Posted on 03/05/2004 1:28:24 PM PST by weekendwarrior
To hear Democrat Presidential-candidate John Kerry tell it on the campaign trail, not only is unemployment the fault of President Bush, but he's practically handing out pink slips to unwitting workers across the nation personally. The campaign rhetoric coming from the Left on the economy is only slightly less histrionic than their anti-war slogans.
There is an opportunity, however, for Senator Kerry to do something good for the economy and jobs by tearing himself away from the campaign trail long enough to vote this week for the Ensign-Boxer "Invest in the USA Act" which is part of the FSC-ETI bill.
The "Invest in the USA Act" is a temporary tax proposal that would allow a one-year reduction on corporate income earned abroad. Currently, American companies pay 35% on all foreign earnings. Under the "Invest in the USA Act", companies would pay a 5.25% rate if the income is repatriated to the US during a one-year period.
According to J.P. Morgan, this could bring home $300 billion or more (some analysts have pegged it at up to $600 billion) . Another study by Allen Sinai estimates a boost to GDP of 0.2% in 2004 and 0.9% in 2005 including an increase in jobs and capital spending.
Companies could use this money to pay down outstanding debt, finance new capital spending projects, fund new R&D and venture capital projects, buy back stock and pay dividends - with the elimination of double taxation. In other words, thanks to the good old I.R.S., billions of U.S. dollars are sitting overseas doing no good for us here at home.
Companies are not static entities that simply amass profits. If successful, they are little beehives of productivity and activity, never content to sit on laurels. They invest and reinvest, building jobs, opportunities and new ideas. An infusion of tax relief would provide investment opportunities for companies and an incentive to bring jobs home from overseas.
It is not government that creates jobs. In fact, government needs to get out of the way of American companies so that jobs, investments and dividends can be created. If American companies weren't overwhelmed by taxation, regulation, litigation and unions, it wouldn't be as profitable to take business to foreign shores.
Jim Lucier and Liz Carver write in a recent report from Prudential Securities, "A German corporation pays German tax on its business in Germany and U.S. tax on its business in the U.S. A U.S. corporation pays U.S. tax on its U.S. business and U.S. tax on its German business as well, minus and allowance for German taxes already paid. The foreign earnings become taxable when remitted to the U.S. parent; otherwise the tax can be deferred indefinitely. This quirk of U.S. tax law discourages U.S. companies who do business overseas from reinvesting their foreign profits in the United States, we believe, since transfers of funds to investments in the United States incur and added layer of taxation while investments of the same funds overseas do not."
In fact, U.S. companies have paid higher taxes compared to other countries - including double taxation -- and the gap continues to widen as foreign tax rates have been repeatedly lowered since the 1970s. The result is truly remarkable when the cost of lost opportunities is contemplated - whether in research and development, giving shareholders dividends to reinvest or in the sheer numbers of jobs that could be created with an infusion of $300 billion.
The good news is that this "quirk" in the tax code is easily fixable with the Ensign-Boxer "Invest in the USA Act." Let's hope that the silly season of feverish campaigning and overblown rhetoric is put aside long enough to pass this bill and bring real working capital home. Passing this legislation will go a long way to demonstrating to voters that creating jobs and economic opportunity is more than an election year promise.
------------
Kay Daly, president of the Coalition for a Fair Judiciary, is the 2003 recipient of the Ronald Reagan Award from American Conservative Union.
--------------------
Note -- The opinions expressed in this column are those of the author and do not necessarily reflect the opinions, views, and/or philosophy of GOPUSA.
Good grief. This scam is nothing but more globo-perversion of the English language.
All this "temporary" tax break does is reward transnational corporations who can outsource their operations quickly.
If they were serious about promoting productive investment in the USA, a SHIFT in the structure of our tax code would be more effective. An across-the-board reduction of the corporate income tax could be financed by a revenue-neutral increase in tariffs: a relatively low, flat rate "revenue tariff" placed on ALL imported goods.
I once estimated that a 20% revenue tariff could be substituted for the corporate income tax: A Proposal to Abolish the Corporate Income Tax. But there is no reason that this couldn't be prorated over a period of time to facilitate a smoother transition. Perhaps a 5% revenue tariff in exchange for a 25% reduction of the corporate income tax, or a 10% revenue tariff in exchange for a 50% reduction of the corporate income tax. ANY of these would be MUCH more stimulative for domestic business investment than this misnamed "Invest in the USA Act".
Wow......
Next we'll have a 'Sovereign-National-Bank' for 'Sovereign-Legal-Citizens' of the U.S.A.
100% Separated and Independent of 'Foreign',...International Banking.
(Back to the Constitution's meaning of 'Local/Nation Vested Interest'.)
naw.....
Not with the A.C.L.U. 'Suprime Court Nine' overlording-overruling reasoned citizens' voting.
(These nine folks are 'The New Nine Commandments' of Pluralistic House Divided?)
/sarcasm
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.