Many of America's largest global companies are lobbying hard for a tax holiday to repatriate to the U.S. nearly $1 trillion that they have amassed from foreign business. This plan as proposed will almost certainly not be enacted. The president and Congress will not agree to support a giant windfall to reward firms that exported American jobs to foreign lands and now seek a huge taxpayer subsidy for their profits from these actions.
I propose one simple amendment to the repatriation plan that could lead to its enactment and give a significant boost to the American economy, American workers and American firms large and small.
Let's add a "repatriate prosperity" provision that would require participating global companies to increase the size of their American workforce by a designated amount, within a designated window, such as six months, in order to receive the tax holiday.
Under my plan, the repatriation proposal would be enacted including a provision that would have the Secretary of Labor certify that the new American jobs have been created, as a trigger for the tax holiday. The money could be repatriated immediately upon certification by the Labor Secretary.
Corporate CEOs, boards of directors, equity investors and bond investors would all have 100 percent certainty that once the jobs were created, the money comes home immediately under the tax holiday. They would have 100 percent certainty of exactly when the money comes home. They would have 100 percent of the power to determine when the money comes home, simply by creating the jobs.
The exact number of new jobs per company that would trigger the tax holiday could vary. I would suggest a 5 percent increase above a company's current workforce and suggest the Congressional Budget Office and Joint Tax Committee run numbers to quantify the benefit to and impact on the economy.
I have been an aggressive dissenter for over a year against the lack of a strong jobs program from Washington and a strong critic of the lack of creativity and ingenuity in economic policy. I would urge again that the housing tax credit be renewed, that a significant jobs tax credit for small businesses be created and that a large tax credit be devised for firms that repatriate jobs and equipment purchases.
We should fund a major infrastructure rebuild and consider a capital gains tax holiday for venture capitalists who finance American job wave growth companies.
While I support passage of the pending patent reform bill, it falls short of what is needed to maintain American leadership, ingenuity and jobs. The issue should be revisited until American patent law fully promotes American inventors and American prosperity.
A "repatriate prosperity" plan would lift our economy beginning shortly after enactment. Companies would announce new hires. New hires would lift consumer demand, tax revenues and consumer and investor confidence.
If $150 billion of the $1 trillion is used for hiring, companies would also have immediate access to the remaining $850 billion, some of which would be used in ways that generate additional jobs.
America must become again a nation of job-producing patriotic capitalists. "Made in the USA" should be a clarion call with a resounding echo heard in Washington.
There is nothing wrong with global firms being global, but if they want a gigantic tax break, it should be a win-win for the companies and Americans, not a win-lose deal where companies win another tax break while Americans lose more jobs.
We Americans have our economic backs to the wall. There is a cry for jobs throughout the land that remains strangely silent in the high councils of politics.
America must honor and support workers who work, laborers who labor, inventors who invent, creators who create, builders who build and financiers who finance the job waves of the future. Let's repatriate our prosperity and rebuild our nation.
This column was originally published at The Hill.
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http://www.ctj.org/pdf/regcg.pdf
historic tax rates
http://www.usinflationcalculator.com/inflation/historical-inflation-rates/
inflation rates
http://www.davemanuel.com/historical-unemployment-rates-in-the-united-states.php
employment rates
Why did it not work for President George W. Bush?
In two words - Free Trade
During President Bush's term the money left the U.S. and went to the fast developing nations. Under President Reagan with the protective tariffs the money stayed here and created jobs.
Who can argue that unrestricted free trade gives a nation that treats its citizens and our environment the worse has a competitive advantage!
That's why Republicans are attacking the EPA and labor agencies. They want that advantage to compete.
I think the system we had that worked for a 150+ years was a better approach. Protective tariffs - that's what created the middle class here!
Unenforceable.
And, not something that Obama would administer.
But, interesting.
Any such law would need to require a direct quid pro quo that is objectively testable.
Otherwise, this proposal is simply window dressing on the repatriation of the money at a rate that is favorable to corporations.
Additionally, I disagree that the, "plan as proposed will almost certainly not be enacted. The president and Congress will not agree to support a giant windfall." Empirically, Congress and the President will do just that - think oil company corporate socialism.
The high tax rate is a signal to businesses that if they have a choice there are better places than the U.S. to invest new jobs and grow. Any first year financial analyst would recognize that the return on investment needed to invest in America must be at least 10% better than other markets in order to make sense.
If the U.S. were to lower the tax rate to a level where it would be able to compete with other developed nations the move would pay dividends. (http://bit.ly/kxSMHw)
"Fact: World Bank study found U.S. effective corporate tax rate lower than those of several industrialized nations
In its Paying Taxes 2009 publication, based on its 2009 Doing Business report, the World Bank-International Finance Corp. estimated that the United States has a lower effective rate of current corporate tax than that of several other nations, including Germany, Canada, India, China, Brazil, Japan, and Italy. The publication also included a figure that compared effective and statutory corporate tax rates for several G-8 and BRIC [Brazil, Russia, India, China] countries"
So we already have an effective tax rate lower than that of Brazil, India, and China. How low do you think we should go?
If you look at the countries you mentioned they all have effective tax rates above their statutory tax rate. That means that somehow companies in those countries were taxed more than they were told they were going to be. Is this what you think the U.S. should do? Trick its companies into paying more in taxes.
If the U.S. were to make its statutory and effective rates more similar it will give companies a better understanding of what they will be taxed. When the U.S. is able to create a clearer picture of its tax rates many companies will see that the U.S. effective tax rate is actually lower than that of these and other countries and will be more willing to move their operations to the U.S.