because earnings are not
legislation has been proposed separately from the Bush
repatriated
administrations 'jobs and growth" stimulus package, it is
now being discussed as a possible element of this plan.
Under current law, If the profits were repatriated the firm would also
owe $35 in US taxes and $450 in additional foreign for distributed
The current form of the proposed legislation reduces the tax
darings less a $14.50 tax credit to offset the foreign corporate income
rate to 5.25% on distributions in excess of a corporation's
tax and withholding tax paid The additional tax cost of repairiating the
"normal" annual distribution, and would be effective for
$90 is $25
distributions made in either 2003 or 2004, depending on
when the legislation becomes law.
Under the proposed Law. the US corporate tax would be lowered by
from $35 to $5.25 the foreign tax credit would also be reduced by
The Senate Bill differs from the House version in requiring
85% to $2.18 and Acme would still have to pay the 34.50 foreign with
US corporations to provide a domestic reinvestment plan.
holding tax on distributions The tax cost to the from of repatriating the
This plan requires firms to describe how repatriated income
$90 in earnings to the United States B lowered by more than two thirds
will be reinvested in the United States. The Senate bill an-
from $215 to $7.57
ticipates that an electing corporations reinvestment plan
would provide for use of the distributed cash as a source for
Example
funding worker hiring and training, infrastructure, research
Foreign Taxable Income
$100
and development, capital investments and/or providing fi-
10% Foreign Corporate Tax
410
nancial stability (of the corporation) for purposes of job
Foreign Net Earnings
$90
retention or creation.
Tax cost of repatriating foreign earnings
If the Homeland Investment Act becomes law on or before
Under Current Law
September 2, 2003, the temporary reduced tax rate will only
us Corporate Tex at 35%
$35
apply to qualifying distributions made on or prior to De-
Foreign Tax Credit
$14.50
cember 31, 2003 for all calendar year taxpayers. This im-
Fineision Withholding Tax
$4.50
plies that any resulting capital flows would occur in a very
Additional Tax Burden
$25.00
short period of time. If the Act becomes law after Septem-
ber 2, 2003, the reduced tax rate would apply to distribu-
tions made during 2004 for calendar year taxpayers.
Under Proposed Law
US Corporate Tax at 5.25%
$5.25
Motivation for changing the law
Fioleign Tax Credit
$2.18
Unlike most other industrial countries, current US tax law
Foreign Witholding The
$4.50
provides multinational firms with strong incentives to keep
Additional Tax Burden
$7.57
earnings from foreign operations outside the United States,
even when efficiency considerations would argue that the
US corporations: profits earned abroad
funds be used within the United States.
billions of dollars
percent
Under international tax principles, primary jurisdiction to
210
28
Profits earned abroad
tax income is given to the country where the foreign subsid-
180
iaries operate. The accumulated earnings of a US
24
150
corporations foreign subsidiaries are generally not subject
to US corporate income taxation until the earnings are actu-
120
20
ally distributed to the corporate parent as a dividendAs a
90
16
general principle, US tax on repatriated income is imposed
60
Share of total profits
to bring the total corporate tax rate to 35%. In countries in
30
12
which tax rates are below 35%, an additional US tax gener-
85
87
89
91
93
95
97
99
01
May 2, 2003
Economic & Policy Research
PMorgan
Introducing the Homeland Investment Act
JPMorgan Chase Bank, New York
Page 3
Bruce Kasman (1-212) 834-5515
[email protected]
ally is paid when earnings are repatriated. Thus, foreign
Foreign undistributed earnings by credit rating
investments financed with foreign earnings of US multina-
share of
tionals typically have been more attractive than returns on
undistributed earnings
domestic investments financed with foreign earnings (after
AAA
22.9
additional taxes are paid to repatriate the earnings). To be
AA
9.9
sure, US tax rules are far more complex than this short de-
scription suggests. Often they operate to create disincen-
AA-
11.5
tives to repatriate foreign earnings even when tax rates
A+
13.6
abroad are high.
A
10.3
A-
9.4
In lowering the tax rate to 5.25%, the cost of repatriating
BBB+
3.3
earnings is significantly reduced. Firms can repatriate funds
BBB
10.3
at a lower tax rate and may receive a partial tax credit for
Lower
8.8
taxes paid abroad. A stylized example presented in the ac-
companying box (previous page) makes this point clear. In
Foreign undistributed earnings by sector
the example, costs of repatriating earnings are cut by more
share of
than two-thirds.
