Is Cash Still Trapped?
Reducing Incentives to Invert Before the TCJA, the combination of a high corporate tax rate and the differential treatment of income earned in the U.S. vs. outside the U.S. provided a powerful motivation for U.S. companies to restructure to reduce taxes. The U.S. Bureau of Economic Analysis reports on the level of foreign earnings of U.S. multinationals and also shows the portion that's repatriated in the form of dividends and the portion reinvested in foreign affiliates. Early evidence suggests that dividends continued their upward trend and share repurchases increased at most of the companies-a doubling of repurchases at Apple and even more dramatic increases at Cisco and Oracle (see Table 4). [...] both Apple and Cisco have announced significant increases in both areas. Some companies were borrowing to pay dividends in the U.S., and the repatriated cash was being used to pay down this type of debt. [...]for companies that had cash deficits in the U.S., the onetime repatriation was a lifesaver.
Aselta, J., Engel, R., Lyons, B., & Pannese, D. (2019). Is cash still trapped? Strategic Finance, 100(10), 38-43.