The Cayman Islands, where the living is easy and corporate holdings are untaxed. David McFadden/AP

A new proposal could bring in billions of dollars from offshore accounts to solve the country’s infrastructure-spending gap.

You will be forgiven if you’ve forgotten how much money U.S. corporations hold in overseas accounts. After all, the Panama Papers story broke way back in April. Dozens and dozens of news cycles have passed since the revelation of records held by Mossack Fonseca, the world’s fourth-largest offshore law firm, and the names of corporations and leaders ensnared therein.

Here’s a reminder: U.S. corporations hold more than $2 trillion in offshore accounts. It’s a shame that the presidential election is occupied by other subjects (namely Donald Trump), since offshoring prevents the government from putting tens of billions of dollars to good use at home. Money that could go a long way in solving the country’s infrastructure-spending gap.

A new report from S&P Global shows one way that the government could begin to close the overseas tax loophole and fund infrastructure improvements at the same time—and do so without forcing American corporations to take a bath.

“What if we repatriated under this proposal 15 percent of half of the $2 trillion?” says Beth Ann Bovino, chief economist for S&P Global. “That would bring in $150 billion into infrastructure projects in the U.S. We keep infrastructure as the grease that keeps the economy going.”

Here’s how it would work: S&P Global proposes a tax holiday. During this period, companies with overseas accounts can move their holdings back to the U.S. at a zero tax rate, provided that they invest a healthy fraction of those funds into spending on building rail, improving water systems, and replacing bridges. For the purposes of this exercise, S&P Global settled on 15 percent, close to the effective corporate tax rate (14 percent, per the Government Accountability Office).

The $150 billion in repatriated funds could be directed toward refurbishing bridges and replacing outdated water systems, but also to introducing broadband to rural regions and expanding capacity in dense networks, according to the report. In addition to creating more than 300,000 new jobs, this level of infrastructure spending would add almost $190 billion to the GDP through the “multiplier effect”—in just a few years’ time, per the report.   

“When we talk about the bang-for-the-buck effect, it depends on where you are in the business cycle,” Bovino says. “For every dollar invested, we’d get a return of about $1.30.”

This tax holiday would be different from the 2004 tax holiday, which saw American companies repatriate some $362 billion at a statutory tax rate of 5.25 percent. That effort generated between $13 billion and $19 billion in federal taxes. (More on that in a moment.) A new tax holiday bound by a mandate for increased infrastructure spending would not only put much more money toward public welfare—maybe 10 times as much—it would do so in a way that presents companies with a profitable opportunity.

A tax holiday could be a first step toward comprehensive tax reform, a subject that usually commands headlines during normal presidential elections. According to Shripad Joshi, the senior director and accounting officer at S&P Global, there are a number of factors for policymakers to consider in order to take such a step. Considerations include the length of the tax-holiday window (e.g., one year), defining the categories of qualifying infrastructure investments, and determining where (in which states) governments or other groups could match these investments.

Bovino notes that it’s a win–win scenario for companies with funds overseas. While the European Union’s order to Ireland to pursue $14.5 billion in back taxes from Apple is a complicated case, it shows a willingness among supranational authorities to chase overseas funds. “We believe that most companies never intended to have such large cash piles parked overseas, and that, if given the choice, many would prefer to repatriate cash, invest in the U.S., and limit their debt,” the S&P Global report reads.

Further, a tax holiday with an infrastructure mandate pairs well with bipartisan efforts to boost investment in infrastructure at the state and local level. Consider the Move America Act of 2015, introduced by Democratic Oregon Senator Ron Wyden and Republican North Dakota Senator John Hoeven, which would expand tax-exempt infrastructure bonds and create an infrastructure tax credit.

Of course, it would be more profitable for shareholders if policymakers simply gave companies an opportunity to repatriate the money at a zero tax rate, full stop, resulting in more for shareholders or mergers and acquisitions. Tax holidays may be double-edged swords: A Senate report released in 2011 found that the 2004 tax holiday cost the federal government $3.3 billion over the long term and led the 15 companies that benefitted the most to shed more than 20,000 jobs.

From another angle, giving a tax holiday to companies that may choose to repatriate anyway robs the U.S. Treasury of needed funds. Just last month, Apple CEO Tim Cook said that the company plans to repatriate billions to the U.S. next year, with no tax holiday in the offing. The Joint Committee on Taxation argued in 2014 that a temporary tax holiday would cost the government $95 billion.

No doubt, an infrastructure mandate would need to be enforced as strictly as a tax for it to have any meaningful effect. Taking money from federal coffers in order to fund investment in infrastructure would be an example of robbing Peter to pay Paul, so long as the mandate is enforceable. If the money is coming back anyway, the government ought to have a plan for guiding some of it toward the public good. There’s no reason why that path shouldn’t also be profitable for companies.

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