To immediately jump start the desperately needed US private sector job creation, I think the focus must be on the US government passing bold legislation that increases US business demand sufficiently for businesses to quickly create jobs. Also, there must be certainty that this increased US business demand directly results in substantial private sector job creation. Further, this should be done optimally, so that it is paid for, as determined by very prudent CBO front-end scoring.
I think that all of the initiatives the US government has enacted during the past 32 months of this horrible structural recession, have been, in the aggregate, very expensive but have done little to increase private sector, long-term job creation or to solve the horrible underwater mortgage housing crisis.
And for the entire 2000 decade, as well as for the first 8 months of the 2010 decade, the US government has been consistently shooting blanks on the economic front.
The US government, both nearly the entire US Congress and the Administration’s economic team, appears to be deficient in business acumen, so necessary to creatively solve, or to at least make a substantial dent in, the horrendous jobless, deficit and housing problems the country faces.
The country is rightfully disappointed with the US government’s lack of execution on the private sector job creation front. It’s not solely the Democrats fault (no bold ideas) nor solely the Republicans fault (no ideas at all, just obstruction)…..they equally share the blame for letting the country’s citizenry down on this critical issue. And then for the US Congress to go on vacation for such a long time while so many US citizens are desperately suffering….that’s just not right.
Anyway, my goal here is to give some insights on how I think the country can best turn its economic blanks into live ammunition.
The best way to increase US business demand is to simply give US business customers lucrative investment tax incentives that directly do just this. Thus, the old investment tax credit, although I’d rather now call it a better sounding “manufacturing tax credit”, is clearly the optimal way to create US business demand when things are so bad economically.
The widespread Republican proposal of instead just reducing the top income tax rate, both to individuals and to corporations, and hoping that indirectly trickles down, is flat out crazy reasoning, and one of the main reasons the Republicans, to nearly everyone's surprise, will not be picking up nearly as many seats in the November 2010 election as they expect to.
The Republicans are significantly underrating the financial wisdom of independent voters. Independent voters tend to be very thoughtful skeptics. They know that a drop in the top income tax rate creates no jobs and increases substantially the US deficit.
They realize that the Obama Administration and the Democrats in Congress could have been much more effective in creating private sector jobs, but they also are aware of the incredibly deep crater of the US economy left over by the previous Administration, and they also know that the US economy probably would have been even much worse now if it were under Republican control.
Wise independent voters are also keenly aware of the objective past track record of Democrat control vs. Republican control on the performance of the US economy since the end of World War II, particularly on the three critical issues of unemployment rates, real GDP growth, and US debt increases, where on all three, the US has fared far better under Democrat control, as you can clearly see from the following three charts:
Changes in US Unemployment Rates during All Presidential Terms since WWII from US Bureau of Labor Statistics
US Unemployment Rate Declines:
Clinton……(Democrat)…….Dec 1992 to Dec 2000…..down 3.5%
Reagan……(Republican)…....Dec 1980 to Dec 1988…..down 1.9%
JFK/LBJ....(Democrat)……Dec 1960 to Dec 1964…..down 1.6%
LBJ……......(Democrat)……Dec 1964 to Dec 1968…..down 1.6%
Truman……(Democrat)……Dec 1948 to Dec 1952…..down 1.3%
Carter……..(Democrat)…….Dec 1976 to Dec 1980….down 0.6%
US Unemployment Rate Increases:
Nixon……......(Republican)…..Dec 1968 to Dec 1972…..up 1.8%
Bush 1…........(Republican)…..Dec 1988 to Dec 1992…..up 2.1%
Nixon/Ford..(Republican).....Dec 1972 to Dec 1976…..up 2.6%
Bush 2…….....(Republican)…..Dec 2000 to Dec 2008….up 3.5%
Ike……….......(Republican)…..Dec 1952 to Dec 1960…...up 3.9%
Average Annual US Real GDP Growth during All Presidential Terms since WWII from US Bureau of Economic Analysis
Average Annual GDP Increases above 3.00%:
LBJ………..(Democrat)…..Dec 1964 to Dec 1968…...5.05%
Truman…..(Democrat)…..Dec 1948 to Dec 1952…..4.93%
JFK/LBJ….(Democrat)…..Dec 1960 to Dec 1964…..4.65%
Clinton……(Democrat)…..Dec 1992 to Dec 2000…..3.88%
