Obama's buddy Andy Stern, former SEIU union boss, says that it makes sense for American companies to be able to repatriate capital to the U.S. without facing double taxation.In a recent blog entry for the Washington Post, Mr. Stern called for a law that would allow American multinational corporations to bring home, at a temporary low tax rate, a half-trillion dollars in overseas profits. Under the current tax code, these profits would be taxed at 35%, minus the amount already taxed by the government of the foreign country where the profits were earned. Corporations seek to avoid this double taxation, of course, so they keep their money parked outside the U.S.
...With just a stroke of a pen, Congress and the president could change the tax code to temporarily eliminate this double taxation. Doing so would result in $30 billion flowing into the U.S. Treasury, plus $470 billion becoming available for U.S. corporations to distribute to investors as dividends, to workers as jobs and wages, and to other businesses through capital investments and inventory restocking.
That's what happened in 2004, when the tax rate on unrepatriated profits was reduced for a short period. Allen Sinai of Decision Economics Inc. estimates that of the $360 billion that was repatriated, 25% was used for U.S. capital investment, 23% for hiring and training U.S. employees, and 14% for U.S.-based research and development. Mr. Sinai estimates that such a tax reduction today would have an equally large impact, generating more than 600,000 jobs in 2011. It's hard to imagine a more effective stimulus, especially since it would cost taxpayers nothing.
To Obama, however, common sense is irrelevant. It's about punishing companies he views as unfair and evil.
