Monday, February 7, 2011

Trillions in reserves?

So says the President in a talk today to the U.S. Chamber of Commerce.  And if business would just get off the sidelines and invest some of that cash, we would have a "virtuous cycle."  The President pledged to trim unneeded regulations and simplify the tax code to help stimulate the recovery.  That certainly would be a 180-turn from his first two years in office.

Today in a talk at NC State KPMG CEO John Veihmeyer had a different take on all those trillions sitting idle.  According to Veihmeyer, most of this money represents profits earned overseas that will never be repatriated because of high marginal corporate income tax rates.  To avoid 35% taxation, these firms are more likely to use the funds to expand overseas.  Remember your basic lesson from MBA 505: firms and people respond to incentives. 

No comments:

Post a Comment