dividends

Is there a pot of U.S. multinational money parked overseas?  Yes, approximately $2.3 tr.   Will the U.S. government temporarily lower U.S. tax rates by 85% again, as it did in 2004, so those firms will bring roughly $565 b. of it home?  No, at least not during the next two years, mainly because studies show the 2004 dividend repatriation didn't create many jobs here, and most of it went to buy back shares and to pay dividends.  The Senate rejected it in early 2009.  President Obama opposes it, and, even if the Republicans take Congress, they won't have enough votes to overcome a Senate filibuster or a veto.

Congress is beginning to realize how expensive it will be to cap the dividends tax rate at 20% for those earning over $250,000 beyond the end of this year.  Yesterday, House Ways and Means Chair Sander Levin (D-MI) told the Bureau of National Affairs that it would be "very expensive" and that there was no provision for exempting it under the Budget Act or for "paying for" it at a cost of $138 b. FY11-FY20.  Congressional taxwriters have spent the last few months struggling to find ways to "pay for" $31 b. of extensions of expired tax provisions and would have a much more difficult time finding $138 b.

Soon, President Obama will sign H.J.Res.45 to increase the debt limit by $1.9 trillion and to restore statutory PAYGO. The exceptions to PAYGO totaling $3.157 tr. (using estimates from the President's FY11 budget) reveal what Congress expects to pass later this year: