Two Simple Proposals for Restoring Middle Class Market Power

The U.S. jobs market is broken. The causes of the breakdown are readily identifiable, and there are simple cures that would go a long way towards fixing them without undermining the general benefits of a free market. The Shared Economic Growth proposal (explained below and further at www.sharedeconomicgrowth.org) would be particularly helpful. As with antitrust enforcement, product safety regulation, and other facilitators of an efficient market, these steps would increase wealth for everyone, but particularly for middle class and working class people, helping our nation to deliver on the promise of the American dream. Further, like those other basic underpinnings of the success of the U.S. economy, they do not require “Big Government” interference, but rather just some simple common sense changes to address basic problems.

There is plenty of data showing that the growth in the U.S. economy over the last 30 years has flowed almost exclusively to the top few percent of the population. That is an unfortunate thing in a democratic society, for wealth translates into power and human nature is such that those with power tend to use it to help entrench themselves, their children and their friends. It is also inefficient. It has been a very long time since the U.S. was a capital constrained economy. Our growth is limited primarily by consumer demand. The wealthy do not spend all of their money, or even close to it. The middle class and working class, on the other hand, pretty much spend what they get – and often more. Thus, an American economy with income concentrated at the top has less consumer demand, and hence less growth and strength, that an economy with better income distribution. No very good purpose is served by having a group of people with more money than they can ever spend, so this inefficiency in income distribution is a bad thing overall.

What produces it? It’s hard to believe that the top 1% of the population really drives all the value creation in our economy. It feeds the vanity of those at the top to think so, but speaking as a corporate manager I can state with confidence that such a view is not consistent with the facts. I am good at my job, but I couldn’t do much without the 43 other people who report to me. Any time we have a poor hire at any level it’s a big drain on the group. If I can’t trust the judgment of those below me and I have to look over their shoulders, then my ability to spend time and energy on cutting edge thinking falls to zero. I have lived through repeated examples of all of this, and am absolutely convinced of the value of the contributions of every member of the group. The same holds true at the level of the CEO and top officers. If they could not rely on the people below them, they would not accomplish anything. Special talent is important and logically commands a premium. But special talent does not explain the skewed distribution of income in America today. Something is wrong.

It’s not hard to figure out where the problem lies. Despite having a relatively high employment rate, and certain fields that are going begging for employees, we have an effective oversupply of labor. This flows from several sources. The increase in women entering the workforce, whether voluntarily or out of perceived economic necessity, has added competition. Increases in employee productivity through automation, the information technology revolution, and – let’s face it – just working people harder has increased supply and reduced demand. But layered on top of these developments are the effects of globalization, which hit on two levels.

At the low end of the spectrum, we have had the huge and unceasing influx of unskilled immigrants, mostly illegal, desperate for even minimum wage or lower work. (Read on, immigration backers. My point here is not nationalistic, it’s just structural, and the solution would help everybody.) Defenders say that they do the work “that Americans are unwilling to do”, but this is just code for saying that such immigrants can be hired for a wage that native born Americans are unwilling to accept. But this undercuts the market power of unskilled Americans. There will always be someone willing to take that unskilled job for minimum wage or less, so why should an employer pay more?

This problem is greatly aggravated by the other side of globalization, job export. The tradition blunt instrument that America uses to deal with over-competition among unskilled workers is minimum wage laws. The problem with such legislation is that it fails to distinguish between two very different classes of jobs – mobile and inherently local. Many jobs, such as manufacturing or any type of service than can be provided over the internet, are mobile. If the government raises the minimum wage for those, they really do move to some other country where wages are lower, assuming that labor costs are a major concern for the employer. This movement may be direct – a decision to put a plant elsewhere – or indirect, through a company being forced out of business by a lower cost foreign rival. In any event, it happens, leaving the former employees looking for other unskilled jobs. The result of this is that minimum wage tends to become target wage for mobile jobs.