undistributed earnings
Manufacturing
39.7
Many firms have large pools of accumulated earnings from
High tech and telecom
17.7
foreign operations but lack promising investment opportu-
nities for use of the funds abroad. In particular, tax laws
Pharmaceuticals and health care
27.0
make it difficult to structure direct investments from one
Consumer
12.2
subsidiary to another. And while the US parent can gener-
Energy
9.6
ally borrow as an alternative to repatriating funds, the cur-
Finance and insurance
6.5
rent environment is one in which firms have strong incen-
Other
5.0
tives to deleverage. Risk considerations should also pro-
Note: Both tables based on the sample of 237 S&P 500 corporations that report reinvested
mote repatriation. Absent a US tax bite, the risk of political
foreign earnings.
change or shifting foreign tax regimes create disincentives
The Joint Committee on Taxation analyzed a proposal simi-
for holding assets in many parts of the world.
lar to the current one in 2001. It estimated that repatriated
earnings would rise by $135 billion in the first year after
The primary motivation of the change in the law is to allow
legislation is effective. The estimated revenue impact was
firms to repatriate these foreign earnings to promote long-
modest. A small positive $4.1 billion gain in the first year
term growth. The hope is that some of these funds would be
was estimated to be temporary. Over ten years the legisla-
used in ways that boost US investment and hiring. That a
tion was estimated to reduce revenues by a net $3.9 billion.
reduction in the tax rate on repatriating earnings might have
The Joint Committee has provided little detail in how it ar-
little if any net cost to the US Treasury is also appealing.
rived at these estimates.
There would be a net loss in revenues from firms that
planned to repatriate earnings in the future and would now
JPMorgan's assessment of the Homeland Investment Act
bring these funds home at a lower tax rate. However, firms
begins with an estimate of the size of the accumulated for-
that keep virtually all their foreign earnings abroad to avoid
additional taxes under current law would have incentive to
eign subsidiary earnings that would be available for repa-
triation to the United States. In the audited financial state-
repatriate earnings currently under the proposal.
ments of many S&P 500 corporations, the cumulative
amounts of foreign subsidiary earnings that are permanently
Foreign subsidiary earnings: a large pool exists
or indefinitely réinvested outside the US hereafter, rein-
Although the motivation of the legislation is clear, there is
vested foreign earnings) are disclosed.
little information available to assess the likely size of in-
flows that will be generated under the new law and its mac-
These figures generally appear in the tax footnote to audited
roeconomic effects.
financial statements. They are available because, under
May 2, 2003
Economic & Policy Research
PMorgan
Introducing the Homeland Investment Act
PMorgan Chase Bank, New York
Page 4
Anne Swope (1-212) 834-7566
[email protected]
GAAP, all corporations that consider all or some of their
$500 billion in estimated retained foreign earnings
foreign subsidiary earnings as permanently or indefinitely
reinvested outside the US-and therefore do not accrue a
Financial statements show $406 billion in accumulated foreign
deferred tax liability-are required to disclose the amount
subsidiary earnings for the S&P 500: This figures likely underesti-
in their audited financial statements. Financial statements
mates the size of the total pool of foreign camings that could
indicate that the reinvested foreign earnings of the S&P 500
potentially be repairiated
corporations that could potentially be repatriated following
passage of the Homeland Investment Act is $406 billion.
The SEP 500ms a subset of the entire corporate sector S&P
500 operating eamings has recently averaged about 60% of over-
Most of these earnings are held by companies with high
all after tax earnings Its share of foreign eamings is likely larger,
credit ratings (tables, page 3). Based on S&P ratings, more
atthough no official breakdown is available
than three fourths of the earnings are held by companies
that are rated A or higher Sectorally, manufacturing and
The aggregate réinvested foreign earnings of corporations in the
pharmaceutical companies account for the largest concen-
S&P 500 includes reinvested foreign earnings of only 237 corpo-
tration of accumulated foreign earnings, more than one-half
rations The remaining 263 corporations did not overtly disclose
of earnings held abroad.
reinvested foreign earnings life some cases the lax effects but
not the total amount of formen subsidiary earnings are disclosed
There are good reasons to think that this $406 billion figure
For RUE calculation these companies BIRE treated as if they have
underestimates the total pool of earnings that would be eli-
no reimwested foreign earnings
gible for repatriation (box, page 4). Indeed, this view is
confirmed by an alternative estimate based on IRS data for
There are foreign subsidiary earnings that have not been repa-
a larger sample of firms. Taken together, the total pool of
triated Dut also not been treated 2015 permanently reinvested
reinvested foreign earnings eligible for repatriation is esti-
These namings could also be repatriated H the bill becomes Haw
mated at about $500 billion.
