Corporate America pays no income tax on off-shore profits if the profits are re-invested off-shore for more profits. We should stop playing games and reverse this benefit to create jobs on-shore by canceling the corporate tax, averaging 23 percent, and replacing it with a 6 percent VAT. This cuts taxes, promotes exports, creates jobs, and provides billions to pay down the debt. Last year, the corporate tax brought in $194.1 billion, whereas a 6 percent VAT for 2010 brings in $700 billion. With $70 billion exemptions for the poor, this leaves $630 billion to pay down the debt. Spending cuts will provide billions more to pay down the debt and have a vote on the debt limit. Now Corporate America can repatriate a trillion dollars in off-shore profits to create jobs in the United States.
But the President and Congress play the game of “chicken” on the debt limit. Each thinks it has the upper hand because each can blame the other, and the press and media play it for all its worth.
It’s easy. All the President and Congress need to do is take the tax benefit they give Corporate America to off-shore investment and jobs and give it to Corporate America to create jobs in the United States. Replace the eliminated corporate tax with a 6 percent VAT and “presto,” Congress has cut taxes, created millions of jobs, lowered the debt limit and started competing in the trade war.
Instead, the nation suffers as the president and Congress play games and fight for contributions.