Saturday, January 9, 2016

How to Solve the Corporate Inversion / Jobs Dilemma

I know it's been a while, but honestly I've been working on a lot of stuff. So sue me. (Please don't sue me).

One of the problems I'm always rolling around in the back of my head is how to make more jobs for ordinary, hard-working folks in this country. This is especially true in light of the coming automation of a number of jobs that have traditionally formed the backbone of the U.S. labor force.

There's also a problem with corporate inversions, whereby (and this is incredibly simplistic) companies create offshore shell companies and transfer all assets to them in an effort to skirt the somewhat draconian U.S. tax laws.

Nothing I've seen on either issue has really moved the needle for me. Until now...

You see, tonight I spent a long time thinking about this stuff. (Yes, it's a Saturday night, and I'm a loser, and blah blah blah, but I actually had a moment of clarity while watching the Blues game with buddies tonight).

I think I've come up with a solution.

Here goes:

For every "full-time job" (let's say $40,000 salary + $10,000 benefits = $50,000) a company has, they get a $30,000 tax credit/deduction/whatever is more advantageous to them.

It doesn't matter if the employee makes $40,000 (plus benefits) or $3 million. Each employee counts for one unit under this scheme. Obviously the figures would be tied to a cost of living increase, 

Maybe the numbers are off, but I'm looking for a tax system where companies are rewarded for the number of jobs they create as opposed to profits they generate. Profits go to shareholders. The public very likely never sees a dime. How do we create a benefit for the common working man or woman? 

Make it worth the company's while!

Essentially, you shift any "entitlement burden" from the state (where everyone, rich and poor pays in) to companies, who could absolutely use more help, but who are incentivized at present to wring increasingly more out of employees while hundreds of thousands go unemployed, not paying taxes, and feeling pretty awful about themselves.

Why not make it so that in light of dwindling traditional jobs, we entice companies to hire folks as opposed to trying to wring more blood from the stone? Honestly, I think this is a happy medium between the wholly Libertarian crowd and some more progressive ideas. 

Of course, there are a bunch of questions already:

1) How do you prevent cronyism? Like a company just hiring a bunch of its CEO's kids?

Honestly, I think this is a bigger issue for small businesses than the behemoths. Let's say Jerry's Shoe World has Marla, Edith, Luanne, and Goober as employees, all relatives. Should Jerry get tax protection for hiring all of his relatives? 

Here's the problem: you can come up with a bunch of regulations w/r/t hiring practices, and it really doesn't matter ultimately. All it does is impose a bunch of B.S. on Jerry, who will find a way to hire Luanne anyway.

On the other hand, at least Jerry is paying these folks cash. They will, ostensibly, use that cash on rent, food, entertainment, and utilities (no, I'm not a hopeless Monopoly fan). 

But at the same time, I don't want Bob Sears to hire 150 Sears descendants to "keep the store," especially since Sears is in TROUBLE...from what I've heard...

2) There aren't enough $40,000 jobs out there!

I disagree with this one. I think that companies would find this new plan a lot easier to work with than the current plan. As such, hopefully a company with a lot of cash on hand (cough, cough, APPLE, cough, cough), would CREATE more $40,000 jobs to avoid the punitive tax system we have in the U.S.

3) How would this be more appealing than corporate inversion?

I'm not some "pie-in-the sky" idiot who thinks that companies will take this up regardless of whether it's good for them or not. I'm not an accountant, either. I don't know all of the ins and outs. But we DO need to do something to keep Americans employed and companies around.

But what I do know is that if we increase incentives to keep American jobs around, or even to create new American jobs, I honestly couldn't care less if companies are headquartered in Charlotte or Dublin. If we have more jobs, we have more taxpayers. Really, in some ways it comes down to shifting employer ideas about what constitutes "a job" more than anything else. This is just the first step.

Our current plan isn't working. We need some "out there" potential solutions. The President and the numerous frontrunners have entire TEAMS dedicated to this stuff. In all honesty, I just hope to catch an eye and go from there.

So there's my pitch. Questions? Comments? You know where to leave them...

-D.J.


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