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This
website, which dates back well before the financial crisis of 2008, provides
extensive background from across the political spectrum that explains what is
fundamentally wrong with our economy, and offers a simple, three page piece
of legislation that would go a long way towards fixing it. If you are tired
of a do-nothing government that acts like our problems can't be solved,
please spend some time with this site and encourage others to do the same,
and then to contact their legislators to demand action.
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Globalization is hurting
a broad group of American workers. Given a choice between
paying U.S. wages and paying workers in a developing country $1.00
an hour, companies are choosing the latter. In some industries this trend
cannot be reversed, but America cannot and should not try to
compete for those low-wage, low-skill, low-value jobs. Trying to do so would
cause us to sacrifice standards that are important to our society, such as
the minimum wage. Instead, we must seek to obtain the promised upside of
globalization: good, new jobs in high-value industries with companies that
can afford to pay U.S. wages.
But the companies creating those choice jobs are sensitive to tax burdens. Their profit margins are high, so tax is a major consideration in deciding where to locate their factories, laboratories, and offices. Unfortunately, instead of tilting the equation in America’s favor, the outdated U.S.corporate tax system is helping to move those good jobs offshore. How is the current system broken? If a U.S. company operates overseas through a foreign subsidiary, the income from those operations won’t be taxed by the U.S. until that cash is brought home as a dividend. Originally designed in the mid-20th century to help U.S.businesses be more competitive, this “deferral” system operates in our current global economy to provide an incentive for companies to keep their earnings offshore and reinvest them elsewhere. Why? Because a U.S. corporation will have to pay a 35% tax on its profits the minute they hit the U.S. border. So when the U.S. corporation is considering how best to expand, it considers that an investment of $100 in foreign operations will have the same net earnings cost as an investment of $65 in the U.S. In other words, because of the U.S. tax system, its dollar will go farther offshore. In light of that, where would you put your factory? The U.S. could afford such a system back when it led the world in technology, wealth, and the education level of its workforce. But we can no longer afford it. We are now a debtor nation. We have lost much of our technical lead, and we are no longer able to retain good jobs in the face of foreign competition. Even companies that staunchly maintain their loyalty to the American workforce are competing against other companies that will use cheap foreign labor. Eventually they, too, must fall in line or risk being acquired by a foreign company that can instantly make their business far more profitable simply by moving the U.S. operations offshore and pushing the resulting income beyond the reach of the punishing U.S. tax laws. But what is the best way to correct these skewed incentives? The Shared Economic Growth proposal would fix the broken U.S. corporate tax system. How? It’s simple: by providing corporations with an incentive to distribute their earnings to shareholders in exchange for not being taxed on those earnings themselves, Shared Economic Growth would make U.S. operations attractive and would encourage companies to bring home the cash they have invested abroad. Under Shared Economic Growth, a corporation wouldn’t be penalized by the tax code for building a plant in the U.S. instead of offshore. In fact, the U.S. would immediately become a preferable location over any foreign country that imposed any tax at all. Shared Economic Growth would provide extraordinary benefits to the U.S. economy – benefits like encouraging corporations to invest hundreds of billions of dollars in foreign cash in our economy, helping to ensure a secure and dignified retirement for American workers, promoting the efficient allocation of capital, and helping to foster corporate transparency and responsibility. No other proposal does that. We invite you to browse this website to learn more about this exciting proposal. Its time is now. |
Note1: This site has not yet been updated for the passage of the TCJA, which fubndamentally changed u.S. international taxation by imposing a current U.S. tax on most foreign earnings. However, Shared Economic Growth remains a superior proposal that can be enacted on top of the TCJA structure.
Note2: The links contained in this site lead to neutral sources as well as to the writings of persons and organizations from all parts of the political spectrum. These are not partisan issues; they are American issues, and they demand a solution that breaks the bonds of partisan sound bites and draws upon the most uncommon commodity in politics: common sense. |
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