The chair of the Senate finance committee, Max Baucus (D, Montana) is putting forth a way to build momentum for a rewrite of the US tax code. His idea is to put a 20 percent tax on the estimated $2 trillion held by American companies overseas. Senator Baucus, and others, object to the fact that American companies use international law to the maximum advantage of shareholders.
A Democratic aide in the Senate said that this new tax would be ‘more fair’. How is it more fair to put American companies at a tax and cash disadvantage in comparison to other multi-national firms? The logic eludes me.
In addition, the estimated $200 billion in federal revenue would be used to replace the automatic spending cuts under sequestration, fund other stimulus measures, lower other tax rates, or shrink the deficit. Does anyone actually believe that the Senate would use the additional revenue to shrink the deficit as opposed to finding new and creative ways to spend the money? I don’t.
Sequestration is the means by which the Congress agreed to partially reign in spending and here we see an attempt to expand spending instead. The stimulus packages of the past have proven unproductive and expensive, and yet many in the Senate (and the House) have a strong belief that government spending can do what they believe private industry cannot.
Their lack of success over the last six years (and long before that) should prove that their belief is ill-founded and that additional taxes are not the solution to our budgetary or job-growth problems.