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Berkeley Research Group Director Ken Serwin on the impact on the economy of a tax holiday.
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Thank you may remember that last week listen I talk to president Obama's top economic advisor Gene Sperling.
About whether a tax holiday for corporations.
Could bring back money overseas and whether that would.
Actually help the economy here's what mr.
sperling had to say.
They're just is absolutely no evidence to suggest.
But doing another repatriation holiday.
Would in any way meaningful way helped create jobs or invest -- yes I think they're already sitting on OK one to two trillion up -- -- -- very low.
Right well there fresh rating by.
Arm there are so I'm just does not much out there are economists as -- -- -- -- -- assessment I can tell you don't want -- Well we found an economist who does disagree that assessment cancer when.
Is where the Berkeley research group and He just did a study on this very topic.
Professor good to see -- thanks for coming at what would you tell mr.
sperling who said that there really aren't many people argue.
Well I would tell mr.
sperling that there there are others who feel this way it myself and my colleagues doctor Laura Tyson and doctor aircraft -- have done this study among others.
Who have evaluated this issue and have thought that.
And find that -- quite a bit of money would return under new tax holiday and that there are many channels through which that new money.
Coming back would benefit the economy.
We should managed by the way Laura Tyson served in the democratic administration so it's this isn't necessarily a partisan opinion on these things now.
The 2004.
Tax holiday according Gene Sperling in people with his view that didn't work you agree or disagree.
I disagree that the the idea that it didn't work is is more related to with the concept of the congressional intent to the 2004 holiday which was.
That the money would come back in the corporations that brought it back would directly invest that money.
There have been a number of good economists have done studies have looked at 2004 and that they found that a large part of the money that was brought back.
Wasn't directly invested.
At least.
-- in net.
In new activity -- those firms but it was instead return to the shareholders of those firms that's of those studies found.
Now -- Does study stopped there and those that it didn't do any evaluation to determine whether or not -- -- back to shareholders was good or bad for the economy they didn't evaluate that.
They were just looking at whether or not the money was used directly by firms it's what are Citi does is look at well if a lot of it was given back to shareholders would that be a good thing and yes it would shareholders do many things with that money they would consume.
With that money and they would reinvest that money on top of that not all the money did go back to shareholders.
-- portion of the money probably are up 25%.
I went to some multinationals that work capital constrained at those firms did invest that money.
Our world just to put a fine point on the on the issue.
At mr.
sperling says -- very few economists agree that this would help the economy you say it's it's more like a 5050 split.
I've I've you know I can't say 5050 which -- it would go but I think that most economists you do look at the issue.
Do not discount the fact that returning money to shareholders has beneficial effects for the economy.
And I don't think that there are many economists who would disagree that if their firms out there -- -- capital constrained and at the moment.
Are unable to take advantage of profitable opportunities in the US because is that the high cost of capital.
That if they could return this money at a lower across the capital and take advantage of those opportunities and create new opportunities and I know we are economists not a politician but but the frustrating thing is just one of the few things -- Republicans and some Democrats agree on I mean if there's going to be any bipartisan support on any particular economic issue this is that.
One would hope they would be support for this I think that we have a situation where there are many things being tried in the economy have you know you've you've got.
Proposals for jobs that you've got proposals for many different things to get things going this is a good opportunity to take advantage of corporations using their own money.
-- to generate -- activity in the economy and to let shareholders.
Take advantage of their own money and get things going as well.
And at at very low at any cost of that to the the US treasury can -- when who is director of the Berkeley research group Ken good to see you have a good weekend thanks for coming in.
Thank you very.
