On August 29, 2013, Dave Johnson writes on AlterNet.org:
Here is one thing Congress cold do that would create more jobs and boots the economy and reduce both the budget deficit and the trade deficit. This one thing would not only provide a big boost now, but would provide an ongoing boost from now on. Congress should modify the ‘deferral’ tax loophole that lets companies dodge their taxes by moving and keeping profits ‘out of the country.’The top corporate tax rate is currently 35 percent. But corporations are allowed to ‘defer’ paying taxes on profits earned outside of the country until they ‘repatriate’ those profits, which means bringing the money back into the country. (Any taxes paid elsewhere are deducted from the amount owed,) There are solid reasons to allow corporations to do this. Simply put, they might need to put money to good use, which will benefit the company, which in theory will later benefit our country.But this tax deferral has turned into a huge loophole that is draining our country of jobs, tax revenue, investment, manufacturing infrastructure and other good things. We the People are supposed to receive in return for allowing these corporations to operate. Companies not only are keeping profits out of the country, the loophole gives them an incentive to engage in schemes that shift more and more jobs, production and profit centers out of the country.
This proposed “fix” of the “deferral” tax loophole would certainly bring additional tax revenues to the government. But what remains to be discussed is how to use the monies and the stipulations for broadened individual ownership where those monies are spent with companies in the private sector.
We also need to apply the proven principles of insurance to the financing of FUTURE wealth-creating, income-generating productive capital assets. We need to empower individuals to acquire multiple company diversification ownership facilitated with private capital credit insurance or a government reinsurance agency (ala the Federal Housing Administration concept). The promissory note can be offset to the government’s central Federal Reserve Bank in return for the cash equivalent of the amount of the loan, less an administrative fee. The only cost to the direct lending bank in making a loan to the corporation would be the administrative fee, or about 2 percent of the loan’s principal and then another 2 percent for capital credit insurance, with an additional quarter of a percent paid to the Federal Reserve Bank to monetize the loan and give the lender the same cash as it would have had if it had actually loaned money to the corporation. The lender’s cash loaned to the company’s Employee Stock Ownership Plan (ESOP) trust and/or the individual Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) is replenished with the Federal Reserve Bank cash. When the company pays the ESOP trust or CHA enough money to enable the trust(s) to repay the lender, the lender has to retrieve the note and pay back the Federal Reserve Bank. Thus, the loan cost would be essentially not more than 5 percent to allow ownership broadening financial capital to be invested in ownership broadening ESOP and CHA trusts to create new capitalists. Thus, national capital credit insurance replaces the requirement for pledging past savings and security (which for the most part the most Americans do not have).
See “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624 and “The Income Solution To Slow Private Sector Job Growth” at http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490.
