Some companies really are hoarding [0] cash. By which I mean, they're stashing it in very liquid investments, rather than investing it in long-term ways back into their own company, and rather than hiring new employees. (And many banks are choosing not to lend those cash stockpiles out as capital.)
Corporations have good reason to do this. For many companies, they want to have the flexibility to take advantage of opportunities created by this economy, but they don't want to move just yet since there's so much political uncertainty. Nobody wants make a big investment only to have Congress levy a punitive tax on that investment. Nobody wants to hire a bunch of new people and then be forced to spend a bunch of money due to an unforeseen change in labor or health care law. So companies are sitting on cash, simply waiting for the political situation to settle down enough that it's safe to start using their cash productively.
[0] horde - a large group of people or warriors. hoard - a stockpile of resources.
Actually, no. Back in 2008 when banks were failing but the economic numbers showing that we were in a depression hadn't come in yet the Fed was faced with a problem. They felt like they needed to pump money into failing banks, but they were worried that this might cause inflation. To allow them to inject lots of money into banks without it getting out into the rest of the economy they came up with something called the Interest on Reserves, that is the Fed would pay the banks not to lend the money out.
It totally fulfilled its objective. Despite huge growth in the money supply America was soon actually experiencing deflation in 2009. Sweden, on the other hand, actually charged banks interest on the excess reserves they were holding - and their economy recovered very quickly...
But it's not as simple in my view. Yes banks do lend out a portion but currently the reserve they have to keep have increased a lot in the last few years and the flow is not very well distributed (in my view) to through the whole economy.
I'd like to know if there are some analysis of this somewhere. My hypothesis is that certain sectors have seen drops how much money has been added through lending while others have seen increases.
Why would it be any different from taxing property that you simply own? In fact, where I live, blighted, disused buildings are taxed at a punitive rate.
The combination says: You'll be taxed individually if you withdraw it, or taxed as a company if you horde it. Why not invest it instead?
Which might lead to greater employment, or more innovation.
* This whole post was a 2-second thought, I'm pretty sure it's flawed, but it amuses me.