Count the Benefits

Shared Economic Growth Count the Benefits

·       Reverses the current incentive to locate high value jobs off shore. Today net profit can be increased 54% purely by having operations outside of the U.S.  Reversing this incentive will increase the demand for American workers and drive up wages.  Want evidence that this helps? Look at the growth in average hourly direct pay for production workers in manufacturing for 3 low tax countries. Between 1980 and 2004, Irish wages grew from 67.6% of the U.S. level to 107.5%. Swiss wages grew from 117.9% of the U.S. level to 141.6%, and . Singaporean wages grew from 14.5% to 35.6%, despite the fact that Singapore increasingly used imported Malay day labor while the native Singaporeans moved into white collar jobs. ·         ·       Eliminates the incentive to hold cash off shore. Today there is a penalty of up to 35% for bringing cash into the U.S. economy. Corporations accumulate hundreds of billions off shore each year to avoid this penalty. Removing that penalty would add liquidity to our economy as those hundreds of billions flow home. ·         ·       Eliminates the incentive to over-leverage corporations by putting debt and equity on an equal tax footing. Corporations borrow too much today, reducing their stability, because they have a tax motive to do so. ·         ·       Increases the equity returns to hard-hit IRAs, 401(k)s, and other retirement savings by up to 54%, restoring the value of savings and rewarding responsible middle class people who live within their means and save for the future.  ·         ·       Unlike the current bail-outs that are subsidizing operations that have failed, it provides incentive to place high profit winning operations in the U.S., revitalizing our economy. We should build our economy on stars, not on dogs. ·         ·       Reduces the current over-focus on speculative growth and returns attention to solid cash income. ·         ·       Eliminates the tax incentive to keep cash locked in corporations, liberating investment dollars to flow to the best overall prospects. ·         ·       Stops the use of an individual tax subsidy that applies equally to investments in foreign operations, redirecting those dollars to our own economy. ·         ·       Shuts down tax abuses. ·         ·       Best of all, Shared Economic Growth does all of this without adding a dollar to the deficit and while improving the fairness of our income tax structure.

Shared Economic Growth: No Tricks, Just a Powerful Tool to Change America

Shared Economic Growth:
No Tricks, Just a Powerful Tool to Change America

Shared Economic Growth is a simple 3 page bill that keeps the well established enforcement mechanisms of our income tax system in place, and improves them by eliminating incentives for corporate tax and capital gains abuses. It replaces a losing war to control corporate income with a simple, easily enforced tax on 1099 income.

Corporations are allowed a deduction for dividends they pay out, limited to the amount of their pre-deduction tax liability. To the extent that they elect to pay out dividends, they are thus freed from U.S. tax.

Favorable tax rates on capital gains and dividends are eliminated. This causes the dividend deduction to be self funding for dividends paid to individuals. Because corporate earnings are increased by up to 54% due to the lack of U.S. tax, lower bracket shareholders come out ahead, and upper bracket shareholders come out close to even on this trade.

Foreign portfolio investors are subjected to an offsetting 35% withholding tax, holding them neutral

Currently the U.S. gives corporations a dollar-for-dollar credit for taxes paid to foreign countries, making them care less about the tax those countries impose. Most of our trading partners do NOT allow their corporations a credit for U.S. tax, making their companies shy away from high U.S. tax rates. They exempt foreign income. Because Shared Economic Growth would eliminate U.S. corporate level tax on both foreign and domestic income, we could change the foreign tax credit to a deduction, effectively matching our trading partners and complying with our treaty obligations, while forcing more dividends to be paid to - and taxed to - shareholders.

To make up for the revenue loss on dividends flowing to IRAs, 401ks, and defined benefit retirement plans, individual income over $500,000 a year is subjected to a tax at the rate of the employee FICA tax imposed on middle class wage income - a tax that people currently don't pay on most of  that over $500,000 income. The all-in effective income tax rate on persons earning over $500,000, including state taxes, would still be less than 40% on average. This improves the fairness of federal funding for overall retirement security. And, since the tax revenue lost on dividends paid to retirement savings accounts is only temporary, the net tax dollars collected from this offset will be recycled back to help the government to get through the coming Social Security funding crisis. Both personal retirement savings AND tax revenues for Social Security would be increased.