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A Jobs Program That Costs Us Nothing

A Jobs Program That Costs Us Nothing

by Kevin Kelton

Sometimes the best way to solve a problem is to merge two opposing problems into one solution. I think Hillary Clinton or Donald Trump could score a major policy victory by addressing jobs and untaxed offshore profits at the same time.

American companies are currently holding 2.4 trillion dollars in accumulated profits offshore to avoid what they consider onerous U.S. corporate tax rates. That’s almost $800 billion in owed taxes that we may never ever see.

To get that money back into the U.S. economy, politicians are proposing temporary preferential tax rates – called a transition tax – that they’d like to apply to those profits to coerce them back to the United States. President Obama has proposed a transition tax rate of 14%, but corporate lobbyists and their bagmen in congress are balking that it’s too high. Some want it at ten percent, some want it at six or less – rates so low that they would be seen as a giant giveaway to corporate greed. Some even propose a “tax holiday” by setting the rate at zero.

That’s not a “holiday.” That’s a full and absolute pardon.

At the same time, American companies are not hiring at as brisk a pace as we need to grow GDP and spark wage growth.

So how about we merge the two problems into one solution? What if we made creating American jobs a patriotic and profitable thing to do?

What if we set two tax rates for repatriated overseas profits: 15% for normally repatriated profits, and zero percent on $500,000 of profit for each new full-time job that company creates in the United States. In simpler terms, get a $75,000 tax break for each new employee.

So if the company has a billion dollars stashed overseas and they hire 2,000 new employees, they get to bring back the entire billion dollars tax free.

Hire a thousand new employees, bring back half a billion for free, and the rest at 15%.

If companies used the entire $2.4 trillion on hiring, reducing their tax rate to zero, the nation would get almost 5 million new jobs. Of course, not all of it would be used that way. But any fraction of it would be a substantial jobs creation program and a giant boost to the economy.

Sure, we’d lose out on the tax revenue that might have been had if those profits were brought back here at normal corporate tax rates. But guess what: those profits have been MIA for years and may never be coming back, in which case those tax revenues will never be seen anyway.

Rules would have to be put in place to make sure companies kept the new employees for a reasonable amount of time (say, three years) and don’t play a shell game by creating new jobs in one state while eliminating jobs in another.

The new jobs would expand tax revenues while the new buying power would spike consumer demand, having a geometric effect on economic growth. And of course, a more robust job market would increase wages, improve the skill set of the U.S. labor force, and help reduce income inequality. A win-win-win-win-win.

In fact, the lost corporate tax revenue from allowing companies to repatriate tax dollars at bargain basement prices might be more-than-offset by the new middle-class economic growth and related tax revenues.

And the best part is, it would be patriotic. Like buying war bonds in the 1940s, the program would be seen as investing in America and doing right by the country that provides those companies so much.

So instead of a tax holiday, how about a tax hiring day. A great American jobs fair hosted by employers and paid for with tax dollars that we were never going to see anyway.

In the 1950s, they said, What’s good for G.M. is good for America. Today we’ll make it, What’s good for America is good for G.M. Call it “corporate patriotism.” A corporate tax break for creating new jobs.

Find me the Republican or Democrat who can’t get behind that.

Kevin Kelton is a political blogger and co-host of the More Perfect Union podcast. He is also the founder of Open Fire, the best darn political debate group on Facebook.

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