Reagan……(Republican)…...Dec 1980 to Dec 1988…..3.40%
Carter……..(Democrat)…..Dec 1976 to Dec 1980…..3.25%
Average Annual GDP Increases of 3.00% or less:
Ike………......(Republican)…Dec 1952 to Dec 1960…..3.00%
Nixon…….....(Republican)…Dec 1968 to Dec 1972…..3.00%
Nixon/Ford.(Republican)…Dec 1972 to Dec 1976…..2.60%
Bush 1……....(Republican)…Dec 1988 to Dec 1992…...2.18%
Bush 2……....(Republican)…Dec 2000 to Dec 2008….2.09%
Average Annual US Public Debt Added during All Presidential Terms since 1976 from US Bureau of Public Debt
Bush 2…(Republican)…Dec 2000 to Dec 2008.$630 bil per year
Bush 1…(Republican)…Dec 1988 to Dec 1992...$373 bil per year
Reagan.(Republican)…Dec 1980 to Dec 1988….$219 bil per year
Clinton..(Democrat)…....Dec 1992 to Dec 2000...$186 bil per year
Carter….(Democrat)…....Dec 1976 to Dec 1980....$ 69 bil per year
Anyway, going back to my job creation proposal, I think this manufacturing tax credit should be healthy enough to accomplish the US business demand goal, and also to accomplish it as quickly as possible. Thus, I would set the manufacturing tax credit at say 15% of new US eligible property purchased from now until the end of 2010, and then reduce it down some to perhaps 10% for all of calendar 2011 eligible property purchases.
For maximum effect, this manufacturing tax credit should apply to all (yes, that’s by both large and small businesses) new property placed in service in the US that is depreciable under MACRS, and that has a Recovery Period of seven years or less (i.e. all Three-Year Property, Five-Year Property, and Seven-Year Property). When you check out the Tax Code, you'll see that.....wow, these three MACRS property categories are pretty all encompassing.
In addition, new manufacturing plant facility costs and manufacturing plant facility remodeling costs should be eligible. Also, any external computer software costs, any external computer software development costs, and any external web site development costs, should also all be eligible.
What makes this manufacturing tax credit particularly stimulating to US businesses is that the purchaser of the property will get not just an economic benefit, but also a highly desirable GAAP earnings increase, for the manufacturing tax credit.
But a stand alone very healthy manufacturing tax credit, although substantially increasing US business demand, won’t necessarily trickle down to increased jobs. Thus, it is critical to also put in a requirement that a business earns this manufacturing tax credit only if it also creates a sufficient number of new jobs….thus, this “Manufacturing Tax Credit Tied to Payroll Count Increases” proposal. What this accomplishes is effectively embedding a Jobs Tax Credit within the Manufacturing Tax Credit…..a pretty neat, very effective idea, I think.
Perhaps an even more descriptive title for my proposal here is "Innovative Productivity Enhancing Tax Credit". It substantially increases demand for US manufacturing and other businesses by providing very healthy tax incentives to US business customers for purchasing innovative equipment and other property, along with providing an intertwined tax incentive for this business customer to also hire new employees. And then the merger of this property acquired with the key new employee element puts the company in a much better position to enhance its overall productivity and to have its products and services better compete globally in the world economy.
Although this proposal focuses principally on enhancing the US manufacturing sector, all US businesses can get the manufacturing tax credit and can also benefit from it by having their productivity enhanced.
To illustrate how this would work, let’s assume that a company places in service, from now until the end of 2010, total eligible property of $10 mil. The tentative manufacturing tax credit for 2010, before testing for payroll count increases, is 15% times $10 mil, or $1.5 mil.
However, the amounts of these manufacturing tax credits actually earned by the purchaser cannot exceed a certain maximum dollar amount per new job added multiplied by the increase in US full-time jobs, exclusive of those jobs from business acquisitions, for the remainder of 2010.
To make it sufficiently attractive to businesses to increase business demand, I would set this maximum dollar amount per new job pretty high. Let’s assume it is set at say $20,000 per job, which is about 50% of the average annual base pay of all US full-time employees.
To encourage higher pay for the new hires (or to discourage lower pay for new hires), I think this maximum tax credit should be set at the lower of this $20,000 per job added and 50% times the actual average annual base pay for new hires for the company earning the manufacturing tax credit in the current period.
