Cash-Rich Companies and Corporate Tax Cuts

Corporate America has plenty of dough, the New York Times finally discovers.

According to S.& P., the total cash held by companies in its industrial index exceeded $600 billion in February, up from about $203 billion in 1998.... [Research indicates] that growing cash holdings over that period most likely reflected the simple fact that the world became a much riskier place for business.... An even longer savings trend was spotted by 'Jason DeSena Trennert, managing partner and chief investment strategist at Strategas Research Partners in New York, who said his own rough examination of corporate balance sheets shows that "cash, as a percent of total assets, is as high as it's been since the 1960s."

Opponents of cutting the U.S. corporate tax rate—the second-highest in the world—often point to all that cash as a reason for leaving rates where they are, or even raising them. But as CEOs see things, apparently, they need that cash as a cushion in a riskier world. Cutting rates, therefore, might well encourage and enable investment and improve U.S. competitiveness.