An atternative exercise employs IRS data for the 7500 largest
Survey points to large-scale repatriation
controlled foreign corporations for 1998 and points E accumu-
lated foreign subsidiary earnings in 2002 of close to $500 billion
The existence of a large pool of reinvested foreign earnings
This level appears consistent with a scaled up estimate from the
provides little insight as to the likely size of repatriated
smaller S&P sample
funds under the tax plan. In order to estimate the likely ef-
fect of the legislation, an informal survey of large firms was
Survey results, repatriation of relnvested foreign earnings
conducted. The survey sampled tax and treasury depart-
percent of reinvested foreign earnings
ments of 28 firms. Their reinvested foreign earnings repre-
sent about one-quarter of the aggregate $406 billion mea-
60
sured in the S&P 500 sample. The results of the survey
50
highlight the following:
40
A strong incentive to repatriate. Respondents representing
30
slightly over half of the sample-both as a share of the
20
number of respondents and as a share of reinvested foreign
10
earnings-indicate that substantially all of their earnings
0
would be repatriated. Most other companies indicated that
Substantially all
Some
None
some of their earnings would be repatriated. Only two re-
spondents, accounting for about 8.7% of reinvested foreign
Estimate of repatriated earnings
earnings of the sample, did not plan to repatriate foreign
billions of dollars
earnings to the United States.
From Firms
From Firms
Repatriating
Repatriating
Dollars
Cash flow and repatriation. Adequate liquidity appears to
Substantially All
Some
Repatriated
be an important consideration for firms willingness to repa-
Share of sample
50.3%
41.2%
triate. Firms with large cash balances globally appear more
Percent repatriated:
committed to repatriating all their reinvested foreign earn-
Higher estimate
100%
60%
$375
Lower estimate
80%
30%
$265
1. Corporations may change their reinvestment strategies, however, at which time
Note: Estimates are based on a JPMorgan survey of 28 firms accounting for roughly 25% of
deferred taxes may be required to be accrued
all accumulated earnings by the S&P 500 sample of very large firms.
May 2, 2003
Economic & Policy Research
PMorgan
Introducing the Homeland Investment Act
JPMorgan Chase Bank, New York
Page 5
Bruce Kasman (1-212) 834-5515
[email protected]
ings. Corporations that do not have sufficient cash would
S&P sample and survey group
have to borrow the cash at the foreign subsidiary level, liq-
$ billion
uidate operating assets, or distribute property, all of which
Global
Lesser of Reinvested
have collateral consequences and make the decision signifi-
Group
Reinvested Foreign
Cash & Cash
Foreign Earnings or
cantly more complex. Liquidity is also significant as there
Earnings
Equivalents
Global Cash and Equiv.
would be cash taxes due on the distributed earnings. In ad-
dition to US taxes, most countries impose a withholding tax
S&P 500 sample
407
374
193
when earnings are distributed.
Survey Group
102
76
59
The results of the survey point to a substantial flow of repa-
Note: The S&P sample represents the 237 corporations in the S&P 500 that
triated foreign earnings (table, page 4). The estimates range
disclose reinvested foreign earnings. The survey group represents the 28
corporations sampled by JPMorgan. The amount of global cash and cash
from $265- 375 billion.
equivalents for each company is the amount reflected on each
companys audited financial statements The aggregation of corporations
The possibility that the survey sample is biased towards
using the lesser of their reported reinvested foreign earnings or global
cash is reported in the last column.
companies with high levels of liquidity- and therefore a
greater proclivity to repatriate earnings- was also examined
(top table, page 5). In the aggregate, companies in the sur-
vey sample do not appear to have a larger cash position
relative to those in the broader S&P 500 sample. This find-
Survey results: uses of repatriated funds
ing holds when the data are aggregated such that repatriated
survey of 28 firms; respondents could mention more than one use
flows are no larger than a corporation's available cash posi-
Percent of
tion.
Number
respondents
Pay down outstanding debt
13
46
In all, $300 billion looks to be a reasonably conservative
Finance capital spending
11
39
estimate of the magnitude of foreign earnings that could be
Fund R&D, venture capital, or acquisitions
11
39
repatriated under the proposed legislation. This estimate is
Buy back stock
5
18
more than twice as large as that produced by the Joint Com-
Use cash for working capital
3
11
mittee on Taxation.
Might pay dividend (if double taxation ends)
3
1.1
Fund underfunded pension fund
1
4
A modest boost to growth and deleveraging
The ultimate intent of the Homeland Investment Act is to
provide a boost to US macroeconomic performance. In con-
sidering the possible benefits of repatriating $300 billion in
foreign earnings, once again the survey provides guidance
cash or is used for stock buy-backs and shoring up pension
(bottom table, page 5). Most corporations point to shoring
funds.
up corporate finances— buying back debt, increasing levels
of liquid assets, rebuilding pension funds or even retiring
Under these assumptions, $150 billion of corporate debt
equity- as a key priority for the use of these funds. How-
would be paid down, equivalent to about 3% of total nonfi-
ever, a substantial number of corporations also indicate that
nancial corporate debt. For many firms repatriating funds,
a portion of the funds will be used to finance activity: capi-
the percentage reduction in debt would be much greater.
tal spending, research and development, and the like.