Also, to encourage companies to hire employees even though they don’t invest in capital expenditures, I would set a minimum dollar amount per new job added at say $5,000.
Thus, going back to my illustration, let’s assume that there is an increase in US full-time jobs of this company for the remainder of 2010 of 50, and that the average annual base pay of all new hires for this company for the remainder of 2010 is $45,000. Therefore, the maximum amount per new job added would be $20,000, since this $20,000 is lower than $22,500 (50% X $45,000). Thus, the company would earn manufacturing tax credits for 2010 of $1 mil ($20,000 X 50), since this is lower than the $1.5 mil manufacturing tax credit based strictly on eligible property additions.
If instead, there is an increase of 100 jobs for the remainder of 2010, with the same $45,000 average annual new hire base pay, the manufacturing tax credit earned by this company is $1.5 mil, since this is lower than the $2.0 mil (100 X $20,000).
This manufacturing tax credit earned should be computed on a total US company operations basis. Thus separate US companies controlled by the same US company should be combined.
For maximum effect, I would make the manufacturing tax credit immediately refundable. Also, I wouldn’t reduce the tax basis of the property for the manufacturing tax credit earned.
To make these jobs created remain for a reasonably long period of time, I would also include a tax recapture of this manufacturing tax credit if the increase in full-time jobs of this business doesn’t last for say four years. And I would have a 100% tax recapture for reductions in full-time payroll counts in the first two years, and a proportional time, pro-rata tax recapture for reductions in full-time payroll counts in years three and four. There would be no tax recaptured after four years.
For the handful of very large global US companies, perhaps as measured by level of unremitted foreign earnings (just the 32 corps with unremitted foreign earnings above $10 bil comprise about half of the total unremitted foreign earnings of all US companies), I would let them earn the above computed manufacturing tax credits only if it is also 100% paid for by a like amount of additional US federal income tax triggered by their foreign earnings repatriated to the US in the same period. I would consider granting these large global US companies an incentivized dividend received deduction of perhaps 10% to 20% on these foreign earnings repatriated used only to 100% fund their manufacturing tax credits.
For the many other smaller global US companies, I would give them a choice….they could either earn the manufacturing tax credit like pure domestic companies do, or they could elect to have it to be 100% paid for by a like amount of additional US federal income tax triggered by their foreign earnings repatriated to the US in the same period. I would consider granting these smaller global US companies a bit higher incentivized dividend received deduction of perhaps 30% or 40% on their foreign earnings repatriated used only to 100% fund their manufacturing tax credits.
So the above is the crux of my “Manufacturing Tax Credit Tied to Payroll Count Increase” proposal. It should both quickly increase US demand and US private sector jobs.
But is it paid for? How should the CBO, on the front end, compute the pay out here?
Well, in a fair CBO scoring, the above proposal should more than fund itself, whenever it is enacted in a horrible economic environment like the present one, where there is so very little private sector job increases, and where there are also expected to be so few private sector job increases over the next couple of years.
Under this Manufacturing Tax Credits Tied to Payroll Count Increase proposal, the bulk of the upfront manufacturing tax credits granted by the US government will directly trigger substantial future incremental payroll tax receipts (both individual and company matched…15.3% of the higher gross payroll in total) and also substantial future incremental individual income tax receipts (probably average about 10% to 15% of the higher gross payroll) from the resultant payroll count increases.
The salient point here is that a company can't earn the manufacturing tax credit unless it also increases its US full-time payroll count. Thus if the CBO counts the manufacturing tax credit as a tax outflow, which it should, it also must count as a future cash inflow the higher incremental US federal government tax receipts that directly result from, and are inextricably linked to, the manufacturing tax credit.
Because of the present very dismal private sector US job situation, there will be millions of new hires who previously wouldn’t be paying, or expected to be paying in the next couple of years, these federal taxes who now will be paying them due to this Manufacturing Tax Credits Tied to Payroll Count Increase proposal. Thus, the CBO, in scoring this proposal, has to estimate the future amounts of these additional US federal tax receipts triggered by this proposal. Further, the CBO, in scoring this proposal, has to estimate the future amounts of US federal tax receipts due to the tax recapture aspect of this proposal.
