On US corporate taxes and inversions: My simple idea to solve the problem: cut the US corporate income tax rate to zero. Thats right. Zero. I will pause for a second as my liberal friends pick themselves up off the floor. Why? My research shows that it only brings in $350 billion a year in federal revenue-averaged from a variety of sources. Meanwhile, US corporations are holding $2 trillion in profits overseas to avoid our high federal corporate income tax rate. Under the current system, if they bring that money back to the US from their overseas subsidiaries, it is subject to our federal corp income tax. Corporations are looking to move out of the US (the inversions we are hearing about on the news) because our federal corporate income tax rate is much higher than most other nations. They are performing their fiduciary duty to their shareholders to minimize expense and maximize profits. The US corporations with that $2 trillion of profits sitting overseas will repatriate the money-bring it back here. The current system favors wealthy shareholders with the lower taxes on capital gains and dividends. The corp income tax gets passed down to employees and customers. So to go along with this, I also propose mandating that the repatriated monies must be spent on hiring new employees, pay raises/benefits for rank and file employees (below VP level). The repatriated money cannot be used for executive bonuses, stock options, restricted stock grants, or stock buybacks, etc. Also, raise the capital gains tax. It is ridiculous to think that spurs investment. It merely benefits the wealthy stockholders. My proposal will truly spur hiring and corporate investment. Bringing that $2 trillion back into the US economy will spur hiring, start pay increases again, and spur capital investment by companies. All of those things grow the economy and will grow federal personal income tax total revenue to easily make up for the loss of that $350 billion. I bet within five years it would allow for a nice reduction in personal income tax rates. And the whole tax inversion issue goes away. If anything, non US corporations will start moving here to the US.
Posted on: Fri, 29 Aug 2014 12:39:59 +0000
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