BIG HELP: Last year, untaxed foreign earnings comprised 22% of total earnings for 282 S&P 500 companies.William Waitzman for Barron's Follow-Up: Yahoo!|Dow Indicator|Preview Prospects for tax reform have recently faded, but last year companies continued right on growing the sizable cash balances that they have sequestered overseas to shield them from high U.S. corporate tax rates. Last year, the cumulative balance of so-called indefinitely reinvested earnings grew 9%, to $2.4 trillion, according to the Analyst’s Accounting Observer. That stash is held by 307 companies in the Standard & Poor’s 500 index. Perhaps because of fear of intrusive examination, that growth was the second lowest in 10 years. In 2016, estimated untaxed foreign earnings rose by $185.5 billion, comprising 22% of total earnings for 282 of the 307 companies, the Observer notes. Although corporations reported those overseas earnings on bottom lines, “if companies were going to repatriate these earnings, they would have to deduct deferred income tax and bring the tax bill up to 35%,” says Jack Ciesielski, publisher of the Observer. For instance, if the money were held in Ireland, where the tax rate is 12.5%, the repatriated earnings would be taxed at 22.5%. The tax difference has a big effect on earnings, Ciesielski adds, with only 48 companies—fewer than 16% of the 307 companies—reporting their potential liability if the earnings were repatriated. Among the top holders of overseas cash are information technology companies, at $762.8 billion; the health-care sector, at $534.8 billion; and consumer staples, at $247.2 billion. Together, IT and health care accounted for more than 75% of untaxed foreign earnings in 2016. Those sectors would have the most to gain from a tax holiday or one-time lower tax. http://www.barrons.com/articles/u-s-companies-rising-stash-of-cash-1495858789
US companies will not repatriate because it is a nice hedge against a fail in the the $US. they will not repatriate because they may feel the US is headed towards capital controls and the country is the equivalent of a roach motel.