There are many jobs that are inherently local – food service, child care, nursing, public security, harvesting crops, brick and mortar retail, etc. Minimum wage laws work for such jobs, within limits, because they cannot be shipped away. But with competition from unskilled immigrants and from unskilled native-borns who have lost jobs in mobile industries, it becomes difficult to drive wage increases in these jobs above the statutory minimum. And, again, because raising the minimum for mobile jobs creates more unemployed workers, minimum wage tends to become target wage for the unskilled segment of these inherently local jobs as well.

OK, but we have all be told ad nauseum that globalization was going to fix this problem by replacing the low-skill, low-wage jobs exported to developing countries with high-wage, high skill jobs here in America. We’re told that all the U.S. employees who lose jobs will get new training and move happily up the scale. But that’s not happening for the most part. Why? That brings us to the second flaw.

The U.S. tax system pushes corporations – the primary source, directly or indirectly, of high paying jobs – to move their best operations abroad. U.S. law currently provides that most income earned abroad is only taxed by the U.S. when you bring the cash home. So, if you make $100 in America you only keep $65 after the U.S. 35% corporate tax, but you keep the full $100 if you earn it in the Dominican Republic. When you reinvest that $100 of D.R. cash you can use the full $100 if you invest abroad, but only $65 if you invest in America, due to the U.S. tax bite. So you invest in new foreign operations, not American ones. This effect is strongest for the highest value operations, because they have the highest taxable profit margins. The U.S. became a net importer of high technology goods for the first time in 2002, and that deficit has increased each year since. So, the set of operations that would NOT more jobs abroad to chase cheap labor – the operations that have a high profit ratio relative to labor costs – flee abroad for tax reasons, and once they flee they become subject to an addictive need to reinvest their earnings outside of America.

This is not a theoretical problem. I am the head of tax for a large U.S. multinational. It is my job to advise that high value manufacturing and research should, from a tax point of view, be located outside of this country. I advise that it is better to invest cash in foreign operations than in American ones. If the recent tax proposal of House Ways and Means Committee Chairman Rangel becomes law, I will advise that good administrative jobs should be moved out of the U.S. I don’t like giving that advice, but under current law that’s what the numbers dictate. I want to change that.

This flaw also has indirect effects. Those of us who work for multinationals are now used to moving things abroad. Allow me to explain how this has affected my own function. There is a shortage of good accountants in this country. That is partly because no child says “gee, when I grow up I want to be an accountant and decide how to book things properly!” It is also partly because the infamous Sarbanes Oxley legislation and several unfathomable recent dictates by the accounting authorities have created a huge amount of new, mostly totally useless, work for accountants. That should make salaries rise, right? Not so fast. The first response has been to get rid of most of the less skilled jobs. Companies outsource these all over the world. My company moved them to Costa Rica, where there were plenty of bright, hard working, conscientious people happy to get the work. That increased the effective supply of accountants in the U.S., but there is still a shortage. Now what?

Well, we have the same problem in Tax, and I can tell you what I am doing. Good tax people are in even shorter supply, but companies are not offering us 20% budget increases to address that problem. What can I do? Well, I found that we could hire good people pretty easily in our European office, so I did. Last year, one of my managers went out on maternity leave, and the only person on the planet who knew enough to backfill her job is a former international intern of ours now based back home in Argentina. I tried to bring her in temporarily, but U.S. Immigration blocked it, declaring (wrongly) that she was not unique. So we had her do the work in Argentina, and it went just fine. So now I am looking to source employees in various foreign locations, where I will get reasonable cost, good language skills, geographic convenience, and diverse talents. And I am not raising average U.S. salaries by more than inflation for my highly skilled workers. I am pleased for my non-U.S. employees, who are quite good and are happy to have this opportunity to have exciting, highly development roles in a U.S. multinational, but at the same time I realize that this is not a good thing for America.

And it is going to get worse. The U.S. government has been trying to attack companies that shift U.S. developed technology abroad. What’s the response? The companies, not surprisingly, are rapidly shifting their R&D operations abroad, so that they do not have to worry about U.S. developed technology. There are plenty of well qualified foreign researchers out there, so why not? The IRS has issued new regulations seeking to increase the tax on U.S. administrative activities, and Chairman Rangel has proposed a law that would substantially boost the tax on U.S. administrative jobs connected to foreign operations. Guess what the response will be? I will certainly have to advise my employer to push administrative jobs to a foreign holding company. Those direct effects have indirect effects. Similar to my tax hires in our foreign offices, lots of skilled jobs will flow abroad in response to these issues, undercutting the market power of middle class Americans. They may not be thrown out on the street, but good luck to them in negotiation for salary increases above inflation, no matter how quickly corporate profits grow.

