The Bureau of Economic Analysis (BEA) revealed that over $300 billion was repatriated to the United States through the first quarter of 2018, a new record.
Businesses appear to be taking advantage of tax reform – signed into law by President Donald Trump at the end of 2017 – by bringing money back to the U.S. rather than investing it overseas, Fox Business reports.
During the same period last year, only $38 billion was repatriated.
Kevin Hassett, chair of the president’s Council of Economic Advisors, said U.S. companies are investing more at home since Republican-passed tax reform was implemented.
"U.S. firms that used to build their factories overseas in order to avoid U.S. taxes, they stopped in their tracks because of the tax bill, they are bringing all the money home," Hassett told Fox Business.
The BEA suggested repatriation increased because companies are no longer taxed on foreign earnings when moving money back to the U.S. Many economists hope the surge of repatriated funds will be used for U.S. hiring and boosting wages.
The new tax laws have led many economists to revise estimates for economic growth. The economy is tracking almost 4 percent growth in the second quarter of 2018, CNBC reported. The report cited "new-found proceeds from the tax bill" driving consumer spending as a primary source of higher growth.
J.P. Morgan’s chief U.S. economist, Michael Feroli, estimated "real GDP is expanding at a 4.0% annual rate in Q2, up from our prior estimate of 2.75% and almost twice the 2.2% growth rate experienced in Q1." He added that "consumers wasted no time enjoying their tax windfall."
Chris Rupkey, chief financial economist at MUFG Union Bank, said the estimates are what should be expected given low levels of unemployment and increased funds in consumers' pockets.
"This is exactly what we should expect to see when the economy is giving everyone a job and workers have their pockets stuffed with massive tax cuts cash," Rupkey said.
Rep. Kevin Brady (R., Texas), chairman of the House Ways and Means Committee, celebrated the impacts of tax reform in an op-ed for the Wall Street Journal last week:
In only six months, the economy has been reinvigorated—and the best is yet to come. That’s because the new tax code leapfrogs America’s competitors abroad. The U.S. is now at the head of the pack—one of the best places on the planet to find that next job, to build that new manufacturing plant, or to set up company headquarters.
As a result, businesses of all sizes are now investing in American workers and communities. They are bringing back their dollars from overseas and investing at home again. It’s no coincidence that small-business optimism has hit its highest reported level in 35 years.