Kerry’s plan to create 10 million jobs — a plan that Republicans branded yesterday as unworkable and ineffectual — depends on an array of tax cuts and changes in the tax code. The centerpiece is an end to a tax break enacted in the early 1960s, known as deferral, that allows US companies to delay paying taxes on foreign income so long as those profits are reinvested in those overseas operations.
Kerry said this change would strip away an incentive for companies to move jobs abroad and generate about $12 billion annually, which would be used to pay for a 5 percent reduction in the corporate tax rate, from 35 percent to 33.25 percent. Citing IRS studies, campaign advisers contended that 99 percent of US companies would owe less in taxes after these twin changes. The plan also includes a one-year “tax holiday” for corporations that invest foreign revenues into their US operations, proposing to tax those profits at a special 10 percent rate.
Now first of all, economic predictions of this kind are insanely impossible. Second, politicians cannot “create” jobs by the very definition of politics – they can either make it illegal for people to work, or get out of our way so bussinessmen can create wealth. Third, let me get this “recovery plan” straight:
- American companies are forced to be less competitive by limiting outsourcing.
- Investment funds dry up as Bush tax cut is repealed.
- Double-tax American companies for profits they make abroad.
- (Some miracle)
- Deficit is gone, so we can decrease taxes one again, making everyone happy.
Is that how it works?