American businesses make and sell products here in the US as well as in foreign countries.  When a firm sells its goods in the US, income taxes will be imposed on the net profit.  When a US firm sells its goods in a foreign country, foreign income taxes will be imposed on the net profit in that country.  If the US firm decides to bring those net profits back to the US, then US income taxes apply, and the total of foreign and US tax will be at the same level as if the sale occurred in the US.  In a low-tax jurisdiction, the US firm has an incentive to delay returning the net profits from the foreign country, in effect avoiding US taxation, perhaps indefinitely.  

US firms have $2.5 trillion in net profits in foreign countries.  Those funds can be invested anywhere but if they are moved to the US, then suddenly US taxes of up to 35% (less taxes already paid to the foreign country) will be levied by the US.  The US firms and the US taxpayer would rather that most of the $2.5 trillion could be invested in the US.  A trillion-dollar investment could fund substantial US growth and job creation. 

With a trillion dollars in the balance, Congress can be creative enough to ease the tax burden on the $2.5 trillion, but there are some moral hazard issues to be considered.  A one-time concession to repatriate the trillions in net profits avoids creating the expectation of repetition in later years.  A concession in the form of a 10% tax rate has been discussed and that would leave $2.25 trillion for investment in the US.

Some in Congress have strident opinions on use of the repatriated funds. They seem adamant that the funds not be used for dividends, stock buy-backs, increases in executive pay, or other affronts to the working class.  Money is fungible, and if the repatriated money cannot be used for dividends, then the money that never went overseas can be used for dividends and the overseas money can perform whatever task the domestic money was intended to perform.  It will take some careful thought to devise an incentive that funnels money into the current political target of “infrastructure” and avoids garish capitalism.  

There are many infrastructure types with known deficiencies and gaps in funding commitments.     A useful list of infrastructure categories and known funding requirements was compiled by the American Society of Civil Engineers (ASCE): aviation, bridges, dams, drinking water, energy, hazardous waste, inland waterways, ports, rail, roads, schools, solid waste, transit and waste water.  The list excludes information technology investments.  ASCE estimates that between 2013 and 2020, the listed infrastructure investments will total $3.6 trillion. 

Some of these infrastructure categories are traditionally the responsibility of federal, state or local government, but a few are commonly built and maintained by private businesses.  Energy, including pipelines, and electric generation, transmission and distribution, are largely the province of the private sector, as are rail systems and solid waste.   In a few instances, the private sector has taken on the construction and operation of toll roads.  On the other hand, airports, bridges, dams, inland waterways, ports, schools and transit are usually funded and operated by one or more layers of government with private sector involvement limited to holding bonds. 

The annual funding gap (excluding funding already committed) during 2016 through 2025 for infrastructure where businesses are accustomed to participation are:  Surface transportation (Rail Transit and Roads) $1,101 billion and Energy (electrical and pipeline infrastructure) $177 billion.  These business categories have an investment gap that could easily accommodate the repatriated funds.  Closing the investment gap for these two categories would create 1,154,000 new jobs. 

Some of those with overseas cash piles will prefer to invest deeper into their current product lines, and that makes economic sense since they know that arena best.  The overseas cash headed to the US is less than the 4th quarter 2016 US business investment.  In that quarter, US businesses invested $778 billion in intellectual property, $1,057 billion in equipment and $497 billion in structures.  Over a year or two, the US businesses could easily put an extra trillion dollars to work.

The key question for the public is whether the type of firms holding offshore balances would be comfortable as part of the surface transportation and energy sectors, sectors where the US has large funding gaps.  In the case of Apple and Google, the answer is probably yes since each seems engaged in driverless car development and will need to be concerned with energy distribution due to reliance on battery power.  General Electric may favor energy and rail investments.  5G wireless, Internet of Things, and cyber security infrastructure are likely to attract investments by Apple, Google, IBM, and Microsoft.  For others, deciding what to do with their cash pile may be less obvious.