The pledge or promise from corporations is to increase employment, raise wages, spend more on R&D and a “stimulate” the economy, i.e. economic growth.
In 2004, there was a “tax holiday” for corporations with the same promise: They’d add 500,000 jobs in the United States over two years, pay down the debt and increase research and development — springing the economy into full growth mode, “stimulating the economy”.
How did that work out? “Repatriations did not lead to an increase in domestic investment, domestic employment or RMD,” that’s the conclusion of Kristen Forbes, an MIT economist who’d been with George W’s Council of Economic Advisers during the “tax holiday“, along with the Harvard and University of Illinois economists, who found that $299 billion in earnings were re-patriated (five times more than in the previous five years) but concluded “repatriations did not lead to an increase in domestic investment, domestic employment or RMD.” (From the New York Times, September 27, 2017)
What happened to the repatriated profits, the money that “came back to America”? They went for stock buy-backs, raising briefly the price of stocks, boosting the S&P & increasing CEO bonuses (CEOs income are increasingly based on stock price– they pay lower tax rates on capital gains than they would on wages/salary; so prefer stock as remuneration, rather than wages or salary).
Is the American economy stagnant because corporations need the repatriated profits, otherwise they could not invest?
No. Corporate profits are at record levels, wages paid to workers remain low, borrowing can be done at rates near record lows (this has been the case for some time).
What is ailing the American economy is wage stagnation, leading to a drop in demand for all goods and services.
SOURCE: https://www.cnbc.com/2017/04/26/treasurys-mnuchin-this-is-going-to-be-the-biggest-tax-cut-and-largest-tax-reform-in-our-countrys-history.html)