Further, under this proposal, all of the manufacturing tax credits earned by the very large global US companies must be 100% funded by their additional US federal income tax related to their foreign earnings repatriated. Also, under this proposal, the many smaller global US companies can elect to have some or all of their manufacturing tax credits 100% funded with the tax from their foreign earnings repatriated. Thus, for all global companies funding their manufacturing tax credits with the tax from their foreign earnings repatriated, there is no front end cost here to the US government at all. However, there is substantially positive CBO scoring here from the future incremental US federal government payroll tax receipts and US federal government income tax receipts, both caused by the US payroll count increases of these global US companies, triggered under this proposal.
In addition, there will be positive CBO scoring for the movement of the uninsured to insured status, since they will be added to full-time job status, many of them with a company-sponsored health care plan, due to this proposal. This positive scoring comes from the resultant reduction of the total US health care costs payable by the US Government, included in the recently passed US health care legislation.
Also, there will be positive CBO scoring from the reduction in Unemployment Benefit payments made by the US Government, due to the reduction in the number of unemployed citizens, caused by this proposal.
Further, US states will significantly improve their financial coffers from this proposal. First, they will be receiving additional corporate income taxes from the higher dividend income of the global US companies repatriating their earnings. Second, they will be receiving higher individual income taxes from the new hires. Third, they could elect to include this Manufacturing Tax Credit as additional corporate taxable income, which triggers additional corporate income tax receipts. And fourth, their Medicaid costs will drop due to the movement of the uninsured to insured status, resulting from their new full-time employee status.
When I run the numbers, given the horrible jobless recovery we now face, and which we will continue to face for at least the next couple of years, I get substantially positive CBO scoring from this proposal. Thus, I would use some of this excess funding to also make a heavy dose of infrastructure investments, with primarily a green emphasis. And the rest of the excess funding should be used to reduce the US federal deficit.
Granted there will be some companies that will earn the manufacturing tax credit even though they would have increased their number of full-time employees even without this proposal. However, there won’t be many of these, given the horrible private sector US job situation.
I call the above proposal “Single-Barreled Manufacturing Tax Credit Tied to Payroll Count Increases”. It should be fairly simple to apply and can be implemented quickly. It's simplicity is enhanced by the ease in applying the payroll count requirements. Say it kicks in starting Aug 15, 2010. All you have to do is to count a company's overall combined US full-time payroll on that date and compare it with a similar count on Dec 31, 2010. The employee count change here is the relevant one used to compute the combined company manufacturing tax credit earned for 2010. And the same overall employee count change approach would be used to compute the combined company manufacturing tax credit earned in 2011. And for subsequent tax recapture computations, a company follows a similar overall combined company payroll count process. And if you thought it necessary to put in better controls, these counts could be made quarterly, or even monthly.
Now if you wanted to spur US demand, and the resultant job creation directly flowing from it, even substantially more, I would consider converting my above Single-Barreled proposal to a Double-Barreled proposal by adding some of the below additional features.
However, I think one drawback with adding these additional features is that many of them are somewhat involved, and I am not sure that the US government can successfully design and execute quickly something that is so very involved like some of these are.
Anyway, here are some possible enhanced Double-Barreled features:
First, the Manufacturing Tax Credit could be earned by both the buyer side and the seller side of the transaction. Thus for eligible property added for the remainder of 2010, the business purchaser would get 15% (or 10% for 2011) of the cost of the property and the business seller could get say half that amount, or 7.5% (or 5% for 2011) of the selling price of the property. This highly incentivizes both the prospective purchaser and the prospective seller to close the deal and to do so quickly. Now that is what I would call some Black Eyed Peas serious “Pump It”…..to the US economy, that is.
Second, there could be a Marketing/Selling/Advertising Tax Credit of say 20% of all such expenditures for the remainder of 2010 over such amount for the same period of 2009, and of say 10% of all such expenditure for all of 2011 over such amount for all of 2010. This also results in a nice “Pump It” economic spur to make it applicable to both sides of the transaction. Also, this Tax Credit would increase the highly desirable reported GAAP earnings of businesses.
Third, the maximum tax credit per job added could be increased from $20,000 to say $25,000, or even to $30,000. And the related percentage of average annual base payroll for new hires could be increased from 50% to say 62.5%, or even to 75%. And the minimum tax credit per job added could be increased from $5,000 to $7,500, or even to $10,000.
Fourth, a bonus manufacturing tax credit and bonus marketing/selling/advertising tax credit, of perhaps 5% each, could be given to smaller businesses, as well as increasing the related higher maximum amount per payroll count.