The share allocated to new expenditures amounts to about
There are no hard numbers on how the money would be al-
$50 billion per year in new spending. At this magnitude,
located among these varied purposes. As a rough translation
GDP would likely be boosted by about one half a percent-
of the survey results, assume that 50% of the $300 billion is
age point. The biggest benefits would likely come in spend-
used for debt repayment and 35% is used for spending- on
ing on equipment and software and new plant. The boost to
research and development or capital expenditure- spread
the total national level of capital spending would be 2-3%
out over a two-year period. The remaining 15% remains in
in each of the two years.
May 2, 2003
Economic & Policy Research
PMorgan
Introducing the Homeland Investment Act
JPMorgan Chase Bank, New York
Page 6
Anne Swope (1-212) 834-7566
[email protected]
Budget impact is expected to be small
tial offset to the $10 billion to $15 billion gain. Most likely,
The effects of the proposed change in the tax law on the
the past trend of earnings accumulating abroad would con-
federal budget are likely to be relatively modest: positive in
tinue to prevail, and this partial offset would be minimal,
the short run and slightly positive in the longer run as well.
Based on the estimate of the repatriated earnings, cash tax
Close to $100 billion shift to dollar assets
payments of roughly $10-15 billion as a direct result of the
Regarding the currency impact of the tax change, the key
legislation would accrue to the Treasury in the first year.
issue is the extent of the shift from nondollar to dollar assets
This assumes an effective tax rate of 3.5-5.0%, after adjust-
that takes place. Anecdotal evidence gained from talking to
ing for foreign tax credits.
US corporations suggest that a large portion of foreign
earnings held abroad are held in US dollars. Although no
To the extent that some of the reinvested foreign earnings
hard information is available, a reasonable estimate places
would have been distributed in the foreseeable future and
the dollar share of reinvested foreign earnings at between
taxed at the statutory rate of 35% absent the proposed legis-
one-half and three-quarters. As a result, the repatriation of
lation, the present value of the foregone taxes on these earn-
$300 billion in foreign earnings is likely to produce a one-
ings (difference between 35% and 5.25%) would be a par-
time currency shift of around $100 billion.
Copyright 2003 J.P. Morgan Chase & Co. All rights reserved. JPMorgan is the marketing name for J.P. Morgan Chase & Co., and its subsidiaries and affiliates worldwide J.P. Morgan Securities Inc. is a member
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Viard 7/31/03
JC7 revenue estimate
- names $ J.bin frit year
- lises $45 one 10- yr pend
Thomas bill
- - you hane t maintain prom levely
dividend repatria tens) and le you
lose The here fits of The holding
- only some of The davider earney from
abroad ("permanently "innes abwad)
areligible.
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P5;
Harvey S. Rosen - From: Pam Olson
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COLLECTION:
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SERIES:
Rosen, Harvey - Subject Files
FOLDER TITLE:
Dividend Repatriation Proposal
FRC ID:
FOIA IDs and Segments:
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2015-0056-F
OA Num.:
5009
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Risk Management Advisory
Bank of America.
July 11, 2003
Alert: Homeland Investment Act
An Update
The Homeland Investment Act (HIA) is proposed legislation that will provide US
Arnold Miyamoto
corporations with a window of six months to one year to repatriate offshore earnings at
+1 212 847 6218
a significantly reduced tax rate.
[email protected]
We assign a greater than 50% probability to the proposed HIA legislation being
enacted within this Congressional session.
Martin Gonzalez
If enacted in its current form, we expect more than $400 billion to be repatriated in
+1 212 583 8192
[email protected]
2004.
Given that Congress is not expected to focus on the HIA until after the Medicare
issue is addressed, corporations still have an opportunity to join the lobbying effort
to ensure their particular tax situation is considered.
Because the repatriation window is narrow and given the large amount of time
required to properly structure transactions to realize the maximum benefit (and to
structure the associated liability-management transactions), we encourage clients
who have not already done so to initiate debt structuring preparations with our
capital markets desk as soon as possible.
We remain of the view that the impact on the USD will be both direct and indirect.
With the recent decline in the US dollar, we think it is prudent to protect the
shareholder value of non-USD assets, especially those that may be affected by this
act.
Background
The Homeland Investment Act proposes to amend the 1986 Internal Revenue Code with the
objective of encouraging the re-investment of foreign earnings into the United States. The bill
proposes to reduce the applied tax rate on excess qualified foreign distributions from 35% to
5.25% for a period of one year. Excess qualified foreign distribution is the excess of:
Dividends received by the taxpayer during the taxable year from corporations that are
controlled foreign corporations in which the taxpayer is a United States shareholder on the
date such dividends are paid, over the base dividend amount.
