Obama – Bring the Money Home!
By Shlomo Maital
Two reports in today’s Bloomberg Business Week and Global New York Times are closely connected.
Floyd Norris reports that after six years of economic crisis and stagnation, the level of employment in the U.S. has at least returned to its level in 2008.
And Bloomberg reports that American businesses, which recovered far far faster than us ordinary working people, have piled up nearly 2 trillion dollars (!) in retained profits abroad, which they choose not to repatriate and bring home to America, in order to avoid the 35 per cent corporate income tax.
General Electric alone has $110 b. locked up abroad; Microsoft, 76.4 b.; Pfizer, $69 billion; Merck $57 billion; and Appel $54 billion. Overall, only 22 big companies hold half of the ‘locked earnings’ abroad, or $984 billion.
In the past, economic recoveries occur when businesses start investing again, in capital formation, using their retained earnings. But this cannot happen in America when businesses are sitting on their money abroad.
It’s not as if America doesn’t need investment. It needs infrastructure, new airports, fast trains (Amtrak’s ‘fast’ Boston to Washington train is a disgrace, compared to Japan’s and France’s bullet trains), new roads, new bridges, new schools, new factories…in short, everything.
So President Obama — why not declare an amnesty? Tell the giant businesses, if you bring your money home and use it – or even just bring it home, and make it available in capital markets for OTHERS to use it — we’ll offer you an Irish rate of tax, about 12 per cent, rather than the American one, 35 per cent. Do it because it makes good business sense, and besides, your country needs it – and it is your country that gave you the innovation and creativity that made you the profits in the first place.
It’s pretty likely the Republicans, who are pro-business, will support such an amnesty. And President Obama — after your dismal performance for six years, this may be your last chance to actually do something creative and productive. Do something for America’s workers. Renewed investment will create jobs more than anything. Until America’s businesses stop sitting on their piles of money abroad and start using it at home, employment cannot recover strongly.