Now factor in the other issues in our economy, such as our foreign debt of over $9,000,000,000,000, our maximally indebted consumers, our rising unfunded entitlements that have just caused Moody’s to issue a caution on the triple A credit rating for U.S. government debt, the rise of foreign engineers, etc., and a bleak picture emerges. Our economy will inevitably slow, and all of the usual government tricks for trying to boost it are tapped out. The government is already running a huge deficit, low interest rates and the falling dollar are causing the foreign investors who have been propping up our credit markets to start pulling out, the phantom consumer funds from unsustainable mortgage debts are gone – we’re out of gas on government stimulus. If middle class wages have been struggling to rise in good times, what will they do as our consumer economy fades? If wages fall towards developing country levels, what kind of a spiral will we enter as our consumer economy contracts? Keynes was no dope. In the modern world, economies feed on themselves, for good or ill. As ours shrinks, everyone will suffer.

So what’s the cure? Start with the Shared Economic Growth proposal, explained in detail with lots more background at www.sharedeconomicgrowth.org . Shared Economic Growth would allow corporations a deduction for the dividends they pay out, but otherwise would leave the current corporate tax in place at current rates. This means that corporate operations conducted in the U.S. could be effectively tax free, creating a huge incentive to move high value operations to America. This would overnight become the best place to conduct R&D, headquarters operations, high tech manufacturing, and everything else that tends to provide high value jobs. As corporations responded to those incentives, they would need to hire employees. This would give employees market power, effectively eliminating foreign competitive pressure until U.S. wages reached an equilibrium level offsetting the tax benefit of being here.

Would this be a corporate giveaway ladling cash out to the wealthy and boosting the deficit? No. Corporations would only get a benefit to the extent that they paid out their cash within 2 years after earning it. (If you are naturally inclined to dislike corporate power, think about the implications of corporations having to cough up their cash and ask investors to give it back again.) Since corporations currently hoard most of their cash, if they instead maximized this tax benefit (as their shareholders would surely press them to do) the proposal would be largely self funding, since the incremental dividends would be taxed at the individual level. Some incremental offset would be needed, and I recommend two particular things, though others would be possible. First, I would eliminate the special tax rates for capital gains and dividends. This would take a huge amount of game playing out of the tax system that causes billionaires to be taxed at lower effective rates than their secretaries, and would reinforce the intended operation of the proposal in important ways.

That in itself would be the only necessary offset if it wasn’t for the fact that much stock is held by non-taxable pension funds and charities. Most people do not realize it, but a primary effect of the corporate tax is to impose a hidden 35% tax on their IRAs, 401(k)s, and other supposedly tax free investment vehicles, and Shared Economic Growth would eliminate that hidden tax. To offset the lost revenue on dividends flowing to such nontaxable holders, I would impose a 7.5% incremental tax on individual income in excess of $500,000 a year. That would still leave individuals in that bracket with a marginal rate well under 50%, it would do much to address our looming retirement problems without gimmicks, and it would help to ensure that the flow of direct benefit from lifting the corporate tax wouldn’t flow too heavily to the group of fortunate individuals that hold most of the stock outside of pension savings.

That’s it. Simple, easy to enact, easy to administer, doesn’t open up new loopholes, but the benefit to America and American workers would be huge.