The base dividend amount means an amount not less than the average amount of dividends
received during the fixed base period from corporations that are controlled foreign
corporations in which the taxpayer is a United States shareholder on the date such dividends
are paid.
The proposed effective date is the first taxable year of the electing taxpayer ending 120 days after
the date of enactment.
Bank of America
Alert: Homeland Investment Act of 2003
If passed, we believe that dividend repatriation will be in excess of $400 billion. The influx of
capital into the US would be extremely beneficial across both the public and private sectors.
Multi-national corporations (MNCs) participating in a recent survey have identified the following
as probable areas to which they would allocate any repatriated HIA capital:
Working capital, inventory, plant & equipment (30%)
Reduction of debt (30%)
Stock repurchase (10%)
Contributions to under-funded pensions (5%)
Portfolio investments (10%)
M&A and other (15%)
We remain of the view that the impact of this act on the USD will be both direct and indirect. The
direct impact will be the spot exchange required to convert non-USD cash into USD. Relative to
the size of the market, the flows and timing will be both small and spread out. In addition, a
significant percentage of the offshore accounts are already denominated in US dollars.
Nonetheless, even if only 20-40% of $400 billion or more is converted, this would still be a large
number. Indirectly, repatriated HIA. flows represent a significant amount of money relative to the
trade balance. As seen above, HIA repatriated funds will be used to pay down debt and buy back
stock, and the residual flows will at least temporarily be invested in short-term, high-quality
securities.
On May 15, the Senate passed (75-25) its version of the HIA bill (S. 596). S 596 was included in
the Senate's proposed tax and growth package. Despite strong bipartisan support, the bill was
ultimately axed in the final compromise with the Administration, in which a decision was reached
to more narrowly focus this year's tax bill.
Legislative Strategy
Take Away. Given that Congress is not expected to focus on the HIA until after the Medicare
issue is addressed, corporations still have an opportunity to join the lobbying effort to ensure their
particular tax situation is considered. Note that a coalition of thirty companies (primarily from the
technology and pharmaceutical industries) are the principal sponsors of this legislation. We
believe that a broader corporate representation would greatly improve probability of passage.
Should you wish to join the coalition or find out more about it, please contact us.
The HIA is expected to be wrapped into the International Tax Bill (ITB). The ITB has yet to be
introduced, but this is expected to happen in the next month. Congress' first priority is to address
the Medicare issue. We expect this to be resolved and signed by the Executive branch by month-
end. Once Medicare has been addressed, we expect the ITB to be the next major issue on
Washington's agenda.
A key ITB concern is the resolution of FSC/ETI (Foreign Sales Corps and the Extraterritorial
Income Act of 2000). FSC/ETI's are US business vehicles that the WTO has ruled are illegal. In
its November ruling, the WTO granted the EU the ability to levy $4 billion in retaliatory tariffs on
US exporters. Resolving the FSC/ETI will be a central goal of the International Tax Bill.
The next step will be to introduce the ITB (with the HIA provision included) and get it passed
before the summer recess. For reference, Washington adjournment is in the October-November
timeframe. We expect end of August to early September to be a critical period for this legislation.
Ideally, the ITB will be passed this year, making dividend repatriation a 2004 event.
Several Washington lobbyists have indicated that Chairman Thomas' HIA proposal to be included
in the ITB will have two key modifications from the original bill (H.R. 767):
Arnold Miyamoto +1 212 847 6218 Martin Gonzalez +1 212 583 8192
2
Bank of America
Alert: Homeland Investment Act of 2003
An increase in the tax rates from 5.25% to 7%. (Note: the Senate version still calls for
5.25%.)
A shortened repatriation window from twelve to six months.
Washington recognizes the importance and positive economic implications of a large influx of
capital. Thus, shortening the repatriation window is consistent with having a quick impact.
Offsetting the "benefit" to a shortened window are 1) foreign tax credit sign-off (if needed); and
2) having a reasonably long enough period that ensures that all companies will have the time
needed to execute an appropriate strategy. We do not expect the window to be lengthened, and we
believe that it is extremely unlikely that the proposed short-term tax relief will be changed to
permanent relief.
In addition to the probable allocations (above), we are also aware of companies conceptually
discussing a one-time special dividend to shareholders from the repatriated HIA cash net of
immediate needs. Although there are risks to this legislation, we still assign a greater than 50%
probability of the HIA ultimately being enacted.
