This is really odd phrasing for a completely standard arrangement that has existed for decades. The US treasury is paying interest on US treasury bonds to the legal holder of those bonds. Whether that company "should" repatriate those profits instead of buying bonds or some other investment is immaterial.
The US treasury doesn't offer debt out of the goodness of their hearts to support poor bondholders; they offer it to finance their deficit spending. If anything increased demand for their debt is a benefit to the government.
I think you're missing the point. It's not really about bonds.
A proportion of the sheltered money used to buy government bonds "should" have been tax proceeds, rather than forcing the government issue debt and pay to borrow that money.
Only if the money is considered as repatriated. I'm not a tax lawyer and the article is kind of crappy in explaining the precise treatment, but it is possible to purchase and hold bonds overseas (or to hold shares of an overseas ETF that holds bonds in the US, etc etc.) so I'm not sure why this is even an issue, any more than the US would arbitrarily tax the money were it held in, eg, dollar-denominated accounts in European banks.
Governments grant incentives to buy their bonds all the time, notably state governments in the US not subjecting the interest to state income taxes. It sounds like this is at worst a provision of the law designed to encourage exactly what ended up happening - more entities willing to spend more money on treasury bonds, at a lower interest rate.
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[ 2.7 ms ] story [ 19.2 ms ] threadThe US treasury doesn't offer debt out of the goodness of their hearts to support poor bondholders; they offer it to finance their deficit spending. If anything increased demand for their debt is a benefit to the government.
A proportion of the sheltered money used to buy government bonds "should" have been tax proceeds, rather than forcing the government issue debt and pay to borrow that money.
Governments grant incentives to buy their bonds all the time, notably state governments in the US not subjecting the interest to state income taxes. It sounds like this is at worst a provision of the law designed to encourage exactly what ended up happening - more entities willing to spend more money on treasury bonds, at a lower interest rate.