US tax plan may turn cash-hoarding companies into spenders

These companies have piled up cash worth $2.6 trillion abroad and have spent little of it on buying equipment and raising wages and other things.

US government has found a way to fix the problem of cash hoarding by big companies. 
 
They are planning to cut tax, which will then motivate big companies to use piled-up cash for investment, hiring and hiking their workers' salary.
 
These companies have piled up cash worth $2.6 trillion abroad and have spent little of it on buying equipment and raising wages and other things.
 
According to a report by ET, the conservative Tax Foundation estimates that the entire overhaul could lead to 4.8 per cent more spending by companies on equipment and other capital goods over a decade, and an additional 1.5 per cent boost to wages.
 
However, critics say the tax savings can be used by the companies to buy back their own stock and send dividend checks to investors than to expand operations. 
 
The tax cut and reform bill passed by Senate today proposes the cut in the corporate tax rate to from 35 per cent. 
 
Also, these big companies would get a one-time tax break if they send the money back to the US. 
 
Source: ET

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