Obamas’ new plan to curtail the U.S. deficit, tax multinationals
In order to curb our ballooning budget deficit we have now turned to taxing our own multinationals. These U.S. firms will have a difficult time staying globally competitive if forced to pay taxes on foreign profits and this is primarily due to our monetary system being used as a printing press. The new tax plan may cause companies to move their business out of the U.S and deter new businesses from domiciling here. This plan will eliminate American jobs not create them. The current rules put our companies on equal tax footing with those overseas, since foreign governments do not tax as high as we do. Their overseas operations support jobs in the U.S. Obama believes the new plan will stem the outflow of jobs from the US but the jobs arent moving overseas because of taxes but due to the low cost of skilled labor that exists overseas. Foreign governments may also offer subsidies to any U.S multinationals to continue to outsource their jobs, this mitigates the tax impact to the multinationals.
As long as we keep printing money to bail out failing industries the value of our dollar and our purchasing power will continue to decrease while inflation ticks higher.
I’ve been writing about the deficit since Bush first cut taxes for the rich back in 2001 while doubling an already profligate military budget. Where is the money coming from?
It’s hard to believe that we had a budget surplus in 2000, and the debt managed to double from $5 trillion to $10 trillion in a mere eight years.
Where do you cut? Where do you raise revenue? Clearly, you see the problem of the deficit. The economic effect of government overspending is large and obvious.
So what do you suggest?
A good start would be to stop bailing out failing companies such as GM, Chrysler and the banks. If it was my decision I would choose to do nothing and let the game play out the way it should. Many banks would fail, lending would only get tighter and a global recession would still last shorter than current turn of events. Once all the failing players are held accountable and become extinct only healthy banks are left with real balance sheets and the recovery may begin, lending will loosen and so forth begins the next expansion cycle.