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Trump’s tax holiday won’t make much of a difference without corporate-tax reform

President-elect Donald Trump’s proposal to offer U.S. companies a one-time tax rate of 10% to repatriate their overseas cash would bolster domestic liquidity and improve financial flexibility, but it would likely be a temporary blip without a broader reform of corporate taxes.

That’s the view of Moody’s Investors Service in a report published Thursday that argues that comprehensive tax reform could have the unique effect of being good for both creditors and shareholders, if it leads to lower debt levels and higher capital returns. A repatriation holiday, though, could have varying effects based on how companies use the cash.

“Where the rubber meets the road depends on company behavior,” Moody’s analyst Richard Lane, lead author of the report, told MarketWatch.

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