Emperor: You gave us something new, and fresh tonight.
Mozart: So, Majesty, you liked it, you really liked it?!
Emperor: Well, of course I liked it my dear fellow. It was just that every now and then... every now and then, it had... it had... oh, how would you say it, Court Conductor?
Court Conductor: Too many notes, your Majesty.
(Amadeus, Milos Forman, 1984).
Let us be clear upfront. If our politics were not so stupid, the following proposal would not even be on the list of recommendations to create new jobs, grow the economy and reduce the deficit.
Railing against dysfunction, and only railing against it, however, condemns us to paralysis. No one on the other side is listening or, frankly, cares. Much like true psychoses often have their own internal logic, we need to understand the triggers in our political psychosis to determine if there is anything that can be done to provide some relief to the American people.
That is, we need to be street-smart. Make them an offer their paymasters will not let them refuse.
Millions of Americans need jobs. This is not just an economic imperative, but a social need as an increasing number of young adults get no chance to burnish their resumes and experience for their later lives, and near-retirement boomers have no opportunity to rebuild their nest-eggs.
As the political class perseverates on creating phony crises and lying about the country's problems, it behooves us to get the economy growing so another 3 million Americans can have jobs.
Incidentally, more Americans working means less unemployment payments, fewer people on food stamps, fewer people needing Medicaid, and more revenues from their paychecks, and a reduction in the deficit. So, even if the policy itself is less than ideal, its impact can trigger a virtuous cycle.
Businesses complain that they have ~$1.5T in profits sitting overseas that they will not "repatriate" because of taxes, and seek a tax-holiday to allow them to bring back that money. The problem is that the last time we did that not very many jobs were created. There is no reason for the American people to provide another gift to large corporations without a meaningful benefit.
So, here is the deal: For every new U.S. job created, a business gets to repatriate $1 million paying just a 10 percent tax. If they create 1 million new jobs, they repatriate $1 Trillion, and we receive $100B in revenues. (We can use FICA submissions to determine if the number of employees has increased over last year or not).
As the quid-pro-quo, we get to use that $100B to create jobs -- the American Jobs Act, an Infrastructure Bank, re-hiring teachers, police, firefighters, public health workers, whatever mix of direct hiring makes the most sense.
Adding this together, corporations will repatriate $1T (or more if they wish), with which they can do anything they wish so long as 1 million jobs are created to enable them to take that credit. The 10 percent tax on the income provides $100B to fund new jobs. The American Jobs Act alone is estimated to produce 1.9 million new jobs that, when added to the 1 million jobs the repatriation provision provides, gets us nearly 3 million new jobs.
It has not added one dime to the deficit, and all the provisions are short-term. Republicans get to serve their corporate paymasters, providing them $900,000 after taxes to buy back their own stock, give out as dividends or pay for corporate jets. Out of that $900,000 will also come the new worker's salary and benefits, but that is not likely to average even $100,000, and that, of course, is deductible as an expense before taxes anyhow.
The American people get 3 million new jobs, and a deficit that quietly reduces itself while the political class continues to yammer about nothingness.
This is not great economic policy. Some of those new jobs would have been created anyhow.
But, so what? In the era of stupid, the country needs some street-smarts.
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