Corporate America is repatriating offshore cash at slower pace

U.S. CORPORATIONS are not bringing profits back from overseas locations at the rate that designers of the 2017 tax law update had expected. So far, slightly less than $1 trillion has been moved back to the United States, compared with the $4 trillion that was predicted by President Donald Trump. / BLOOMBERG NEWS FILE PHOTO/DANIEL ACKER
U.S. CORPORATIONS are not bringing profits back from overseas locations at the rate that designers of the 2017 tax law update had expected. So far, slightly less than $1 trillion has been moved back to the United States, compared with the $4 trillion that was predicted by President Donald Trump. / BLOOMBERG NEWS FILE PHOTO/DANIEL ACKER

WASHINGTON – Corporations brought $88.3 billion of overseas profits back to the U.S. in the second quarter, marking nearly $1 trillion that has returned since Congress overhauled the international tax system and prodded companies to repatriate offshore cash.

The sum so far falls short of the $4 trillion President Donald Trump said would return as a result of the 2017 tax law. Investment banks and think tanks have estimated that American corporations held $1.5 trillion to $2.5 trillion in offshore cash when the law passed.

The flow has slowed from $96 billion in the first quarter and $146.6 billion in the final three months of last year, according to a Commerce Department report released Thursday.

Before the overhaul, companies were incentivized to keep profits overseas because they owed a 35% tax when bringing it back and could defer payment by keeping funds offshore. The law set a one-time 15.5% tax rate on cash and 8% on non-cash or illiquid assets.

- Advertisement -

The repatriation figures were included in the quarterly report on the current-account deficit, which narrowed $8 billion to $128.2 billion in the April to June period from a revised $136.2 billion. The gap is considered the broadest measure of international trade because it includes income payments and government transfers.

Laura Davison and Katia Dmitrieva are Bloomberg News staff writers.

Purchase NowWant to share this story? Click Here to purchase a link that allows anyone to read it on any device whether or not they are a subscriber.