U.S. firms keep ‘foreign cash’ in American banks
A new Wall Street Journal report by Kate Linebaugh says a good deal of the estimated $1.7 trillion in foreign assets American companies have is actually sitting in U.S. banks. How does that work?
“It’s a technicality, this is just sort of how global banking works,” says Linebaugh. “Companies have been expanding overseas and a lot of their income is earned from developing markets around the world or from Europe and it is just being kept in U.S. securities or bank accounts or U.S. government bonds because they are very safe.”
Linebaugh says this situation lays bare how the current tax situation isn’t serving anyone.
“The U.S. Treasury is not getting the revenue they expect to be getting from corporate earnings and corporations are not able to use those funds in the ways that they want,” says Linebaugh.
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