Today, $2 trillion is held on the balance sheets of American companies – but much of this money is held off-shore and not a part of our nation’s economy. Why? Because if the American companies were to repatriate the money, it would be subject to a 30 percent tax, just for coming into the country.
What’s key to remember is that this money was already taxed once when the income tax was paid in the jurisdiction it was earned. But the way our tax law is written, it would be taxed again when coming back our country.
If our tax laws were revised under the Fair tax, this “double jeopardy” would be eliminated, and than $2 trillion could be used as seed money for an economic boom here, regardless of whether that money was used for investments in plants, property or equipment, payment of dividends or was deposited in American banks and made available for lending into the greater economy.
When corporate income taxes are eliminated, greater investments in the American economy are made possible.