Trillions of dollars in cash held by U.S. corporations overseas were supposed to come flowing back to the country as a result of the Republican tax bill, which provided a one-time lower tax rate on repatriated profits. But just a fraction of the projected total – President Trump had promised as much as $4 trillion – has arrived so far, and the pace of returns appears to be slowing.
Bloomberg’s Laura Davison reports that, according to a note from Morgan Stanley Thursday, U.S. companies brought an estimated $50 billion to $100 billion back home in the third quarter, about a third of the level seen in the first quarter. The repatriation total for 2018 now stands at about $514 billion.
“The sharp drop and trend trajectory is surprising -- and may require analysts and investors to rethink their near-term capital deployment and return expectations,” Morgan Stanley said.
Some U.S. companies, including Johnson & Johnson, eBay and Cigna Corp., have said they have no intention of bringing their profits back home. One contributing factor may be the fact that some foreign jurisdictions impose high taxes on profits leaving their borders, Morgan Stanley said, reducing the incentive to move profits.