Rep. Michele Bachmann, R-Minn., called for cuts in corporate taxes and the elimination of capital gains and estate taxes in a speech last weekend as she campaigned for the Republican presidential nomination.
Michele Bachmann
Bachmann also urged a corporate repatriation tax holiday to allow U.S.-based multinational corporations to repatriate the profits of their foreign subsidiaries during a campaign appearance in Poinciana, Fla., according to The New York Times.
“American companies have sitting in the bank over a trillion dollars,” she said. “If we had a zero rate of repatriation, by the afternoon that trillion dollars would be back in the United States. Do you have any idea of how many jobs would be created?”
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A group of multinational corporations under the umbrella of the Win America Campaign has been lobbying in Washington to allow a reduced tax rate for repatriated foreign profits, saying it would help boost jobs and the economy (see The Corporate Repatriation Tax Holiday Mirage). However, the Treasury Department has resisted the idea so far, pointing out that the last time a corporate tax holiday was tried, most of the repatriated money was spent on share buybacks and stock dividends, but little on job creation.
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There should be a corporate repatriation tax holiday only for the money that either buys new equipment, manufactured in the US, and that which is used for new payrolls, but not for excessive executive salaries, or bonuses for the top people.
Of course I doubt that the business class will buy this approach, or MB either.
Posted by: Tedego | September 2, 2011 9:37 PM
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I remember in a college economics class that I took back in 1965 one of the professor's said "Corporations don't pay taxes. They just collect them from the users of their products and pay them over to the government." He explained that if the government raised corporate taxes, the corporation, to satisfy its stockholders requirements for profits, would increase its product price in ratio to the tax increase. This would also act to create inflation since there would be no corresponding increase in production to support the price increase. At first the class laughed at this concept, but as time passes and the corporate tax rates fluctuate, I can see some truth his theory. I am afraid that a reduction in corporate income tax would not immediately cure the problem because there would be an expectation by the shareholders that the amount usually paid to the government in the form of taxes, should go to them as profits. Only when competition forced profits down would the corporation's product prices decrease, creating more demand that in turn cause more production.
Posted by: haychuck | August 30, 2011 6:08 PM
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In today's economy, America is in need for people who are thinking for the country. It is true that small businesses represent the backbone of our economy as to creating jobs for the working class and those who are earning lower incomes; however, everyone may agree to the fact that the United States of America needs to curb on their spending overseas in programs that are not bringing any return here to the benefits of American citizens. Although some folks find it ironical to repatriate the trillion dollars sitting in foreign banks, it appeares that such a monetary injection in the economical system would pave the way to create new jobs through new investments deriving from those funds circulating through the private sectors. America counts a great number of new graduates and even professionals with a career who are suffering from the unemployment disease. Rep. Bachman deserves a great rouse of applauds for invoking this idea that is shared by so many people from the working class. Although history repeat itself as mentioned by one of our commentators, this time, one must understand that no matter how much money is fueled in the economy there will obvious be a portion of the population that cannot benefit from it. When $1.00 trillion is repartiated tax free in the US and invested locally, many brokers without a job today will have something to do, this will create an incentive for many people in the retirement industry to offer more attractive products with confidence, and finally, more liquid money will be available to encourage vacation, leisure travels, and permit Disney world to hire more low income earners in the casting industry. As a result, all that added together will give a push to the economic growth and president Obama would take a good ride from it because that is all he needs to compete in a presidential race calling for the attention of everyone on the evolution of the economy from now to mid of November of 2012.
Posted by: fritzjseide@gmail.com | August 30, 2011 5:26 PM
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So once again, we have the corporations that the Supreme Court and Gov. Romney tell us are people being offered lower or zero taxes while the rest of the electorate that pays federal income taxes carries the weight of the paying for the government services that protect the citizenry and the businesses.
Rep. Bachman is all for reducing or eliminating taxes on the corporations designated as people who don't serve in the Armed Forces and now might have their taxes reduced or eliminated.
Should we now lump the business community with the dreaded 50% of the electorate that pays no federal income taxes?
Posted by: ThoseWhoServe | August 30, 2011 2:45 PM
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So once again, we have the corporations that the Supreme Court and Gov. Romney tell us are people being offered lower or zero taxes while the rest of the electorate that pays federal income taxes carries the weight of the paying for the government services that protect the citizenry and the businesses.
Rep. Bachman is all for reducing or eliminating taxes on the corporations designated as people who don't serve in the Armed Forces and now might have their taxes reduced or eliminated.
Should we now lump the business community with the dreaded 50% of the electorate that pays no federal income taxes?
Posted by: ThoseWhoServe | August 30, 2011 2:45 PM
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It is time to understand that the government actually does not stymulate anything, it only releases money back into the economy. By reducing expenses and taxes, the money does not go to the economy through the government but directly into the economy. Government is a cost center and does not generate profits.
Dividends and stock repurchases are not necessarily a bad thing for the economy. Much of the investment is by pension funds and retirement and wealth accumulation accounts. It helps fund these future events.
Repatriation is good for the country as it brings back into it cash to grow, invest, fund and employ. If the govet saves a trillion in stymulus money that is funded through debt vs the companies repatriating and investing a trillion dollars with no tax, it is obvious that the repatriation costs taxpayers less in the long run.
Until companies see a benefit in investing in the US again and moving production, etc. back no amount of gov't money will help as it is now recognized there is too high a price to pay for this carrot. The solution is to come up with a long term solution where the companies know and understand the ules of the game and can feel comfortable the dealer is not making the rules up as the game plays.
Posted by: BrianL | August 30, 2011 10:43 AM
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What a wack job. Periodic repatriation holidays simply lets companies know there will always be another one and we will be encouraging jobs overseas.
With regard to the other tax cuts, how in the world is she going to pay for them if she insists on a balanced budget.
Posted by: sterlingwinchester | August 30, 2011 10:32 AM
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limiting tax breaks to job creation and eventually major equipment purchases unless related to job creation would definitely impact small businesses. low and middle income people are tired - real tired of hearing about GE and other large companies taking jobs overseas and paying no or little taxes.
Posted by: smilesliles | August 30, 2011 10:23 AM
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Since history usually repeats itself, we should anticipate that another corporate repatriation tax holiday will result in stock dividends and several buybacks of shares, and not creating a siginificant number of new jobs as supposed by Rep. Bachmann. If this is the case, then what can be done to encourage job growth and investment?
Since GE and several large corporations paid little to no tax last year AND considering the severe impact of the economy on small businesses, the combination of eliminating some tax breaks and lowering the corporate tax rates across the board should prove to be better than a carte-blanche free-for-all that will mostly benefit multi-billion companies. We shouldn't forget that small businesses comprise the majority of all businesses in the USA, and that their health serves as a good bell-weather of economic improvement.
While lower taxes tends to stimulate the economy and encourage investors to open their pockets, it is equally important for the taxbase to be broadened so that the US Government can still operate.
Posted by: lammip | August 30, 2011 9:03 AM
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