Proposal number two is on the immigration side. The argument that keeps being raised for not just stopping illegal immigration by really going after employers (you don’t need a fence if illegal immigrants can’t find a job – they will just go home) is that America needs them to “do the jobs that Americans won’t do”. So, let’s test that proposition by allowing guest workers for jobs (not requiring a college degree) where the sponsoring employer agrees to pay them at least three times the U.S. minimum wage. If we really want those jobs done that “nobody will do”, surely we can pay three times the minimum wage to make it happen. And if you, dear reader, wouldn’t do that job at that price, then I suggest that you should not object to paying someone else that much to do it. What’s the effect of that change? Suddenly, there would no longer be a race to the bottom for inherently local jobs. Employers would desperately try to recruit native-born Americans to replace the guest workers at somewhat lower wages. But, unlike a minimum wage change, this would have no impact on wage-intensive mobile manufacturing or service jobs, other than through the general increase in demand for labor. If a U.S. manufacturing job moves abroad because all its workers were attracted to above-minimum wage jobs at another company, that’s OK. This would not be a panacea for the low-skill part of the job market, but it would be a well tailored, free-market friendly big step in the right direction.

Shared Economic Growth and smart immigration would make a huge difference at a time when America really needs it, but neither one will happen unless people help to spread the work and force such proposals into the public conversation. The Powers That Be won’t do it. Neither political party will do it. It has to come from Americans who care about reforming our country for the sake of all Americans and our children. Be part of that awakening to the possibilities for real, simple, effective change. Spread the word.

Matt Lykken is the Vice President, Tax for a Fortune 250 multinational and the Director of SharedEconomicGrowth.org.

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Comments

Prevailing wage

For insourcing, high skilled jobs there is S.1035 trying to disallow the constant labor arbitrage of H-1B Visas.
It has a prevailing wage law, much to your 3x minimum wage principle as well as a market test that no American could be found (which does not exist currently).

Another thing proposed is to stop the guest worker Visas lottery award (first come first served, pick at random) and approve H-1B applications "top down" possibly based on salary award or maybe a vector of criteria (say critical to a particular research area in the US for future R&D development).

I'm shocked a corporate guy would even acknowledge trying to fix the race to the bottom from any perspective...but what bothers me most about corporate mentality is not the long term, 10 year plan, about what is going to happen to them with this kind of national economic path. As you point out, the US goes down, it's bringing the whole world with it.
(and where is this mythical 1.3B Chinese consumer market I might add?)

i.e. We have a 40% drop in people studying STEM because they know the career is ripe for age discrimination, labor arbitrage yet it years of education and training (You don't mention training on your CPA and tax people! by using foreigners the US has offshore outsourced training, education investment costs). So, here is all of this raw talent sitting around the US wondering where to focus in order to survive economically. and raw talent sure isn't skilled talent. As it is there are more graduates in STEM than there are entry career openings.

So, long term, what is this global labor arbitrage agenda going to do to the US economy? These high skills arenas are the innovators, the future startup CTOs, the patent holders the new industry break trhough generators.

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Nothing but Right-Wing tax cut scam

Robert,

This guy already posted his thinly veiled Corporate tax-cut scam on my own forum. It makes no more sense now, than it did the first time I read it.

His assertion that Corporations are moving offshore because of high Corporate taxes is B.S.

They're moving offshore to access cheap labor. No amount of Corporate Welfare, in the form of tax giveaways, is going to offset the labor cost savings of replacing $140/day American workers with $4/day Chinese workers.

I've previously read his concoction in detail. His commentary sounds good to start with, and then he reveals his true, and only motivation--to eliminate taxes on rich Corporations.

There is a simple solution to the outsourcing problem that could be implemented tomorrow if we had the political will-- TARIFFS. If Corporate America thinks American labor is too expensive for them to keep producing in the US , then we need to make it even MORE expensive to produce goods for the American markets overseas. Tariffs could easily accomplish that.

Every other country in recorded history, including the US, has used tariffs to protect its industries at one time or another.

As it stands now, many American Corporations pay no taxes whatsoever. The average tax rate actually paid, according to the combined information from the Treasury Dept and the Bureau of Economic Analysis, is roughly 20% (before all the phony deductions.)

We don't need to reduce Corporate taxes any whatsoever. We need to INCREASE taxes on Benedict Arnold American Corporations that have moved overseas, and then want to sell their slave-labor-produced goods in the US market.

http://www.unlawflcombatnt.proboards84.com/

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Another Response

Below is my January 21, 2008, regarding "SharedEconomicGrowth's" Corporate tax cut proposal:

There are too many bad ideas in this proposal to contest in just 1 post.

