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ETpro's avatar

What do you think of Newt Gingrich's idea to allow repatriation of profits?

Asked by ETpro (34247 points ) December 11th, 2011

Newt and several other Republican hopefuls have embraced the idea of stimulating jobs here by putting more money in the hands of the “job creators”. Newt has several ideas that will rapidly put more money in the hands of those who already have a great deal of it. One specific idea he pressed in last night’s debate was allowing US corporations to bring foreign profits back onshore tax free. Currently these corporations often set up corporations in a PO box in some small island nation that provides an absolute tax shelter, and they leave the profits on the books of the branch office that lives inside that PO Box.

What do you think of Newt;s idea to get the US back to work. Is it actually a job creator, job neutral or job killer? Please explain your answer.

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13 Answers

Aethelflaed's avatar

I think it would be a big job creator, just not for those in America.

jaytkay's avatar

@Aethelflaed nails it. Every possible activity will somehow become “foreign”.

marinelife's avatar

I think that it is one more way to get money into the hands of the corporate overlords, who would not use it to create jobs!

JLeslie's avatar

From what I understand America did it before and it didn’t create more jobs. Maybe we need to change tax laws regarding money and profit earned off sure by American companies?

Linda_Owl's avatar

It sounds like Newt Gingrich still has problems figuring out what is ethical & what is not. Of course, he probably does not actually care. He is simply saying what he thinks that the ultra conservative Republicans want to hear, in the hopes of parlaying his surge in the polls into getting the Nomination. His idea will not result in the creation of jobs for the unemployed, but it will increase the profits of the corporations (which they will then use to expand their plants in the various third world countries so they can make even more money).

JLeslie's avatar

Gawd, I wrote off sure, instead of off shore.

2davidc8's avatar

Generally speaking, I agree with what has been said above. The problem I have with Newt’s proposal, if I understand it correctly, is the tax-free part. If I’m not mistaken, currently profits earned overseas are taxed at a much higher rate than domestic profits when those profits are brought back to the U.S. If it is made tax-free, then as @jaytkay says, every profit will somehow become of foreign origin.

I’m OK with lowering the tax rate on these foreign profits to the same as the domestic rate, but if we are going to allow this, there must be some strings attached to assure domestic job creation. As @JLeslie said, the last time something like was done, there was no job creation. That’s because there was no accountability. This time we need to have rules that stipulate how the money can be used. I can’t understand why we keep giving banks and corporations money and tax breaks with no accountability.

ETpro's avatar

@Aethelflaed How true. Please feel free to expound on why that is the case.

@jaytkay Ditto to the above,

@marinelife That it is.

@Linda_Owl Well, we did modify tax policy to put a far greater amout of wealth into the hands to the richest people during the Bush Administration. To be fair, it wasn’t done then by allowing tax-free repatriation of foreign profits. But the net result was it doubled the national debt, and resulted in the worst job creation record since Herbert Hoover in the Great Depression. So yes, putting more money in the hands of the “job creators” has been tried multiole times and it has always been an abysmal failure.

@2davidc8 I think it makes sense to tax offshore profits at a modestly higher irate than onshore., That tends to keep investment and jobs here. I also think that the top corporate tax rate should be reduced from 35% to 20%. But I would eliminate loopholes other than real losses by the existing corporation. . I would not allow the acquisition of dent ridden, failing corporations to work to increase market share while letting highly profitable corporations escape any tax liabilities, and in some instances actually get a check from the IRS.

Aethelflaed's avatar

@ETpro I haven’t seen a whole lot of evidence that business owners are hugely ethical people who will spend more money to hire Americans because it’s “the right thing to do”. For the record, I don’t think owning a business somehow robs people of their ethics, but rather don’t think most people are inherently good and ethical; however, business owners tend to have more power to do unethical but non-violent things. It’s cheaper for them to keep sending things oversees, and unless we give them a reason other than “pretty, pretty please with a cherry on top” to put things back over here, that won’t change. They have repeatedly been given more money, and then not hired people, under a “just a little bit more money, and then we’ll hire tons” policy.

jlelandg's avatar

One solution would be to offer nice tax breaks to companies that keep X amount of employees employed in the US. Companies know that American work is going to be pretty good when compared to Chinese or Central American, but the price of that work is so great that they outsource and find every loophole to make more money. If repatriation means offering good incentives to companies to get Americans back to work, count me in!

ETpro's avatar

@Aethelflaed To further back up your theory, the fact is that US corporations are currently sitting on $2 trillion in cash reserves. They are NOT using that cash to be “the job creators” because there is too little demand for the goods and services their companies produce. If they invested the money in job creation here, it likely would leave them cash poor and do nothing to boost their revenues. So the Republican claim that we need to extract a trillion or two from social programs that do help the poor and middle class, and ship it off to billionaires to get jobs created ican be described in very simple terms. It is a Big Lie, and they know it. That’s why they follow the Joseph Goebbels playbook of saying it loud and often.

@jlelandg That would definitely help, but it won’t get past the Senate. Republicans even filibustered a move to end tax credits for corporations that off-shore US jobs. THere is no way they would back something that tempts CEOs to take less profits by hiring more expensive US workers. They talk about Jobs, jobs, jobs being their only priority. But every jobs plan they advance is either a massive tax break for millionaires and corporate jet setters or cuts to the federal payroll which is laying off people, not putting more to work.

2davidc8's avatar

@ETpro That’s why I said that if we were to roll back the taxes on repatriated money, it should have some strings attached. As for what some of those “strings” might be, there are some good suggestions by some of you above. Whether those suggestions will ever get past the Senate is another matter…

ETpro's avatar

@2davidc8 Fat chance of anything that helps ordinary people getting through the Senate so long as the Greedy Oligarch Patty retains a cloture proof minority capable of filibustering anything not aimed at helping only the wealthiest Americans.

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