Tax holiday's are a terrible waste. Just tax foreign holdings at say 3% per year as an AMT and suddenly all that money starts flowing again.
Also your plan is impossible because it's not Apple or Facebook or Google the US listed entities that own this money, it's independent country specific subsidiaries. The US Gov't has no territorial claim on their asset reserves. The fact that the big companies report the money as their own is a GAAP sleight of hand that everyone knows already understands both sides of in the marketplace.
Also, the ability for companies to have subsidiary's as separate entity's is all down to law and can change at any time. US courts regularly https://en.m.wikipedia.org/wiki/Piercing_the_corporate_veil
Also, the idea is an AMT tax if you pay 3 million in US taxes and keep 100 million untaxed offshore that's no additional taxes. Next year if you add another 100 million (200m total) your US taxes also increase by another 3 million. So you might as well bring back enough that you would have paid 3 million in extra taxes so 200m - 3/.35 = 191.4m off shore and 8.6m brought back. After a few years your foreign untaxed accounts stop growing as you bring back as much as your making.
Same basic math would also apply with 5% or 1% AMT tax rate, the difference is how large the foreign reserves get.
PS: Ok, now the downside. It's really hard to parse though untaxed profits of subsidiary's. But, companies like Google are going to stick with legal methods of dodging taxes.
> the idea is an AMT tax if you pay 3 million in US taxes and keep 100 million untaxed offshore that's no additional taxes. Next year if you add another 100 million (200m total) your US taxes also increase by another 3 million. So you might as well bring back enough that you would have paid 3 million in extra taxes so 200m - 3/.35 = 191.4m off shore and 8.6m brought back.
I'm not following you. Suppose every year my goal is to minimize the taxes I pay that year. What benefit do I see from repatriating those $8.6M?
Scenario A: I have $200M offshore and pay a 3% offshore-holdings penalty of $6M. Taxes are $6M.
Scenario B: I have $191.4M offshore on which I pay a 3% offshore-holdings penalty of $5,742,000. I repatriate $8.6M on which I pay a 35% repatriation penalty of $3,010,000. My total taxes in this scenario are $8,752,000, which I notice is more than $6,000,000. What did I gain?
You repatriate 8.6M which leads to tax of: 3,010,000. 3,010,000 < 5,742,000 you pay 5,742,000. Which is less than 6 million. (This assumes you have zero tax bill for US operations.)
Also, paying this does not decrease your future tax bill next year in any way. So if your interest rate is zero you pull money back this year. The idea is to penalize behaviors designed to reduce taxes.
Now you have one of two problems. If the 3% goes against only cash and not other assets then it's completely ineffective, because they can just hold the money in whatever type of assets aren't included. But if it does include all foreign assets then US companies can no longer do business in foreign countries, because they won't be competitive with local companies that don't have to pay the same recurring tax on the plant and equipment and other business assets needed to operate there.