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Investors looking for the U.S. Republican tax bill to prompt multinational companies to convert foreign profits into dollars and end the worst slide in the greenback in a decade may have to temper their hopes for a prolonged rebound. The plan, designed in part to give U.S. multinationals a reason to repatriate the roughly $2.6 trillion in profits held by their foreign subsidiaries, would slash tax rates on such previously accumulated earnings. At the same time, many large companies already have those profits in dollar-denominated securities.This time, however, the Republican bills before a conference committee would permanently change how U.S. companies' foreign profits are taxed.Legislation passed by the House of Representatives would allow companies to bring back foreign profits at a 14 percent repatriation tax rate, as opposed to the current 35 percent, over eight years.Neither bill requires companies to convert foreign profits into dollars.The Brookings Institution, a nonprofit public policy organization based in Washington, estimates that at the 15 U.S. companies with the largest cash balances abroad, 95 percent of foreign profits are held in U.S. dollar-denominated cash or equivalents.
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