Chronicle Letter to the Editor
A Better Strategy
Regarding Tuesday's article "Obama aims at offshore tax havens/ Critics say president's proposal would mean job losses, higher prices":
The Obama administration and others in Congress just don't get it when it comes to the issue of taxing U.S.-based companies' overseas profits. The reason U.S.-based companies keep their profits offshore is the excessive U.S. income tax on corporate profits. It is no longer a U.S.-centric economy, but a global economy in which multinationals must compete. These multinationals are smart and will work to maximize their profits. If this administration pushes forward with this plan, it will encourage U.S.-based multinational companies with offshore operations to become offshore companies with smaller U.S. operations.
Instead of what is being proposed the administration should reduce the corporate income tax rate to 10 percent and allow these companies to bring all $700 billion back to the U.S. This would give the administration an immediate $70 billion, but more importantly, it would give U.S. companies $630 billion to invest here in the U.S. This is equivalent to 80 percent of the recent "stimulus" bill, and this money could actually grow the economy for the long run. To further long-term growth, taxes on businesses making less than $1 million should be eliminated so they can reinvest those dollars in their companies instead of the government.
As an added bonus, if the $630 billion reinvestment results in additional tax collections of just 3 percent annually, the total revenue (including the $70 billion above) over 10 years will exceed the $210 billion the administration expects to collect with its current plan.
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