Tax Savings on Repatriations of Foreign Earnings Under the American Jobs Creation Act of 2004

Albring, Susan; Dzuranin, Ann C.; Mills, Lillian F.

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Tax Savings on Repatriations of Foreign Earnings Under the American Jobs Creation Act of 2004

Tax Notes, Vol. 108, No. 7, August 8, 2005

40 Pages Posted: 2 Aug 2005

See all articles by Susan Albring

Susan Albring

Syracuse University - Joseph I. Lubin School of Accounting

Ann C. Dzuranin

University of South Florida - School of Accountancy

Lillian F. Mills

University of Texas at Austin - McCombs School of Business; The University of Texas at Austin

Abstract

We estimate the incremental tax savings from the 85% deduction for cash dividends from permanently reinvested earnings under the American Jobs Creation Act of 2004. Using 2,196 corporations that report foreign assets or foreign sales in 2002, we find that 282 corporations both report an amount of permanently reinvested earnings and have a foreign tax rate of less than 35 percent. Without AJCA 2004, these 282 firms would have paid an estimated incremental U.S. tax of $46 billion on repatriation. Under AJCA 2004, these firms would save $39 billion, resulting in incremental tax of $7 billion on immediate repatriation.

Keywords: permanently reinvested earnings, repatriation, foreign earnings, cash dividends, American Jobs Creation Act of 2004, tax savings, financial reporting

JEL Classification: H25, M41

Suggested Citation: Suggested Citation

Albring, Susan M. and Dzuranin, Ann C. and Mills, Lillian F. and Mills, Lillian F., Tax Savings on Repatriations of Foreign Earnings Under the American Jobs Creation Act of 2004. Tax Notes, Vol. 108, No. 7, August 8, 2005, Available at SSRN: https://ssrn.com/abstract=763525