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Pro Analysis

Wall Street likes Trump's repatriation holiday idea

Donald Trump
Carlo Allegri | Reuters
Donald Trump

Donald Trump's economic positions have been overshadowed lately by his comments on other matters, but Wall Street has taken notice, sending clients research this week to invest around the proposed ideas of the candidate and Republican party platform.

His call for a repatriation holiday of 10 percent for the more than a trillion dollars in corporate cash parked overseas is among the ideas getting the most chatter on Wall Street right now. It's also possible Hillary Clinton would propose a similar policy, with some conditions, analysts said.

"Given the upcoming elections, there is newfound hope that the presidential candidates would be willing to push for a tax holiday so as to bring back the funds, encouraging its use for capital spending and job creation. Donald Trump already has advocated that idea," Citi Research's Tobias Levkovich wrote in a note to clients Friday.

Strategas Research sees several other positive ramifications of corporate cash repatriation.

"The most efficient way to do that is to impose a one-time tax on the existing foreign profits overseas which will free up the cash for companies to use for dividends, share repurchases, M&A, capital expenditures, and to pay down debt," Strategas' Daniel Clifton wrote in a report Tuesday.

Levkovich said there is approximately $1.2 trillion held overseas that can't be brought back to the U.S. without getting hit with the 35 percent corporate tax rate. Democrats are fine with taxing it at a lower rate, but the funds must be used for infrastructure spending, according to the strategist. However, he sees a "possible compromise" no matter who gets elected in November as Hillary Clinton is open to repatriation too.

So what can investors buy on a potential repatriation deal?