Debt Strategy
Take Away. Given the narrow window in which corporations will be able to repatriate earnings-
and timing needed to properly structure transactions to maximize the tax benefit and to structure
the associated asset-liability management transactions-we encourage clients who have not
already done so to initiate debt structuring preparations to take advantage of the HIA with our
capital markets desk as soon as possible.
The passage of the legislation presents corporations that have significant "trapped" offshore
earnings with three potential capital markets structuring opportunities:
1. Maximizing value of HIA benefit via additional offshore issuance. Issue proceeds will
allow clients with offshore assets invested in illiquid assets to take full advantage of tax
holiday that they might not otherwise have been able to. Similarly, even clients with offshore
assets invested in liquid assets could maximize the benefit of the tax holiday by further
levering their subsidiaries.
2. Managing net investment exposure via additional offshore issuance. Subject to local
limitations regarding capitalization structure and the historical earnings and profits account
(E&P), companies can reduce their consolidated net investment risk by issuing local currency
denominated debt. In addition to maximizing the tax holiday afforded by the HIA, this
structural move reduces overall balance sheet risk to the shareholders from exchange rate
fluctuations.
3. Structuring onshore liability management solutions with repatriated earnings. Naturally,
liability management solutions should be considered in conjunction with the expected wave
of repatriated funds.
FX Strategy
Take Away. We remain of the view that the impact on the USD will be both direct and indirect.
Given the recent decline in the US dollar, we think it is prudent to protect the shareholder value of
non-USD assets that are either in the form of cash or illiquid assets. For specific hedging
strategies, please contact your foreign exchange sales advisor.
For more information, log on to bofa.com/capitalmarkets
The information contained in this publication is for information purposes only. The information contained herein has been obtained or derived from public sources
believed by us to be reliable, but we do not represent that it is accurate or complete and it should not be relied upon as such. Any opinions or predictions constitute our
judgement as of the date of this publication and are subject to change without notice. The information contained herein is not meant to be, nor shall it be construed as,
an offer by Bank of America Corporation or any of its affiliates (together, the "Bank") to offer to buy or sell any currency or financial product. The Bank may from time to
time hold positions in, and may effect transactions in, the currencies and securities mentioned herein.
Arnold Miyamoto +1 212 847 6218 Martin Gonzalez +1 212 583 8192
3
Alan D. Viard
07/22/2003 09:15:29 AM
Record Type:
Record
To:
See the distribution list at the bottom of this message
CC:
Subject: Pam Olson criticized repatriation holiday at July 15 Senate Finance hearing
According to the July 21 Tax Notes:
Olson did her best to puncture the repatriation bubble. "We don't think that a tax holiday like this
is the best way to address the issues in our international tax rules. It would be far better to do
something on a long-term, permanent basis that would improve the competitiveness regime," she
said...Olson said temporary fixes are not on the administration's radar. "We do think that it would
be worthwhile taking a long-term look at the structure of the tax code to see whether or not a
worldwide system continues to make sense, or whether we'd be better off with a territorial
system," she said.
"What we don't think would be good policy would be to just do it on a one-year basis," Olson said.
"We do think that if the committee considers and moves forward with modifications on the
subpart F rules, and modifications on the foreign tax credit rules, we will go some distance to
address this issue."
Message Sent To:
Nicholas G. Mankiw/CEA/EOP@EOP
Harvey S. Rosen/CEA/EOP@EOP
Kristin J. Forbes/CEA/EOP@EOP
Andrew A. Samwick/CEA/EOP@EOF
Julia Stahl/CEA/EOP@EOP
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The Economics of the Proposaed tax Holiday - To: N. Gregory Mankiw
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P5;
From: Harvey S. Rosen, et al
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COLLECTION:
Council of Economic Advisers
SERIES:
Rosen, Harvey - Subject Files
FOLDER TITLE:
Dividend Repatriation Proposal
FRC ID:
FOIA IDs and Segments:
5919
2015-0056-F
OA Num.:
5009
NARA Num.:
4849
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
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b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA]
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA]
an agency [(b)(2) of the FOIA]
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financial information [(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
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Court Sealed - The document is withheld under a court seal and is not subject to
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[email protected]
07/17/2003 04:32:06 PM
Record Type:
Record
To:
Harvey S. Rosen/CEA/EOP@EOP
CC:
Subject: FW: Repatriation Holiday
A better answer came in as soon as I sent you my reply.
