An Analysis of the Tax Holiday for Repatriation Under the Jobs Act

10 Pages Posted: 14 Oct 2013 Last revised: 22 Oct 2013

See all articles by Roy Clemons

Roy Clemons

New Mexico State University

Michael Kinney

Texas A&M University - Department of Accounting

Date Written: August 25, 2008


The American Jobs Creation Act (AJCA) of 2004 provided a one-time tax holiday for firms to repatriate foreign earnings. AJCA was intended to stimulate the economy by expediting the repatriation of foreign earnings and requiring that those repatriations be invested in domestic operations. This study investigates (1) who repatriated foreign earnings under the provisions of the Act, (2) why firms repatriated and (3) what the firms did with the repatriated funds. The study identifies 364 firms that repatriated approximately $283 billion under the Act. The only significant increase in expenditures for the repatriating firms was for stock repurchases, an expenditure specifically prohibited under the Act. Firms appear to have repatriated foreign earnings to take advantage of the tax savings without achieving the Act’s intended objective of increasing domestic investment. Firms’ failure to use the repatriated cash to increase domestic reinvestment appears to be associated with two circumstances: (1) the firms lacked domestic growth opportunities and (2) they could comply with the domestic investment requirements of AJCA without actually increasing investments in domestic operations.

Keywords: american jobs creation act, repatriation, tax holiday, homeland, tax policy

Suggested Citation

Clemons, Roy and Kinney, Michael R., An Analysis of the Tax Holiday for Repatriation Under the Jobs Act (August 25, 2008). Tax Notes, Vol. 120, No. 8, 2008, Available at SSRN:

Roy Clemons (Contact Author)

New Mexico State University ( email )

P.O. Box 30001
Las Cruces, NM 88003-8001
United States

Michael R. Kinney

Texas A&M University - Department of Accounting ( email )

430 Wehner
College Station, TX 77843-4353
United States
979-862-2078 (Phone)
979-845-0028 (Fax)

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