I'll start with your last point about immigration. You've proposed a complicated, completely unnecessary plan for dealing with illegal immigration. It's technically a very simple problem to fix, with a very simple solution. We need to spend every ¢ of our money and effort on prosecuting EMPLOYERS for hiring illegal immigrants. There is a system in place now, that's already up and running, that makes it impossible for employers to use the "I-didn't-know" story. This system, called E-verify, makes it very easy for an employer to verify legal status, and very difficult to concoct an excuse for hiring an illegal worker.

If we aggressively prosecute employers for illegal hiring, there'll be little need for any other policy. We won't need to do something like "pay them 3 times the minimum wage," or any of these other complicated and unworkable plans (like the Comprehensive Immigration-Amnesty Bill).

As for your Corporate Tax giveaway proposal—there is nothing simple or easy to understand about it. And it is full of potential loopholes. And as you are well aware, there is a much, MUCH simpler solution to job losses from outsourcing—Tariffs. Withdrawing from all of our "Free" trade agreements, as both Ron Paul and Dennis Kucinich have proposed, is exactly what we need to do.

If we levy high tariffs on foreign imports, especially on goods and services from American-owned foreign companies, it could easily offset any alleged tax disadvantage that American-located, American companies experience. Tariffs would make it more expensive to move production overseas—by adding the cost of tariffs to the retail price--offsetting tax advantages gained by moving production overseas.

What you've suggested sounds like another Corporate-tax avoidance scam—whose real motivation is to help already rich stockholders and investors, under the guise of "protecting American jobs."

The real solutions to outsourcing and illegal immigration are extremely simple. Put tariffs on all foreign imports, and higher tariffs when there is American ownership of the foreign-located facility. Prosecute employers for hiring illegal immigrants—either with heavy fines, imprisonment, or both.

Except in isolated cases, such as with the production of Lipitor in Ireland, the motivation to outsource has little to do with taxes. It's almost entirely due to the cheaper labor available in foreign countries.

No tax plan will make it more profitable to produce goods in the United States using $140/day labor, than in China using $4/day labor. And China is responsible for roughly $230 billion of our trade deficit. So that's $230 billion that would be completely unaffected by any Corporate tax-cut proposal. Mexico and other Asian countries are responsible for another large part of our trade deficit. No Corporate tax giveaway will offset the advantage of using North Korean slave labor from the Gaesong Industrial Park, who are paid less than 25¢ per hour. Again, the major reason for outsourcing of American jobs is to cut labor costs—due to the availability of cheap semi-slave labor in foreign countries.

None of this country's problems can be fixed, or even reduced, by eliminating Corporate taxes. Though the Corporate tax rate is 35%, few Corporations pay that amount. Many pay absolutely $0. And Corporations don't pay any taxes if they pay out all their money in costs and salaries.

This "proposal" you're pushing is just another way to reduce taxes on those who can best afford to pay them, while offering absolutely 0 benefit to the economy, to American workers, or to anyone but the very richest.

If you really wanted to change the tax structure, and reduce outsourcing, you'd start by eliminating the foreign tax exclusions that [u]currently[/u] exist, instead of pushing for tax elimination on the already exorbitant profits of Corporate America.

The rich need to pay more taxes. Investors need to pay higher taxes. Dividends need to be taxed more. Corporate America is still doing extremely well, unlike the majority of the American people. Corporate America has abundant capital available for investment, which they demonstrate by pushing stock prices higher on news of a Fed rate cut.

Corporations don't need any tax breaks. Their only disincentive for investment is the inability to sell production and services to the American people, whose backs they made their exorbitant profits off of.

If anyone needs tax cuts, it's working and middle class Americans, not rich investors or the Corporate elite.

http://www.unlawflcombatnt.proboards84.com/

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put your math head on

Come on, take the morality out of it and just look at this as a spreadsheet equation.

ok, he's talking about forcing a prevailing wage in so many words on a guest worker Visa program for future immigration.

That's not only good, it's precisely what S.1035 is about to reform the H-1B guest worker Visa. It stops labor arbitrage by flooding the labor supply with cheap workers (legal or illegal).

