Supercharging our economy
For decades, Democrats have insisted on taxing profits generated by U.S. companies in foreign countries, because they think that doing so will force businesses to keep their investments in the U.S.
Wrong! A business-friendly environment always works better than force.
President George W. Bush was able to get the repatriated tax rate lowered to 5.25 percent in 2003, and nearly $350 billion came back into our economy. Today, it is conservatively estimated that nearly $1 trillion might come back if we take the tax on repatriated profits to zero.
Our economy gains nothing as long as those profits remain abroad. Common sense says we have everything to gain if we let those profits come home without a tax.
Some multi-national businesses might use those profits to expand operations here in the U.S., which would mean more job opportunities for the 15 million unemployed people. Or maybe companies would increase salaries and wages for their employees, or they might pay a dividend to their stockholders.
And remember, many senior citizens depend on their dividend income, if they have any, as a way to supplement their paltry Social Security checks. With the price of gasoline doubling in the last two years, and expected to go even higher along with the cost of everything else, a dividend increase would be some welcome relief to many seniors.
Liberals will argue that there’s no guarantee that those “evil corporations” would do any of these things if they were to get such a windfall in cash. They are right, but it’s their money and their choice. It’s not the government’s money or the government’s choice. I trust businesses and business leaders to make the right choices for their owners and customers, not the government.
We live in a global economy in an age of global information. Global businesses are constantly looking for countries that are business-friendly, tax-friendly and labor-friendly. And contrary to what liberals would have you believe, businesses do not always jump to the country with the cheapest labor. Lower taxes and growth potential are usually at the top of the priority list.
We need to also make the repatriated tax rate permanent, along with all of the other corporate and individual tax rates. We are the only developed nation in the world that has not lowered its top corporate rates in the last 15 years or more.
And when Congress and the president extended the lower tax rates for two years in 2010, they just extended tax uncertainty for two more years, which is bad for business.
Businesses plan their growth based on what they know, and the less they know about what taxes are going to be on domestic and foreign profits, the less they plan to grow. Businesses need and want tax certainty in order to begin to aggressively grow again, which would lead to significant job growth.
Liberals will always fight against anything that moves people’s money from government to the people who earned it. They’ll scream “crimes against humanity, old people, children and the poor” because they do not like totally un-taxing anything. They do not want taxpayers to discover that the right kind of tax cuts will actually help the economy and help put people back to work.
Dr. Dan Mitchell has documented the positive impact that low tax rates have had over the last 100 years. Tax cuts increase tax revenue. Tax revenues increased by more than 60 percent during the 1960s, after President John F. Kennedy lowered tax rates. President Ronald Reagan’s tax cuts generated a more than 50 percent increase in tax revenues during the 1980s. This is contrary to liberal beliefs, because the facts do not support their redistributionist ideology.
To achieve bold economic growth, we need bold changes in our tax code. Significantly lowering the top corporate tax rate, reducing the capital gains tax rate to zero, suspending the tax on repatriated foreign profits, making the tax rates permanent, and a one-year payroll tax holiday for employees and employers would be a good start.
The next step would be to completely replace our outdated and messed-up tax code with the FairTax, which is a single-rate national sales tax. This would supercharge our economic growth, and there would be a huge sucking sound of businesses moving back to the United States of America instead of leaving.
Let foreign profits come home.
The return of Republican control of the House of Representatives in November 2010 was step one. November 2012 will be an opportunity to achieve steps two and three.
We will have no greater opportunity in our lifetimes.
Herman Cain is a former CEO, a radio talk show host on AM 750 and 95.5 FM WSB in Atlanta, and a FOX News contributor.