This Week: Trump’s $2.5 Trillion BOMBSHELL to Congress

What happens when 2.5 trillion dollars comes pouring into the United States?

You may get to see exactly what happens as soon as this week. That’s because on Tuesday evening, President Trump will deliver his highly anticipated address to Congress.

As part of that address, Trump is likely to touch on his plan to pump $2.5 trillion into the U.S. economy. To put that number into perspective, that’s more than $7,700 for every single American citizen.

This new plan has potential to put cash in your pocket, to drive your investments higher, and to boost the U.S. economy in a big way.

So what is this $2.5 trillion announcement? And if you’re a skeptic like me, you’re probably wondering “how much will this announcement cost us taxpayers?”

Let’s take a look.

Trump’s $2.5 Trillion Stimulus Package

Trump has his eye on the huge amounts of cash that U.S. corporations have hoarded in overseas bank accounts. I’m talking about corporate cash balances estimated at $2.5 trillion!

This cash is being held hostage by U.S. tax laws. But Trump’s plan favors a special tax holiday for these overseas bank accounts. A holiday that will give corporations an incentive to bring their cash back to the U.S. without paying exorbitant tax penalties.

You see, this overseas cash is a result of profits companies have generated from international markets. As long as the profits are not brought back to the United States, the profits are not subject to U.S. taxes.

And here’s the problem…

Large corporations have a collective $2.5 trillion in cash that is essentially held hostage overseas. If the money is brought to the U.S., it will be taxed at a very high rate. (The U.S. has one of the highest corporate tax rates in the world). But if the money sits in bank accounts overseas, it can only be used for limited purposes (and can’t be paid to U.S. shareholders through dividends or share buybacks).

Once Trump’s tax holiday goes into effect, however, the $2.5 trillion will be sent back to the U.S.. Remember, corporations have “HUGE” amount of cash on their international balance sheets.

When the cash comes back to the U.S., it will boost stock prices for the affected companies. It will lead to higher dividends paid to shareholders. And the cash will improve the U.S. economy, driving job growth.

All of these things are exactly in line with Trump’s stated objectives.

So What is This Going to Cost Me?

If you’re like me, whenever you see a big stimulus program like this, you immediately think about what it’s going to cost you. Politicians have a habit making big promises and then paying for them through higher taxes or bigger deficits.

But one of the reasons I like this plan so much, is that it’s not going to cost you a dime.

In fact, this plan has the potential to raise tax revenue for the U.S., without taking anything from us as citizens. Here’s why…

As part of Trump’s new economic plan, analysts are expecting a “holiday” for companies holding large off-shore cash balances. During this period, companies will be able to “repatriate” their cash, bringing earnings back to the U.S..

Now these earrings will be taxed. But they will be taxed at a lower rate than they would have before. This special unique offer will be a very big incentive for companies to move massive amounts of money back to the U.S.. Otherwise, they’ll have to pay “normal” tax rates on this cash in the future.

(And while future “normal” tax rates are likely to be lower than the punitively high tax rates corporations face today, there’s still a big incentive for corporations to take advantage of this holiday.)

So when companies repatriate their cash, Uncle Sam will get a small cut. But even a small cut of $2.5 trillion will be a big day for the IRS.

Meanwhile, the trillions of dollars coming home to America opens some excellent opportunities stateside  .

How to Claim Your Share of the Cash Windfall

With $2.5 trillion to pour into the U.S., you’ll want to make sure you’re in line to get your share of the cash.

The key is to invest in the companies that are likely to benefit most from this tax holiday. More importantly, you want to be invested in the companies that will pass this cash on to you.

To get the most out of Trump’s $2.5 trillion stimulus program you need to look for three things:

  1. Companies with big international operations — Large companies with overseas profits are going to be most affected by this new policy.
  2. Companies with mature business — If you focus on mature corporations, you’ll be investing in companies that don’t necessarily need the cash to fund growth.
  3. Companies with a strong dividend policy — Companies who already pay a healthy dividend are more likely to increase their dividend when new cash is brought back to the U.S.

If you invest in the stocks of companies that fit all three of these requirements, you’ll be in great shape to get your share of the $2.5 trillion flood of cash.

To help you get started, here’s a chart of the ten U.S. companies with the largest overseas cash positions.

Foreign Cash ($B), Top 10 U.S. Companies With Overseas Positions

But please remember, timing is important! The sooner you get started, the more profit you’ll be able to lock in!.

Here’s to growing and protecting your wealth,

Zach Scheidt

Zach Scheidt
Editor, The Daily Edge

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