Obama should resign for lack of leadership.

I have blogged repeatedly in favor of a reduction in corporate as well as capital gains taxes. As a result, a liberal “reader” of my blog tweeted me and said I was greedy and incompetent. He is entitled to his opinion, but he is not entitled to create his own facts.  At the risk of wasting my time, I will attempt to supplant liberal ignorance with the seeds of modern education. It may take some careful reading so stay with me on this.

Typically,  a multi-national American corporation, with businesses in multiple countries, is really a collage of many companies separately incorporated in each country. IBM for example has IBM USA, IBM France, IBM India, IBM China and so on-a unique corporation in each country. The company pays taxes to the country of residence based on the tax rate in the country. But and this is a large “but,” now understand this fact: the multi-national corporation, the corporation that actually owns all these individual companies, reports its profits by aggregating all its profits from all its companies in each country. Ergo, a multinational corporation may report record profits, but not based on their financial performance in America.

The import of this is that a company may make large profits in India, a country with low corporate tax rates,  and therefore have a lot of cash in India, but little profits and little cash in the good old USA, a country with relatively high tax rates. The USA company may be cash-strapped and have to borrow money to finance operations in the USA. But Mr. webtalkwithbob why doesn’t the company that has all that cash in India simply transfer it to their bank accounts in the USA?

--Great question--Answer.

Because that cash would then be taxed at USA tax rates. Some estimates are that American corporations have more than 2 trillion dollars in overseas bank accounts. If  they brought that cash into the USA to use these funds to build businesses in America, Obama demands a big slice of their cash pie for doing no work. Guess what? They are not going to bring it home. So what would you do, anything different? No. You would build your business in the country with the lowest tax rate and the most friendly regulations. And that is precisely what is happening.

The final glib-lib argument is that lowering tax rates would benefit American corporations. This action would be harmful, the libs assert, I suppose,  because it would make corporations even more profitable, which would cause their earnings to increase, which would cause the stock market to rise and then, just maybe, we could all get our 401Ks back to where they were 5 years ago, which would benefit most every working American, and help get more Americans back to work. Whoa Nellie! Isn’t that good thing? You betcha! 

We should allow USA companies to bring all the cash in foreign banks home, tax free, one time, right now in 2011 and invest it in American jobs.

Join me in my campaign to fire Obama.