However, overseas subsidiaries of U.S. corporations are entitled to a tax deferral of profits on active income until repatriated to the U.S., and are regarded as untaxed.
The Wall Street Journal noted that the "[u]ntaxed foreign earnings are part of a contentious debate over U.S. fiscal policy and tax code.
The downside of a strategy of retaining profits offshore is that corporations may want or need to pay dividends to shareholders, or to make investments in the United States, besides other reasons.
[3] A Wall Street Journal analysis in 2012 found that the amounts for 60 large firms grew by $166 billion in the preceding year, shielding 40% of their earnings.
'"[3] The 2004 tax holiday, under President George W. Bush, yielded a lot of repatriation but not much economic benefit, according to one view.
[4] A number of the large U.S.-based companies that would benefit, including Google, Cisco Systems Inc., Qualcomm Inc. and Oracle Corp., were lobbying during 2011-2012 to obtain a repatriation holiday.
At the time, however, President Obama was believed to oppose a one-time tax holiday, as it would be a giveaway to big corporations.
The national rates of Organisation for Economic Co-operation and Development (OECD) countries vary from a low of 8.5% in Switzerland to a high of 35% in the United States, with an average of 22%.