Fifth, for new manufacturing plant facility costs, as well as for remodeling of existing manufacturing facilities, there could be an additional bonus 5% manufacturing tax credit, as well as an additional related higher maximum amount per payroll count.
Sixth, for clearly Green eligible property additions, as precisely defined by the US Dept of Energy, there could be an additional bonus 10% manufacturing tax credit, as well as an additional related higher maximum amount per payroll count.
Seventh, there could be bonus tax depreciation in the first year, but only if it is accompanied by full-time payroll count increases that must continue for four years, or else it gets recaptured.
Eighth, in just the Gulf Region clearly impacted by either the recent BP Gulf Oil Spill or by Katrina, a bonus 5% manufacturing tax credit could be instituted, over and above, the 15% for the remainder of 2010 and the 10% for 2011, as well as bumping up the related maximum amount per payroll count.
Ninth, in just the above defined Gulf Region, eligible property could be expanded to also include new facility costs as well as facility remodeling costs of lodging, restaurants, retail, leisure, and rental property.
Tenth, I would consider increasing for 2010 and 2011 the R&D tax credits from 20% to 25% for all purely domestic companies and also for smaller multinational corps, with this latter group of smaller global corps having the option of paying for the R&D tax credit by the additional federal income tax resulting from foreign earnings repatriated, which should be given an incentivized dividend received deduction of perhaps 30% or 40%. For all large multinational corps, I would increase the R&D tax credit from 20% to 25% for 2010 and 2011, but they would be entitled to no R&D tax credit except to the extent it is 100% funded by a like amount of US federal income taxes from repatriating their foreign earnings used just for this purpose. I would consider granting these large global US companies an incentivized dividend received deduction of perhaps 10% to 20% on these foreign earnings repatriated used only to 100% fund their R&D tax credit.
Eleventh, to also increase the desperately needed US consumer demand, I would initiate a program of massive reductions of the mortgage loan principal balances of all underwater principal residence home mortgages, to include first mortgages and second mortgages held by financial institutions, and also including those mortgages held by Fannie Mae and Freddie Mac. I have a very detailed proposal, my Job Creation Funding #4, which creatively deals with this.
If additional funding is still needed for the above Double-Barreled proposals, I would consider these:
First, particularly if the above Marketing/Selling/Advertising Tax Credit proposal is initiated, all subsequent marketing/selling/advertising costs could be tax deducted over a longer period than they are presently. This is a temporary tax difference, thus no resultant earnings charge to companies.
Second, there’s the partial deposits on open IRS tax audits of large corps. These open audits last a very long time. Corps already have an earnings charge on their books for this, and thus there wouldn’t be any additional earnings charge to them. All these large corps would be doing is partially paying for liabilities, they agree they owe the IRS, and which are already recorded on their books.
Third, there’s the closing of the many tax loopholes of Big Oil, Big Health Insurance, Big Hospital, Big Pharma, and Big US Multinational Corps. There is a very long list of these, totaling hundred of billions of dollars. Since these industries and companies all played a major role in creating the 2000s Lost Decade in the US, as well as the current disastrous financial aftershocks from it, in all fairness, they should all kick in to help solve the country’s economic mess it is now in. Some of these tax loopholes closed are temporary tax differences, thus there would be no resultant earnings charge to the corps impacted. Also, some of the tax loopholes closed for Big US Multinational Corps could be permitted to be paid for by a like amount of US federal income taxes from foreign earnings repatriated.
Fourth, the LIFO Inventory tax loophole should be closed for all companies above a certain size in all industries. There's no earnings hit here. Nearly all companies now using LIFO would switch their inventory accounting. And as an added benefit, the switch out of the unrealistic LIFO accounting will result in much stronger financial statements of these companies....much higher cumulative earnings and higher equity.
Fifth, Section 197 Intangible Assets include a multitude of items and are now tax deductible over a 15 year period. In all fairness, many of these intangible assets have economic benefits to the business far beyond 15 years. I would extend the tax life here to 20, 25 or even 30 years. This is a temporary tax difference and thus there’s no earnings hit to companies.
Sixth, regarding tax depreciation, I would focus on the Seven-Year MACRS Property category, which includes property with a Class Life of 10 to 16 years. By depreciating this property for tax purposes as Seven-Year Property, the present tax depreciation deductions occur over a period of eight years. If instead, this tax deduction was lengthened to say the midpoint of this Class Life, or 13 years, the US Government’s CBO scoring will be substantially positive. I would make this change now for just the property additions of just the next two years, since those would be the only ones where you would get positive ten-year CBO scoring for now. This one is also a temporary tax difference.
