Moving The US Economy Forward By Reversing Its Tax Policies

Nothing will stir up an argument faster than a discussion on taxes. Doesn’t matter local, state, or federal. One thing is certain: there seems to no longer be a middle ground for those arguing for more, or less. Now it’s all – or nothing.

Not since the days of red-coated overseers has this argument seem to have been met with such furor. One of the troubling reasons is that the people claiming rights to dispense edicts on what they believe one is entitled to keep, believe they have the moral and intellectual argument for it.

We hear routinely that businesses aren’t paying enough, or that other catch phrase, “not paying their fair share.” Well to quote the late Billy Preston, “Nothing from nothing leaves nothing.” And what a lot of these people are finding out pretty quickly – nothing is exactly what they are going to be left with if their current pursuits are followed further.

We hear many on the taxation issue regurgitate so-called “wisdom” or arguments for higher levels of taxes using opinions from academia such as the Krugman-ites, or axioms by none other than Uncle Warren (aka Warren Buffett) as to buttress their claims or stance why they’re unquestionably correct.

Remember when we were told ad nauseam Mr. Buffett believed in higher taxes? We heard: “Oh his secretary pays more in taxes than he does, blah, blah, blah.” And if Uncle Warren says it, well it must be so. After all, he throws great shareholder parties and plays the ukulele. He’s for the little guy. Yeah, right. Until you actually try to touch his money. For no matter what they say, one needs to watch what they do.

A little event took place last month that for all intents and purposes resembled a tree falling in the forest for today’s financial media. Fruit Of The Loom™ is closing its plant which employs some 600 U.S. workers in Kentucky and moving the operation to (wait for it….) Honduras. I guess those 600 U.S. workers were doing jobs that people paying lower wages, taxes, and more won’t do. Oh wait, they will. And now Honduras can claim family ties to Uncle Warren. I wonder if Mr. Buffett broke out into a rendition of Cinco de Mayo when he played his annual ukulele solo surrounded by the Fruit Of The Loom quartet?

Another story involving the moving of assets or capital where taxation plays a key role was highlighted by Apple™. The press was ablaze with scorn and condemnation for Apple not putting to work all that money (reportedly $100 BILLION give or take) held abroad just sitting there inactive.

They contend it should be used and put to work here in the U.S. however, that’s never followed with any legitimate plan, initiative, or thought experiment to do just that. The true underlying issue the espouse is more in line with how their team (or political party) can get their hands on it via taxes putting it to work as they see fit. Nothing more. Which once again yields – nothing.

What needs to be put front and center is the willingness, along with the courage, to argue for justifiable tax reform using the very same “moral justification” used by the taxation crowd. It’s time to be willing to stand in front of the slings and arrows of “not caring for the _______” (fill in the blank) used as weapons against tax reductions and argue for them.

Leaders (big business, local leaders, as well as the political) must be willing to use the most obvious and tangible results as proof positive for and against reforms. Nothing should be off-limits. e.g., Detroit, food stamp rolls, unemployment, social unrest, displacement, etc., along with their alarming ever-increasing pace.

These are troubling factors and need to be openly discussed without cowering to the fear of being called, “You heartless S.O.B.!” The argument and resulting progress in trying to fix such issues is far too important to us all.

Again, just this month another iconic brand Toyota™ announced it is both closing and moving its flagship headquarters out of California and relocating to Tennessee. Why? Taxes. Once again policies that continually grab more, and more find overnight – they’ll now get nothing.

This trend is only getting bigger and gaining speed in its implementation. But at least this foreign-owned corporation decided to stay within the U.S. unlike our Uncle’s fruit looms, so I guess we should be thankful for small miracles.

It is now reported that the total corporate cash sitting off shore outside the U.S. in nearing $3 TRILLION dollars with congress trying to come up with ways (as to get their hands on it) for infrastructure spending and more. The issue at hand is if they were to move their hands away from it, they actually might get it.

What if legislation were enacted to declare places such as Detroit and others completely tax-free zones for a limited number of years, then, scaling up to meet national averages over a sane period of time where both business as well as urban leaders can formulate future (rational) plans. Again, I don’t mean percentage decreases, I mean tax-free as in zip, zero, nada on virtually everything. Allow for the companies themselves to utilize and distribute these funds accordingly as to improve infrastructure and more.

Imagine the opportunities that open up. We’re not talking about places so remote that businesses need years to build infrastructure to get needed supplies because of inequities. These were, and in many cases still are the hubs where rail, airports, industrial land, and more are right there sitting idle just waiting for a breath of air to reignite their furnaces.

Allow companies that move to these areas rebates or other vehicles of tax alleviation to rebuild the needed service structure. (Fire, Police, etc.) Allow people who are employed by these companies to receive reduced payroll taxes if moving from government subsidies to self-sufficiency and more.

Change local tax codes that reward risk takers in revamping dilapidated neighborhoods allowing them to charge lower rents to entice people to move to these areas once again. Change the rules for public education, allow for greater competitiveness and more with charter or other differing schooling initiatives possibly not even yet exploited or envisioned.

Open it all up. All of it – everything. Throw the old rule books out and put real unfettered change in. Be daring, be bold, this is America damn it – why not?! If not us then who?!

I don’t believe for a minute our best days are behind, I believe they’re ahead if only we can just get the “intellectual” crowd telling us “it can’t be done” out-of-the-way and let us get on with the doing of it!

Allow these places to be real-time areas of disruptive change adhering to no taxation rules of the past and see where it goes. Let loose this new wave of disruption that may have more positive impact on the whole fundamental taxation question as we’re now witnessing in the “internet of everything.” (oversimplification yes, but the premise is not)

After all, if we remain steadfast on doing nothing – we’re going to get a whole lot more of the same. And even Einstein warned: Doing the same thing over and over again expecting different results is the definition of insanity.

We have the test beds or the proverbial Petri dishes available. We know all it would take is just a change in thinking along with policy to self-fund the experiment and get it rolling. Yet, we seem frozen in place unable to even rationally converse on the idea.

We need to rethink our current tax policies from the ground up. And one would think this issue would be front, center, and of immediate importance to the financial media at large. But alas of course not.

They’re more focused on what tune was strummed this week on the ukulele. Today that’s regarded as hard-hitting financial reporting and insight.

© 2014 Mark St.Cyr