I was recently prompted, along with millions of other Americans, to come up with an idea or two that might creatively solve some of our nations problems. There were lots already, we’re talking thousands, but one idea did strike me so I though I would place it before some of the smartest people I know and see what they thought.
Basically it’s to develop a set of criteria for companies to qualify as a pro-American investment. The investors in these selected companies would get a lower capital gains tax on that investment, say 15%. This supposes that the Bush Tax cuts do expire and long term capital gains returns to the 20% level.
Some of the qualifications might be, a workforce that is at least 90% located in the US, a product that is directed toward improving US infrastructure, the development of innovations that would primarily benefit the US economy, or substantially improve the circumstances of any one of the many challenges we face today, like education, healthcare, alternative energy production.
The benefit would be to support investments in our own infrastructure, innovation and solutions for pressing issues by rewarding investors who put their money in these companies.
I see two problems right off which are both substantial and solvable. First this would establish a “golden” set of investments for potential stock holders and other investors. If enacted, massive amounts of money might well flow to these companies, which could upset the markets considerably. An investment tax rate of only 15% is a mighty fine reward.
Second, imagine the might of multinational corporations coming into play when congress tries to get this legislated. It could very easily turn into a have and have not badge battle, the winners being awarded with lower taxes on their stock.
There is one solution to both these problems, only give this status to smaller companies. Multinationals would be exempted from the beginning, and would not feel as threatened if only smaller companies were awarded this status. That would also alleviate the danger of a sudden change in market financing because there would only be a certain amount of stock or investments available.
What do you guys think?
Prentiss Gray
Prentiss Gray is a writer/columnist/blogger from New Jersey. After 27 years as a Information Systems consultant and the death of his wife of 21 years, he returned to his roots as a writer, creating the national column Adventures of the Lone Dad/ Daddy chronicles. He now Blogs for Gannet on domestic technology, and writes feature pieces and stories for general publication. He is a member of the American Society of Journalists and Authors and contributes to Bloomberg News, Daily Record, Gannett and the Tribune Syndicate.
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I believe that is on the right track, as you suggested changes need to be subtle as not to upset market places. Incentive is everything, we all tend to get greedy simply supplying incentives where needed will go a long way toward helping to alleviate some problems we are having.
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You are on the right track Prentiss in the sense that we need a more friendly business climate to stop the migration of jobs outside the U.S. and rewards capital investment and R&D that results in on-shore jobs and technology development. There are probably a dozen or more approaches that might prove favorable. A task force to investigate alternatives and issues in concert with industry might yield some workable propositions. A study group (as opposed to working task force) will be staffed with academics and bureaucrats that really only have a modest grasp of the stark realities of doing business in America. Three years from now they would have a stack of papers and no meaningful progress.
Th economy must have gainfully employed consumers, a friendly and affordable business climate and a tax structure that rewards wage earners for investing in America through stocks, real estate and other avenues. The toughest nut may prove to be environmentalists who refuse to compromise, and wield enormous power in all political arenas. Like most things in life, balance brings the best rewards.
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I’m not sure I think we should tax saving and investment. To make it tax-free would be to encourage this behavior. But your proposal is interesting. Perhaps the tax on capital gains should only occur at a certain dollar level.
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nice , very well written. I like it very much. I come acoss your writing by yahoo search engine. I might visit your site daily and introduce it to my neibourghhood. Please keep it fresh. Keep on the good work. – A colleage student
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