He's not talking about amnesty o enforcement only for those already here, it's future influxes, future immigration and it's referring to how Bush, many Politicians (Hillary, Obama included) are going to approve massive guest worker Visas. Professional workers are the ones they are really gunning for to labor arbitrage.

======================================

He's talking about dividends which are corporate dividends, which are currently taxed as part of profits and he's saying to let the corporations write them off as an expense.

then on capital gains he's going from a 15% to 22% (it was 20% before Bush) which should assist with the hedge funds, private equity corporate raiders and then he's saying to add an additional 7% tax on anyone with total earnings over 500K a year.

If I'm understanding this, that would be beyond a tax holiday but a massive write off, account as expenses, i.e. zero taxes, to repatriate all of these corporations offshore holdings which exist to plain avoid paying any tax. That is the issue with capital protection I was referring to and I can't see a counter to his argument that this would indeed not cause a massive capital infusion into the US if this occurred.

I think I'm understanding this right and frankly, getting US corporations to pull back into the US all of that offshore cash this way sure sounds better than getting a bail out from a Saudi Prince.

Also, let's not turn this site into a dailykos.com with the name calling, please. Argue the merits the points, let's stick with the math when in doubt.

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hold on there for a second

1stly, please do not call anyone scum. Yes he is posting from the corporate agenda, no doubt about it and announces so. That said, there are many hidden reasons why corporations offshore outsource and capital protection is a huge reason.

Alot of what he's talking about, I went and researched and he has a real case. Now I have a lot of questions but we need to consider these effects, by the math itself.

Underneath that analysis something he is saying I know is true, corporations operate from a pure short term profit margin in most of what they do. I think that's stupid, they should think 10 years out but that's the reality. They are not moral or are they even bounded by a national interest as entities (although they should consider that frankly and that's another issue). But, he's telling you how they operate and that's a perspective and discussion we need to have.
They generate jobs, bear that in mind.

When you add up a lot of the variables and look at it holistically, they are going to go for maximum profits but the US tax code does greatly affect that and yes our US tax code is messed up.

Tariffs are just not the only answer and are a very brute force here. One can change a series of policy areas to make it not profitable to labor arbitrage and the corporate tax code is one.

I think you should read this:
CPA
has a policy that is based on a consumption tax and VAT.

VAT allows all tax to be rebated on exports and imposed on imports.

There is no doubt about it via trade agreements the US and keeping manufacturing, jobs in the US, the tax code is biased to move these industries out of the US.

But, there is more than one way to skin a cat than just tariffs here.

Now China and the possibility of tariffs, they are so brutal, clearly manipulating their own tariff schedule, that might be more appropriate but for service oriented industries or just generally, it's not so clear.

So, I think we need to consider all of these proposals and basically use our very smart lay people's brains here which I know we can do and evaluate them, find out the real cause and effect.

Nobody, let's face it have you ever seen a call to action on the damn tax code beyond the radical right individual tax code? The entire left and us who analyze per issue never even mention it.

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Corporate tax cuts

Robert,

I'm won't pretend to understand every detail of shared's tax proposal.

However, I'm not going to apologize for that, given there isn't 1 person out of a thousand who could follow it completely.

I made a very simple macroeconomic point, which I think is hard to contest. If you eliminate all current Corporate taxes, which average 23% (based on the BEA's annualized Corporate profit total of $1,612 billion, and the Treasury Dept's $370 billion fiscal 2007 Corporate tax total), you've reduced the after-tax cost of all production costs by $370 billion.

How do you think that compares with the aggregate labor cost savings of replacing 5 million American workers with 5 million Chinese workers, plus the wage suppression caused on 146 million American workers, plus the additional suppression from legal visa workers, and the employment loss and wage suppression 7 million employed illegal immigrants?

I don't know the answer to that, myself. But my guess is that eliminating Corporate taxes would have a much smaller effect than job loss and wage suppression would have. Professor George Borjas puts the wage suppression from immigration alone at about 4% annually, which works out to over $200 billion annually.

And that doesn't count the effect losing of $370 billion in Federal revenue, which necessitates increased Federal borrowing--increasing inflation and decreasing the buying power and production demand created by the expenditure of American labor income.

