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suziedemocrat Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Feb-04-08 07:59 AM
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Article - Confessions of a Job Exporter
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Good Article. Man says that when a company makes money abroad, it must invest that money outside the US, or pay 35% tax on it.

Confessions of a Job Exporter

Say you owned the corner store and needed to hire one employee. Say further that there was a federal law providing that if you hired an American citizen for that position, you would be subject to a fine equal to 35% of your income. If you said, "OK, if that's the law then I will hire a non-citizen", would you therefore be evil? Or would you be entirely justified in saying "If society wants me to hire an American, then they should change that law and not fine me for doing it"? The U.S. government does impose such a law, and multinational corporations face the shopkeeper's dilemma every day. That law should be changed


U.S. law currently provides that most income earned abroad is only taxed by the U.S. when you bring the cash home. So, if you make $100 in America you only keep $65 after the U.S. 35% corporate tax, but you keep the full $100 if you earn it in the Dominican Republic. When you reinvest that $100 of D.R. cash you can use the full $100 if you invest abroad, but only $65 if you invest in America, due to the U.S. tax bite. So you invest in new foreign operations, not American ones.

Changing the law to tax the D.R. operations currently would not work. America is not the only economy that counts any more, and most countries do not tax foreign earnings at all. If the U.S. immediately taxed foreign earnings, our companies would get acquired or crushed by competitors, and wed just lose our headquarters jobs. Like it or not, it is a global economy now, and this country does not control it.

But there is a simple solution that works. Give corporations a deduction for dividends they pay, and make up the tax revenue by getting rid of special rates for capital gains and by imposing a 7% tax on individual income over $500,000 a year, which is all it takes to be revenue neutral. That would make the U.S. the best location in the world for high value operations. It would restore our economy and give middle class workers market power.

....more at link...

Matt Lykken is a tax attorney and is Director of Details of the proposal can be found at .

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