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The U.S. corporate tax code requires a company to pay taxes on the net profits it generates anywhere in the world. However, the profits from international operations are not taxed until the money is brought into the U.S. Repatriation is the process of bringing profits earned abroad into the U.S.
Avoiding The High U.S. Corporate Tax Rate
The U.S. has one of the world's highest corporate tax rates at 35 percent. Corporations avoid paying this rate on foreign earnings by leaving the money offshore. Repatriation of a significant portion of the more than $1 trillion in profits that have not been brought into the country would generate large amounts of tax revenue for the federal government. Political discussions revolve around the idea of giving tax breaks on profits that are repatriated and would then provide money to stimulate the economy.
Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy.