ROBERT PROFUSEK: U.S. companies have deleveraged and built up an unprecedented amount of cash since the financial crisis. However, aftershocks of the financial crisis and investor hunger for yield in a low interest-rate environment combined to make many companies reluctant to invest. As a result, at least until this year’s M&A boomlet, many U.S. companies have focused on returning cash to shareholders, some $1.6 trillion of it last year alone.

    At the same time, America is experiencing an at least nascent rebirth of manufacturing, enabled primarily by technology and the narrowing of the wage gap between America and emerging market countries. The rebirth could be dramatically accelerated were Congress to grant an at least temporary holiday for repatriation of offshare cash, estimated to be well in excess of $1 trillion.

    As things sit today, the tax scrape to U.S. companies for repatriating off-shore cash to fund onshore investment is prohibitive: 35%. That, of course, weighs heavily against the repatriation and investment of that cash in the U.S., a huge competitive disadvantage for investment in America by American companies.

    A permanent tax holiday for repatriation is probably unrealistic given the vituperative gridlock that defines Washington politics today. But a time-limited measure that perhaps lowered the U.S. corporate rate from 35% (the highest among 200 ECD countries) to, perhaps, the 20% capital-gains rate may be feasible. There can be little doubt that it would be wise—not only would it help to narrow the deficit but it would also serve as a major catalyst to reshoring of manufacturing in America.

    Robert Profusek (@RAProfusek) is the head of M&A at the law firm Jones Day.

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