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Do you pun intended unemployment is still dangerously high and his company's cling on to their cash -- shipping their operations and -- jobs overseas.
If we want to bring profits back home on next guest says the key.
May be taking on the corporate tax code it's a common -- joining us now is Paul -- and senior lecturer at the Harvard Business School and Bob thank you so much for joining us OK so Lou is that is all is it going to take we would use the tax code and companies will come flooding back.
Well it's an important factor right now the international profits of US companies.
Fear are kept abroad and we and sent them to keep those profits abroad.
As long as the foreign profits of US corporations are kept.
And foreign bank accounts they -- no US tax but if they bring those profits back to the US.
They pay a 35%.
US tax so guess what.
We have one to two trillion dollars of profits abroad and they stay abroad they're used to buy plants abroad by companies.
Do all the things that we would like those profits to do in the US so we need to change the tax cut.
But the bulk quickly we have a lot of companies in this country already sitting on an awful lot of cash what's -- say -- -- we repatriate that money they don't actually invest didn't spend it as you say.
Well you never know when companies are gonna spend money I -- think that we need to.
Have a better more stable environment here -- more certainty.
And as growth continues.
Then you'll have some more investment spending.
But if you have don't have the money in the US it will never be spent in the US whether it's for shareholder dividends -- from plants.
Or facilities or anything and right now.
Discouraged from bringing it back its 0% US tax of broad 35% tax here but -- no brainer.
It in 2004.
The first of -- I think this is a great idea I think we need some type of stimulus than and this is a great way as to not go and have deeper and deeper debt bring in a trillion dollars on -- One of the things that a lot of the critics to this plan say 2004 that was done and nothing happened it wasn't spent as sort of thing that could be done.
To -- -- -- employment or infrastructure spending to make this work.
Well you could have conditions.
If you had a tax holiday which I'm again.
You could have.
-- conditions that the money be spent on plants -- and employment in the US.
The problem with the tax holiday is it's a one year thing that happens every five or ten years.
And it cements a really bad permanent system.
The key is to change the system permanently.
So that companies are no longer planning -- keeping all their foreign profits abroad by what my proposal.
Gut says look there half the countries in the world.
Tax corporations and they -- and a reasonable way.
Germany France Japan and as long as those profits are made in those countries they ought to be exempt from the US -- there's another happened attacked.
Profits that are made in tax havens where they don't pay any taxes and those we ought to start taxed at.
Then Bob let's talk numbers my proposal yeah I mean if it you know I'd like we're talking about -- cause they pay nothing for the profits made abroad they don't bring -- back here -- the be -- 35%.
What do you see -- a fair rate to taxis companies bring in their profits back home.
If at all and his being here.
-- -- -- Well what I think it depends on where they are broad if they're in Europe.
Or Japan in many countries they are paying reasonable corporate taxes.
The average effective rate and throughout the industrial world.
Is something like.
So my proposal is if they're in a country where they're paying reasonable tax rates.
Then they should be able to do whatever they want with the foreign profits but there are tax havens caimans Bermuda.
Various places where companies are paying no tax and that I think we ought to tax that we ought to.
We ought to recognize the reality.
If they are in countries where they are tax and there are many countries where they are attacked than they ought to free up those profits to go anywhere and we ought to stop allowing.
Money to be made in tax havens and kept -- statement.
But the reality is -- proposal.
They can find cheap labor cheap land and all the other things that can make them that much more profitable she can't really blame them for that.
-- know that I'm not blaming them for that I'm saying is that most of these companies and I've talked to them if they could bring back the profits that they -- Out of Europe and Japan and what large parts of Asia where they are taxed at 20% or higher.
They would bring back some of those profits.
And I think it's a perfectly reasonable thing.
But if we tax them at 35% they -- On the other hand we have to recognize that there are tax havens and those countries.
Very good very go at least we have to we have to keep that distinction we did and the companies will bring it back if it's taxed at 20%.
War higher -- and 20% is the rate where it's being taxed throughout most of the industrialized world.
Time Bob clothes and -- business school senior lecturer above thank you so my.
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