Original Message
From: Randolph, William
Sent: Thursday, July 17, 2003 4:22 PM
To: Olson, Pam
Cc: Angus, Barbara
Subject: RE: Repatriation Holiday
Harvey,
Whether passive or active, the income can be shielded by foreign tax
credits, but companies are most likely to be able to shield it with excess
foreign tax credits from other sources if it is active. I think that
confusion may arise because many companies have accumulated substantial
active earnings abroad by reinvesting in passive financial assets. Earnings
on the financial assets would be considered to be passive and, as such,
would be subject to U.S. tax as they are accrued and would be treated as
passive income under the foreign tax credit rules. However, the
repatriation holiday proposal is about the companies' principle in those
financial assets. The principle represents accumulated active earnings that
have not yet been repatriated and subject to U.S. income tax. If the
companies sell the financial assets and pay dividends (the liquidated
principle) back to the U.S. parent, the dividends are subject to U.S. tax
and may be shielded by foreign tax credits as active income.
Accumulated foreign earnings are not necessarily reinvested in passive
assets, but passive assets are the most likely assets to be liquidated.
Note also that the holiday proposal does not require foreign assets to
actually be liquidated, but I will not go into the mechanism unless you are
interested.
Bill
Original Message
From: Olson, Pam
Sent: Thursday, July 17, 2003 3:40 PM
To: Angus, Barbara; Randolph, William
Subject: FW: Repatriation Holiday
Original Message
From: [email protected] [mailto:[email protected]]
Sent: Thursday, July 17, 2003 3:25 PM
To: [email protected]
Subject: Re: Repatriation Holiday
hi pam. can you help me out with this query?
thanks.
--harvey
Forwarded by Harvey S. Rosen/CEA/EOP on 07/17/2003
03:25 PM
Brian Reardon
07/17/2003 02:24:21 PM
Record Type:
Record
To:
Harvey S. Rosen/CEA/EOP@EOP
CC:
bcc:
Subject: Re: Repatriation Holiday (Document link: Harvey S. Rosen)
hey harvey
thanks for this
Question: You mention excess foreign tax credits several times, but my
impression is the money that would be repatriated doesn't qualify for these,
since its likely passive income from a low-tax regime. Is that not the
case.
Harvey S. Rosen
07/17/2003 01:32:43 PM
Record Type:
Record
To:
Brian Reardon/OPD/EOP@EOP
CC:
Subject: Repatriation Holiday
brian,
here's my shot at the proposed tax holiday for repatriated foreign earnings.
i hope that you find it convincing! best, harvey
(See attached file: temporary repatriation 7.17hr2.doc)
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[email protected]
07/17/2003 04:30:13 PM
Record Type:
Record
To:
Harvey S. Rosen/CEA/EOP@EOP
CC:
Subject: RE: Repatriation Holiday
I'll get you a more complete answer than I can give, but, for starters, the
multiplicity of foreign tax credit baskets (i.e., it's more than the passive
basket) results in excess FTCs for many companies, as does the interest
allocation rule, which can artificially reduce foreign source income, and as
does the overall foreign loss rule. I don't expect much of the income to be
in the passive basket. The arbitrary reductions in foreign source income
for purposes of calculating the FTC and multiple limitations on the FTC all
can result in companies being unable to use all their FTCs currently or even
within the extended period allowed under the carryforward rules. As I
recall from Commerce Department statistics, the lion's share of U.S. MNC
foreign direct investment is in the developed world, particularly Europe,
where with the exception of Ireland (and possibly Switzerland), the tax
rates are not significantly different from those in the U.S. I believe the
companies most interested in the repatriation proposal have significant
operations in Ireland, Singapore, and Hong Kong where the tax rates are
relatively low.
Original Message
From: [email protected] [mailto:[email protected]
Sent: Thursday, July 17, 2003 3:25 PM
To: [email protected]
Subject: Re: Repatriation Holiday
hi pam. can you help me out with this query?
thanks.
--harvey
Forwarded by Harvey S. Rosen/CEA/EOP on 07/17/2003
03:25 PM
Brian Reardon
07/17/2003 02:24:21 PM
Record Type:
Record
To:
Harvey S. Rosen/CEA/EOP@EOP
CC:
Alan D. Viard
07/17/2003 03:49:56 PM
Record Type:
Record
To:
Harvey S. Rosen/CEA/EOP@EOP
CC:
bcc:
Subject: Re: Repatriation Holiday
Right - the firms with excess foreign tax credits won't repatriate their money and therefore, as our memo
states, will not benefit - the firms that repatriate will, as Brian says, be the ones that don't have excess
foreign tax credits.
Harvey S. Rosen
Harvey S. Rosen
07/17/2003 03:25:34 PM
Record Type:
Record
To:
Alan D. Viard/CEA/EOP@EOP
CC:
Subject: Re: Repatriation Holiday
alan,
any thoughts on how to respond to this query?
--harvey
Forwarded by Harvey S. Rosen/CEA/EOP on 07/17/2003 03:25 PM
Brian Reardon
07/17/2003 02:24:21 PM
Record Type:
Record
To:
Harvey S. Rosen/CEA/EOP@EOP
CC:
bcc:
Subject: Re: Repatriation Holiday
hey harvey thanks for this
Question: You mention excess foreign tax credits several times, but my impression is the money that
would be repatriated doesn't qualify for these, since its likely passive income from a low-tax regime. Is
that not the case.
