Naked Capitalism's Yves Smith, along with Rob Parenteau, wrote an op-ed in the New York Times. It brings to light corporations are sitting on profits and not reinvesting in their companies and America.
Over the past decade and a half, corporations have been saving more and investing less in their own businesses. A 2005 report from JPMorgan Research noted with concern that, since 2002, American corporations on average ran a net financial surplus of 1.7 percent of the gross domestic product — a drastic change from the previous 40 years, when they had maintained an average deficit of 1.2 percent of G.D.P.
They mention the obsession with quarterly profits as one reason corporations are sitting on wads of cash. Investors are also in part to blame. The minute a quarterly earnings miss or quarterly profits are not bigger than the last, investors pummel and punish a stock.
Also mentioned the reason corporations are sitting on profits and not reinvesting is to pay obscene executive compensation packages.
The point is to create corporate tax code changes to make corporations reinvest those profits back into their companies.
instead of pursuing budget retrenchment, policymakers need to create incentives for corporations to reinvest their profits in business operations. One way to do this would be to impose an aggressive tax on retained earnings that are not reinvested within two years. Another approach would be a tax on the turnover of corporate financial investments that would raise the cost of speculating with profits, rather than putting them into the business.
At the same time, the federal government must continue to encourage investment in the economy — ideally by creating incentives for investments in national priorities, like new energy technologies.
Great idea and no doubt it will fall on deaf ears. Just like trying to change the corporate tax code so it's not profitable to offshore outsource your job. These changes were in the unemployment insurance bill Republicans refused to pass in the Senate. Yes, count on Republicans to make sure it pays well to offshore outsource American jobs.