If a lower corporate tax rate and repatriation rate were introduced, it might keep companies from stockpiling cash offshore. A Northwestern University study found that companies greatly increased the amount of reinvestment of overseas foreign earnings after the 2005 repatriation tax holiday passed. The study concluded that many corporations were simply waiting for a future tax holiday to be enacted.
Invested in lobbying
Apple Inc. (NASDAQ:AAPL)’s new lobbying efforts are expected to focus on simplifying corporate tax law and the repatriation rate. Sure, there’s talk of environmental concerns and technology issues, but right now it seems the main subject is taxes.
As the American Job Creation Act showed, lobbying can be a powerful weapon for companies. If Apple and others focus their lobbying efforts on actually reforming aspects of the tax code, rather than asking for a holiday, they may have a better chance of making some headway. After AJCA, the government is likely to be less receptive to a temporary tax holiday, but enough lobbying could make a permanent change to corporate tax rates a possibility.
At this point in the game, it’s still too early to tell how Apple Inc. (NASDAQ:AAPL)’s lobbying will pay off for investors — if at all. But if previous lobbying efforts from other companies are any indication, changes to corporate and repatriation tax rates could mean more share buybacks and dividend increases.
The article Lobbyists, Taxes, and Repatriation — Oh My! originally appeared on Fool.com.
Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple, Cisco Systems, Facebook, and Google. The Motley Fool owns shares of Apple, Facebook, Google, International Business Machines (NYSE:IBM)., Microsoft, and Oracle..
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