Economic Stimulus Without Spending a Dime : Option One
January 28 2009, 12:14am
U.S. corporations are charged 35 cents for each foreign-earned dollar they bring back home to the U.S. If they keep that income overseas, it is taxed at lower rates.
This encourages corporations to keep foreign-earned money overseas, leaving billions of dollars out of our economy; while many foreign competitors are free to bring U.S.-generated income back into their home economies without facing such penalties.
Makes total sense, I know.
Back in 2004 Congress passed the The American Jobs Creation Act, which allowed U.S. businesses to bring $360 billion of foreign subsidiary earnings back into the U.S. at a reduced corporate tax rate of 5.25% for one year. On average, 25% of those funds were used for U.S. capital investment, 23% for hiring and training of U.S. employees, 14% for U.S.-based R&D, and 13% for U.S. debt reduction.
That's what I call stimulus...
A new study by Decision Economics Inc., concludes that lowering the tax on repatriating foreign-earned income would inject $545 billion into our economy.
This would add an additional $110 billion to our GDP, and generate additional tax revenue for Uncle Sam which he would not otherwise see (an average of $28 billing per year for five years). States would also see increased revenues.
This is the kind of thinking we need from our elected officials.
