Wealth is pouring back into the American economy under President Donald Trump, according to the U.S. Commerce Department.
Roughly $1 trillion has been repatriated back to the United States since Trump’s landmark 2017 tax cuts, Bloomberg reported. While it falls short of Trump’s more ambitious plans to bring back $4 trillion, it shows that Trump’s overhaul is working as intended by encouraging more domestic investment.
$1 trillion back in American economy under Trump
Trump campaigned in part on putting an end to jobs and wealth flowing out of America to other countries, which Trump said were ripping off the United States for years. The practice of storing profits overseas has long been vilified as an example of this economic outsourcing.
President Barack Obama attempted to repatriate corporate profits with plans for more taxes, but fiscally conservative Republicans have long argued that additional taxes would have precisely the opposite effect.
They seem to be proven right for now, as Trump’s tax law reaps a windfall of more than $1 trillion in repatriated assets in nearly three years.
Before Trump’s tax law, a 35% tax on repatriating assets encouraged offshore investments, Bloomberg notes.
Under the new system, there is a 5.5% tax on liquid assets and an 8% tax on illiquid assets, payable over eight years whether or not the assets are repatriated.
Corporations held an estimated $1.5 to $2.5 trillion in profits overseas when Trump’s tax law was implemented, according to Bloomberg. Repatriation has gone slower than expected; the Wall Street Journal reported that some companies were lukewarm to moving cash back into the U.S. despite the tax overhaul.
Will it stimulate the economy?
Bloomberg is notably owned by billionaire Democratic presidential candidate Michael Bloomberg, who despite his animosity to Trump is an avowed critic of socialism.
President Trump has adopted some unorthodox economic views for a Republican president, passing controversial tariffs and waging costly trade wars to keep jobs in America. But his tax cuts, passed with the sanction of lame-duck House Speaker Paul Ryan (R-WI), followed in line with the more traditional supply-side economics of Reaganism.
The tax cuts were predictably attacked as a giveaway to the rich, and some critics have said that Trump’s repatriation plan is doomed to fail. Critics note that former President George W. Bush attempted something similar in 2004, creating a tax holiday for corporations that brought back billions in profits, but ultimately did little to stimulate the economy.
But wages for American workers are rising the fastest in decades under Trump — last month, even faster than for the highest earners, according to media reports. For the president who campaigned on putting an end to American workers getting ripped off, this is certainly good news.