JPMorgan: Tax Holiday Would Pack 'Bigger Punch' Than Fed Policies

This post has been corrected.

Thomas Lee, chief equity strategist at JPMorgan, would really, really like a tax repatriation holiday.

Lee released a report this Monday in which he asserted that a repatriation holiday -- a one-off occasion where companies could bring overseas earnings into the U.S. at dramatically reduced taxation rates -- could carry “a bigger punch than QE.”

QE refers to quantitative easing, the Federal Reserve’s long-running program of asset purchases intended to stimulate the economy. The latest round of quantitative easing, known as QE2, came to an end on Thursday.

During QE2, the Fed spent eight months buying up $600 billion in medium-term Treasury securities. The strategy has received mixed reviews, especially as it comes to an end.

According to Lee's report, a tax repatriation holiday would do a comparable amount of good for markets and the economy in general.

Lee’s report estimated that companies could have as much as $1.4 trillion parked overseas, and that they might bring between $500 billion and $1 trillion into the U.S. if Congress passes a proposal allowing business to repatriate cash at a 5.25 percent tax rate, rather than the standard 35 percent.

“In our view, this carries greater positive implications for equities compared to QE,” Lee writes. “In other words, from a market’s perspective, this likely represents a substantial catalyst.”

However, Lee’s findings stand in marked contrast to another report issued by JPMorgan in May. That release, compiled by JPMorgan researchers, concluded that even if a tax holiday is passed, most of the money would likely be reinvested overseas. In other words, it “would not result in a flood of repatriation,” according to CNBC.

JPMorgan is far from the only major corporation to call for a repatriation holiday recently. In mid-June, advocates at a corporate conference in Washington, D.C. referred to the proposed repatriation holiday as “the next stimulus."

JPMorgan recently agreed to a $153.6 million settlement with the Securities and Exchange Commission regarding allegations that it misled investors about a mortgage securities transaction.

Correction: A previous version of this post mistakenly said the Federal Reserve bought long-term Treasuries. It also attributed the views expressed in the report to JPMorgan Chase as a whole.

Comments

[1Truthseeker]

12:30 PM on 07/04/2011

And yet another shrill warning of the exponential speed at which our country and the working people are being driven into an economic abyss: New elections will not stop this. Republican persistence on massive financial and corporate de-regulations have throughly greased the skids!

A must read @:

http://www.huffingtonpost.com/2011/06/30/corporations-88-percent-income-growth_n_888066.html

[1Truthseeker]

12:22 PM on 07/04/2011

CEO pay rose by 23% this year! American wage earners pay went into the negative with cost of living and inflationary adjustments. Worth knowing the details! Go to:http://www.nytimes.com/2011/07/03/business/03pay.html?_r=1

[SisterAnn]

06:40 AM on 07/04/2011

Getting rid of Franklin Rosevelt's New Deal has always been the goal of most republican leaders. He gave us unemployment benefits, Social Security and many other programs in the New Deal.

Johnson came up with Medicare.

[lipps]

11:03 PM on 07/04/2011

All three programs should have never been instituted. None are constitutional.

[SisterAnn]

10:44 AM on 07/05/2011

Too many are using the constitution to use against what the people want.

There were a lot of rich people who fought Social Security, so I am sure that it went through the courts.

Isn't there such a thing as when something has happened for many years, they can't take it away? There is no way to end these programs. It will cause some people to lose everything and go on welfare and food stamps. It won't save the government much unless they keep them off of welfare and food stamps.

[kamact]

02:10 PM on 07/03/2011

Self-serving,...

[knosiswar]

01:10 PM on 07/03/2011

In other words, legally laundering slave labor profits into THE country that's is supposed to STAND for equal rights.

[1Truthseeker]

11:55 AM on 07/04/2011

That is the most encompassing description of what is going on with outsourcing!

[oilfield]

12:09 AM on 07/03/2011

based on all of the failed policies, i surely dont see where it could hurt.

[dtallwalk]

11:13 PM on 07/02/2011

Great let them bring the money bach home to use for more prwer in DC
i have to pay the current tax rate
they do not need a break

[halfpricefaustian]

04:01 PM on 07/02/2011

How about this. Tax corporate profits whether they are repatriated or not. That would get rid of the incentive to shift profits overseas. If companies want to leave this country, if they really think they can do what they do here in some other country, let them go.

[oilfield]

12:10 AM on 07/03/2011

you cant really mean that....then who will pay for all of the freebies for the voters.

[Frank J Savel III]

11:48 AM on 07/03/2011

Sure Let them go live in China

[hamsteronwheel]

09:19 AM on 07/02/2011

we are all hamsters on neocon "financially engineered" wheels...

"JPMorgan Chase’s CEO, Jamie Dimon, singled out the Durbin amendment in an April 5 speech before the Council of Institutional Investors, saying it was "downright idiotic" and passed in the middle of the night and had nothing to do with the crisis.”

