If you had a way to give the American economy a major boost and at the same time bring in at least another 100 billion dollars in tax revenues without increasing taxes, would you be in favor of it? Think about it. I am talking about a plan that would increase the growth of GDP by at least 2% (moving it, for example, from the 3% growth predicted for 2014 to 5% growth for the year) which would also bring in substantial new revenues for the federal government to reduce the deficit. Would you be in favor of this?
The simple answer is that anyone with a brain should be in favor of this plan. It would create hundreds of thousands of additional jobs. It would reduce the need for government subsidies to many families. It would lower the need for borrowing from the Chinese. In short, it is a win-win situation.
The problem is that most of the liberal establishment is dead set against the plan. Their reason is that this plan is one which depends on the private sector and one which would benefit many large American corporations and/or wealthy individuals.
The plan is a simple one. It calls for reducing the taxation of profits of American corporations earned outside the USA to 5% for the next 12 months provided the funds brought back into the USA are used either for investment in new plants or equipment or for payment of additional dividends. That's the whole thing. It would not take a 2000 page bill; it could be set forth in two or three pages. It is not complicated; indeed, it is easy to understand.
Right now, profits earned by American corporations in countries other than the USA are not taxed until those profits are brought back into the country. This law has been in effect for decades. What this means is simple. If a large company like Pfizer makes profits by selling its products in Europe, the funds earned are kept in accounts there. Were Pfizer or any other company to bring the profits back to America, it would have to pay 35% of them to the federal government in income taxes. The US tax law, in effect, charges American companies a huge fee to bring their earnings home. Not surprisingly, American companies leave those earnings in other countries. The total amount now being held in such accounts is closing in on two trillion dollars.
Ponder that for a moment. American corporations have two trillion dollars sitting in Europe and Asia just to avoid a 35% tax by the federal government. That money sits there and provides a ready pool of funds for investment when it comes time to build a new plant or buy new equipment. Of course, that new investment has to be outside the USA because bringing those funds back to America to pay for American plants or equipment would mean payment of a 35% tax. The net effect is that for these companies, it becomes, in essence, 35% less expensive to expand operations abroad than to do it in America.
Now suppose that the tax bill were cut for a year to only 5% for funds that were brought back and invested in the American economy or paid out to investors. If that change lured only half the money back to the USA, we would see close to a trillion dollars in investment and/or dividends. The additional investment would bring a major increase in economic activity across the country. The dividend would put hundreds of billions of dollars into the hands of millions of Americans and it would also result in the payment of additional income taxes as those owning shares received the dividends.
In the Washington liberal government/media bubble, however, ideas like this one are derided as plans to benefit the wealthy. They are tax breaks for rich corporations and wealthy stockholders, you see. America cannot give a break to corporations even if that break translates directly into hundreds of thousands or even millions of new jobs. Wealthy stockholders cannot get additional dividends even if the bulk of the funds paid as dividends would go to pension funds, 401k accounts and small stockholders. For the liberals, it is more important to keep any benefit from wealthy corporations and individuals than it is to help the unemployed and to reduce the deficit at no cost to American taxpayers.
I was reminded of the idiocy of this position by an article by uber-liberal Jonathan Chait today in New York magazine. Chait's point was the Republicans have no ideas to reduce unemployment. In Chait's world, ideas put forth by Republicans apparently do not count and can be ignored. Instead of actual reality, Chait wants to make a false claim and repeat it to other liberals so that they can feel good about themselves and their positions. Why should they let reality intrude on their world?
The sad thing is that the idea of a one time reduction of these corporate taxes is something that could have helped grow the economy in any of the last four years. The benefit to America would have been great. Nevertheless, these liberal prisoners of their ideology blocked consideration of this plan.
Oh well, maybe some day...................
The simple answer is that anyone with a brain should be in favor of this plan. It would create hundreds of thousands of additional jobs. It would reduce the need for government subsidies to many families. It would lower the need for borrowing from the Chinese. In short, it is a win-win situation.
The problem is that most of the liberal establishment is dead set against the plan. Their reason is that this plan is one which depends on the private sector and one which would benefit many large American corporations and/or wealthy individuals.
The plan is a simple one. It calls for reducing the taxation of profits of American corporations earned outside the USA to 5% for the next 12 months provided the funds brought back into the USA are used either for investment in new plants or equipment or for payment of additional dividends. That's the whole thing. It would not take a 2000 page bill; it could be set forth in two or three pages. It is not complicated; indeed, it is easy to understand.
Right now, profits earned by American corporations in countries other than the USA are not taxed until those profits are brought back into the country. This law has been in effect for decades. What this means is simple. If a large company like Pfizer makes profits by selling its products in Europe, the funds earned are kept in accounts there. Were Pfizer or any other company to bring the profits back to America, it would have to pay 35% of them to the federal government in income taxes. The US tax law, in effect, charges American companies a huge fee to bring their earnings home. Not surprisingly, American companies leave those earnings in other countries. The total amount now being held in such accounts is closing in on two trillion dollars.
Ponder that for a moment. American corporations have two trillion dollars sitting in Europe and Asia just to avoid a 35% tax by the federal government. That money sits there and provides a ready pool of funds for investment when it comes time to build a new plant or buy new equipment. Of course, that new investment has to be outside the USA because bringing those funds back to America to pay for American plants or equipment would mean payment of a 35% tax. The net effect is that for these companies, it becomes, in essence, 35% less expensive to expand operations abroad than to do it in America.
Now suppose that the tax bill were cut for a year to only 5% for funds that were brought back and invested in the American economy or paid out to investors. If that change lured only half the money back to the USA, we would see close to a trillion dollars in investment and/or dividends. The additional investment would bring a major increase in economic activity across the country. The dividend would put hundreds of billions of dollars into the hands of millions of Americans and it would also result in the payment of additional income taxes as those owning shares received the dividends.
In the Washington liberal government/media bubble, however, ideas like this one are derided as plans to benefit the wealthy. They are tax breaks for rich corporations and wealthy stockholders, you see. America cannot give a break to corporations even if that break translates directly into hundreds of thousands or even millions of new jobs. Wealthy stockholders cannot get additional dividends even if the bulk of the funds paid as dividends would go to pension funds, 401k accounts and small stockholders. For the liberals, it is more important to keep any benefit from wealthy corporations and individuals than it is to help the unemployed and to reduce the deficit at no cost to American taxpayers.
I was reminded of the idiocy of this position by an article by uber-liberal Jonathan Chait today in New York magazine. Chait's point was the Republicans have no ideas to reduce unemployment. In Chait's world, ideas put forth by Republicans apparently do not count and can be ignored. Instead of actual reality, Chait wants to make a false claim and repeat it to other liberals so that they can feel good about themselves and their positions. Why should they let reality intrude on their world?
The sad thing is that the idea of a one time reduction of these corporate taxes is something that could have helped grow the economy in any of the last four years. The benefit to America would have been great. Nevertheless, these liberal prisoners of their ideology blocked consideration of this plan.
Oh well, maybe some day...................
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