Harvey S. Rosen
Harvey S. Rosen
07/17/2003 01:32:43 PM
Record Type:
Record
To:
Brian Reardon/OPD/EOP@EOR
CC:
Subject: Repatriation Holiday
brian,
here's my shot at the proposed tax holiday for repatriated foreign earnings. i hope that you find it
convincing!
best,
harvey
W
temporary repatriation 7.17hr2.
Brian Reardon
07/17/2003 02:24:21 PM
Record Type:
Record
To:
Harvey S. Rosen/CEA/EOP@EOP
CC:
bcc:
Subject: Re: Repatriation Holiday
hey harvey thanks for this
Question: You mention excess foreign tax credits several times, but my impression is the money that
would be repatriated doesn't qualify for these, since its likely passive income from a low-tax regime. Is
that not the case.
Harvey S. Rosen
Harvey S. Rosen
07/17/2003 01:32:43 PM
Record Type:
Record
To:
Brian Reardon/OPD/EOP@EOP
CC:
Subject: Repatriation Holiday
brian,
here's my shot at the proposed tax holiday for repatriated foreign earnings. i hope that you find it
convincing!
best,
harvey
W
temporary repatriation 7.17hr2.
Nirupama Rao
07/15/2003 02:47:58 PM
Record Type:
Record
To:
Harvey S. Rosen/CEA/EOP@EOP
CC:
Subject: Investment (Nat. Acct. Values)
Harvey,
Still tracking down the info on MNC domestic investment; thought I'd pass these numbers along first.
Gross Investment, SAARs in billions:
2003Q1
$1404.8
2002FY
$1456.2
2001FY
$1545.1
2000FY
$1679.4
Gross Private Domestic Investment, SAARs in billions:
2003Q1
$1611.2
2002FY
$1593.2
2001FY
$1586.0
2000FY
$1755.4
-nirupama
best guen
$ 4066 in
is domentic CABEX
multi for nutreds
baseds.
mus. Mn
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Machi 7/11/03
strong in centrue to accelente repations
They can are a 956 exclusion only
cost of Me
att The ex cen nedit companies
-- about 1/2 The companies are m
excess credit pos Jin.
renestment in US is about
n
3006.
a would There be a /3
increase?
for of companies like Dell have toing
from cash already Ania 36 in carl m
The U.S.
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b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(8) Release would disclose information concerning the regulation of
2201(3).
financial institutions [(b)(8) of the FOIA]
b(9) Release would disclose geological or geophysical information
Deed of Gift Restrictions
concerning wells [(b)(9) of the FOIA]
A. Closed by Executive Order 13526 governing access to national
Records Not Subject to FOIA
security information.
B. Closed by statute or by the agency which originated the document.
Court Sealed - The document is withheld under a court seal and is not subject to
C. Closed in accordance with restrictions contained in donor's deed
the Freedom of Information Act.
of gift.
This Document was withdrawn on 4/6/2016
by DRS
Withdrawal Marker
The George W. Bush Library
FORM
SUBJECT/TITLE
PAGES
DATE
RESTRICTION(S)
Email
RE: Foreign dividend repatriation proposal - To: Nicholas G. Mankiw -
4
06/09/2003
P5;
From: Pam Olson
This marker identifies the original location of the withdrawn item listed above.
For a complete list of items withdrawn from this folder, see the
Withdrawal/Redaction Sheet at the front of the folder.
COLLECTION:
Council of Economic Advisers
SERIES:
Rosen, Harvey - Subject Files
FOLDER TITLE:
Dividend Repatriation Proposal
FRC ID:
FOIA IDs and Segments:
5919
2015-0056-F
OA Num.:
5009
NARA Num.:
4849
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P1 National Security Classified Information [(a)(1) of the PRA]
b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA]
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA]
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advise between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
b(6) Release would constitute a clearly unwarranted invasion of
P6, Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(8) Release would disclose information concerning the regulation of
2201(3).
financial institutions [(b)(8) of the FOIA]
b(9) Release would disclose geological or geophysical information
Deed of Gift Restrictions
concerning wells [(b)(9) of the FOIA]
A. Closed by Executive Order 13526 governing access to national
Records Not Subject to FOIA
security information.
B. Closed by statute or by the agency which originated the document.
Court Sealed - The document is withheld under a court seal and is not subject to
C. Closed in accordance with restrictions contained in donor's deed
the Freedom of Information Act.
of gift.
This Document was withdrawn on 4/6/2016
by DRS