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Tax strategies and capital budgeting

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Consider what you know about global tax strategies and capital budgeting (NPV) analysis.  The current U.S. marginal corporate tax rate is 35%. This has provided an incentive to U.S.-based firms to create profit (therefore jobs) outside the United States (in low tax regimes) and leave it outside the United States.

Many in Congress are currently advocating a one-time, repatriation tax of 5% in order to create jobs. (i.e. any profits held outside the United States may be returned to United States and taxed at only 5%, rather than 35%.  This would be a one-time event, the underlying tax law and rates would not be changed).  Would the repatriation tax be likely - or unlikely - to have the desired effect of creating jobs in United States. Why or why not?

Reference no: EM131113934

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