When someone's primary suggestion is a tax cut, and back-handed support of illegal immigration (by not emphasizing employer sanctions) he's missing the forest for the trees. And by default, it implies that he supports current Free Trade agreements, open borders, and amnesty.

And if the discussion of policy focuses on actions with relatively small effects (if any), it distracts from discussion and consideration of policies having larger effects.

When I've already spent 5-6 hours sorting through a self-serving and largely imcomprehensible "proposal", (since it was already posted on my own forum), I have every right and obligation to make some non-profane derogatory comments about its author.

And, Robert, I don't appreciate having to defend YOUR support of "sharedeconomicgrowth's" views on my OWN forum, since I've highly recommended your site on my forum, while adamantly (and publicly) opposing the views of sharedeconomicgrowth.

Members of my forum have noted my recommendation of of your site, and visited it as a result. But then they've questioned my support of your site--based on your support of sharedeconomicgrowth's views. Initially, I defended your initial response to shared's proposal, as simply tolerance of sharedeconomicgrowth's views. Apparently, however, you were not just "tolerating" them. You were supporting them. As such, I can no longer recommend your site. I'm now forced to withdraw my previous recommendation.

I readily tolerate opposing views, and even personal criticism on my own forum. In fact, I thrive on opposing views. But I cannot recommend another site to my forum members when I'm in fundamental disagreement with its administrator--especially on something as critical as the Corporate cheap labor lobby. And especially when such disagreement is actually brought to my attention by my own forum members.

EconomicPopulistForum

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Wait a second

I never said I supported his views ever.

I'm working through it as well and I see a positive in the idea of a tax holiday to repatriate foreign profits to the US but not as he suggests, distributing to the taxpayer and then taxing it.

I have a different idea, which is not taxing those foreign corporate profits, but only when used for reinvestment purposes, i.e. building up new manufacturing here, hiring here, building infrastructure here, not distributed to the shareholders via non-corporate taxed dividends and just passing the tax onto the shareholders.

All I'm saying is to keep it civil and to keep it on the math.

Too many sites flame first, think later and you can imply your conclusions easily by looking at the math as you do above.

Then, the other point is I want the corporate perspective on this site, knowing how they view things and taking into account their own goals I think can only help us advance an agenda which brings jobs, investment back to the US.

His post actually got me to think about this to respond. I think that's good.

To me, this is not just a 1 element issue of taxes, it's the overall international capital flows and why I think it will have an effect.

Did you look at CPA's VAT proposals? So that is some tax reform with respect to trade agreements and proposals like that certainly need to happen in conjunction with reforming the corporate tax code itself.

On insourcing cheap labor, that's another area that needs to be addressed but a different one.

Again, his prevailing wage idea is a major component of H-1B reform, so it's not way out there and that's one of the techniques we are pushing heavily for.

What would create a global minimum wage in effect to deal with this hunting the global for cheap/slave labor? From a multinational corporation's view, labor isn't just labor it's the total costs involved and sharedeconomicgrowth does point that out.

It isn't "one" solution here, we need policy change across the board so I don't think just changing the corporate tax code is the answer.

I also looked at Rangel's tax reform and he does not appear to have a tax holiday to get those corporate profits returned to the US and I think that's a bad idea and will lead to corporations relocating their headquarters, everything, to another nation-state.

Truth is there is a US asset and corporation fire sale going on right now and this is a real threat to the US economically.

Of course you should tell everybody about this site, we're on the same team. All I'm saying that sort of behavior we see on the major blogs that's not reasoned, civil, doesn't analyze is a real wall to get more people to use their heads. We're all used to those other sites and the culture they create of flame first think later and it's one of the reasons we cannot get those people to look at the realities of global labor markets at all, immigration at all..
they flame first and refuse to look at any statistics, economic realities or even acknowledge how labor markets work.

Think about it, we lost the economic discussion on those major blogs with the flame claim that everything about it is obviously racist and discriminatory
i.e. no reasoned analysis allowed ! Let's not create that sort of culture here is what I am asking for.

Can't we deal with someone's proposal and point out the issues or not easily by looking a few things up? Sure we can.

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