Durbin blasted back in a letter to Dimon, which the senator asked to be sent to the company’s shareholders, ripping Dimon’s eye-popping paydays and the financial excess on Wall Street that pushed the economy into a deep recession.

“Last year Chase had $17.4 billion in profits -- up 48 percent from the previous year -- and a 15 percent profit margin,” Durbin wrote Dimon, noting that Dimon’s own personal compensation “jumped nearly 1,500 percent to $20.8 million in 2010.”

“There is no need for you to threaten your customers with higher fees when you and your bank are already making money hand over fist,” Durbin continued. “And there is no need to make such threats in response to reform that simply tries to spare consumers.”"

incredible, honesty in DC?

True CONSUMER PROTECTION is required instead of lashing us all to hamster wheels so banksters can hide their stolen gains in tax-free off-shore UBS accounts while investing in China and sending jobs out of the country.

these guys are traitors and financial terrorists.

the top 1% have "financially engineered and innovated" the greatest transfer of wealth in history!

[1Truthseeker]

12:08 PM on 07/04/2011

In a very large part through the Federal Reserve and the US Treasury. The Federal Reserve is made up of the 9 largest private banks in the US. What Senator Durbin does not seem to understand is that the GDP of our country is being stolen and moved out of our country faster than you can blink your eye! There is no real consumer protection possible during a financial heist! In plain and simple english our country is being looted and robbed and the treasure is moved overseas.

[hamsteronwheel]

02:43 PM on 07/05/2011

we are all hamsters on neocon "financially engineered" and "financially innovated" wheels

J. W. McCallister, an oil industry insider with House of Saud connections, wrote in The Grim Reaper that information he acquired from Saudi bankers cited 80% ownership of the New York Federal Reserve Bank by far the most powerful Fed branch by just eight families, four of which reside in the US. They are the Goldman Sachs, Rockefellers, Lehmans and Kuhn Loebs of New York; the Rothschilds of Paris and London; the Warburgs of Hamburg; the Lazards of Paris; and the Israel Moses Seifs of Rome.

CPA Thomas D. Schauf corroborates McCallister’s claims, adding that ten banks control all twelve Federal Reserve Bank branches. He names N.M. Rothschild of London, Rothschild Bank of Berlin, Warburg Bank of Hamburg, Warburg Bank of Amsterdam, Lehman Brothers of New York, Lazard Brothers of Paris, Kuhn Loeb Bank of New York, Israel Moses Seif Bank of Italy, Goldman Sachs of New York and JP Morgan Chase Bank of New York. Schauf lists William Rockefeller, Paul Warburg, Jacob Schiff and James Stillman as individuals who own large shares of the Fed. [3] The Schiffs are insiders at Kuhn Loeb. The Stillmans are Citigroup insiders, who married into the Rockefeller clan at the turn of the century.

http://www.globalresearch.ca/index.php?context=va&aid=25080 endpost

[mmkay]

08:02 AM on 07/02/2011

"Shameless, shameless, shameless. . ."

[SisterAnn]

06:36 AM on 07/04/2011

Worry, worry, worry....

[mmkay]

06:46 AM on 07/04/2011

I don't know that song. Is that Neil Young as well?

[PPatt]

10:35 PM on 07/01/2011

It's telling that this can even be reported with a straight face. If it were from a talking head the smirk would be hard to suppress.

[vokesk51]

06:44 PM on 07/01/2011

Of course Wall Street wants another taxpayer bailout - this time in the form of a "tax repatriation" holiday. How about a "tax patriotism" holiday for all the middle class workers in this country who saved their butts after they mismanaged their companies into the ground? If there's any repatriation, it better come with a Treasury agent carrying the money in a briefcase handcuffed to his/her wrist, to make sure it goes to the people it should be helping - the working class and poor whose lives have been steamrolled by the neverending greed of Wall Street.

[democrats for life]

04:50 PM on 07/01/2011

the gop allow money to be kept offshore, as they get more campain contributions from these corporations, while the country slips into default

[Benjamin Rosenfeld]

04:05 PM on 07/01/2011

If an individual was keeping taxable income offshore they'd be charged with tax evasion, but corporate giants can do it without even a slap on the wrist.

[1Truthseeker]

12:16 PM on 07/04/2011

They're facilitated in that process by the programs with in the US Department of Commerce! It runs on a 10 billion dollar annual budget and it's primary function is to expand corporate profitability at home and abroad. In their programs there are all kinds of tax-evasion mechanisms available. Their programs are so successful that a study reported on by Reuters in Aug. of 2008 showed that the majority of US Corporations paid ZERO in taxes to our government.

Read for yourself @:
http://www.reuters.com/article/2008/08/12/us-usa-taxes-corporations-idUSN1249465620080812

[StopMakingSense2]

02:36 PM on 07/01/2011

How could you argue with an unbiased source like JP Morgan? ROFL!

[SisterAnn]

06:37 AM on 07/04/2011

Funny! Still laughing.