U.S. Direct Investment Abroad: Trends and Current Issues (CRS Report for Congress)
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| Release Date |
Revised June 29, 2017 |
| Report Number |
RS21118 |
| Report Type |
Report |
| Authors |
James K. Jackson, Specialist in International Trade and Finance |
| Source Agency |
Congressional Research Service |
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Summary:
The United States is the largest investor abroad and the largest recipient of direct investment in the world. For some Americans, the national gains attributed to investing overseas are offset by such perceived losses as displaced U.S. workers and lower wages. Some observers believe U.S. firms invest abroad to avoid U.S. labor unions or high U.S. wages, however, 74% of the accumulated U.S. foreign direct investment is concentrated in high income developed countries, who are members of the Organization for Economic Cooperation and Development (OECD). Even more striking is the fact that the share of investment going to developing countries has fallen in recent years. Most economists conclude that direct investment abroad does not lead to fewer jobs or lower incomes overall for Americans and that the majority of jobs lost among U.S. manufacturing firms over the past decade reflect a broad restructuring of U.S. manufacturing industries responding primarily to domestic economic forces.
In the 113th Congress, Members introduced a number of measures that would affect U.S. multinational companies in their foreign investment activities: (1) H.R. 851, S. 337, S. 2562, and S. 2569 (Bring Jobs Home Act) that would provide certain tax exemptions to U.S. multinational firms to induce them to redirect economic activity from a foreign subsidiary to a domestic U.S. operation; and (2) H.R. 4679, H.R. 4895, S. 2360 (Stop Corporate Inversions Act) to discourage U.S. firms from incorporating themselves overseas to avoid being taxed on their foreign income by merging with or acquiring a company in a low-tax jurisdiction, termed an inversion. In the 114th Congress, Members also introduced similar measures, including: H.R. 297, Stop Tax Haven Abuse Act of 2015, introduced by Representative Lloyd Doggett on January 13, 2015, and companion measure S. 174, introduced by Senator Sheldon Whitehouse; and H.R. 415, Stop Corporate Inversions Act of 2015, introduced by Representative Sander Levin on January 20, 2015, and companion measure S. 198, introduced by Senator Richard Durbin. While H.R. 415 and S. 198 are directed at tax inversions, H.R. 297 and S. 174 address a number of tax and financial issues relative to U.S. multinational firms, including: the use of foreign tax havens to evade U.S. taxes; money laundering; corporate offshore tax avoidance; and corporate tax inversions.