Seventh, many insurance companies, including health insurance companies, are able to deduct each year for federal income tax purposes some of their estimated insurance claim liabilities, even though they are not fixed in amount. I would delay the tax deductibility here until the years these claims become fixed in amount, which is the general tax rule. In all fairness, these insurance companies are presently getting the benefit of a tax loophole here, not enjoyed by many other industries. And there will be no hit to insurance companies' earnings for this temporary tax difference.
Eighth, many insurance companies, including health insurance companies, are able to defer each year for federal income tax purposes the taxability of some of their unearned premiums received in cash. I would make these premiums taxable when the cash is received, consistent with the general tax rule on when revenues are taxable. It seems only fair to close this tax loophole, not enjoyed by many other industries. And insurance companies would not get a hit to their earnings for this temporary tax difference.
Ninth, with all of the horrible financial havoc swaps and other financial derivatives have played on the US and world economies, I think the last thing we want to do is to give tax incentives for any financial derivative, which believe it or not, we presently do. The financial firm arranging the swaps and other financial derivatives incurs a lot of internal costs in designing, implementing and marketing the swaps and other derivative transactions, and also could have lucrative compensation programs for various executives and employees in which compensation is based on measures like fees or positive interest spreads earned in swap or other financial derivative transactions. I think all the substantial costs incurred by the financial firm to generate the fees received by the financial firm, including all compensation driven by the level of swap fees and other financial derivative fees, should not be tax deductible in the year these costs are incurred. Instead, in all fairness, they should all be deferred for tax purposes and spread over the life of the related swap and other financial derivative transactions.
Tenth, for all large financial firms, there are substantial internal costs incurred which are necessary to acquire each of their many financial assets and financial liabilities. These would include employee salaries, commissions, incentive compensation, employee benefit costs, travel and many other costs. And there are also a lot of external costs to acquire these assets and liabilities…examples would be items like external legal costs and CPA firm services for accounting and tax advice. My understanding is that many of these costs are presently tax deducted when they are incurred. I would instead enact tax legislation that would require all of these internal and external costs to be initially allocated to the related asset or as a reduction to the related liability, and then to have the timing of the tax deduction of these allocated assets or reduction to liabilities follow the movement of the related assets and liabilities. This seems to me to be a very fair approach in timing the tax deduction.
The large financial firms that I would include in my ninth and tenth proposals above would include US firms like JP Morgan Chase, Citigroup, Bank of America, Goldman Sachs, Morgan Stanley, GE Capital, AIG and others. In addition, I would include large foreign firms with significant US operations like Barclays, UBS, Credit Suisse, ING, Deutsche Bank, and others.
I think my ninth and tenth proposals above related to large financial firms (i.e. deferring financial derivative-related costs and also deferring other internal and external costs related to many financial assets and financial liabilities, and instead spreading both of these tax deductions over the life of the related financial derivatives, financial assets and financial liabilities) seems to me to be a much better way to have the large financial firms pay for the remaining unpaid portion of TARP, and also pay for the massive cost necessary to make both Fannie Mae and Freddie Mac truly whole, than to impose a substantial annual stand alone bank tax. Also, both my above ninth and tenth proposals do not impact Corp reported earnings, since they are treated as temporary tax differences, whereas a stand alone bank tax would reduce Corp reported earnings.
Eleventh, as a measure to address the devastating offshoring problem, for 2010 and going forward, I think a US multinational corp, or a multinational corp above a certain size, manufacturing products in a low wage or low tax haven offshore, and then subsequently selling this product back to a US customer, should pay an annual US tax computed as a percentage of the sales price to the US customer, with a portion of this tax being transferred to US States in some reasonable manner. To soften the blow on the hit to earnings of multinational corps here, a multinational corp should have the option of paying for this annual tax by a like amount of additional US federal income tax resulting from its foreign earnings repatriated in the same year, which should be given a somewhat incentivized Dividend Received Deduction.
Twelth, as a second measure to address the financially devastating offshoring of US jobs, I think all separation costs and all other costs, resulting from a plant closing in which a US plant is moved offshore, should not be tax deductible by the corporation moving its plant offshore.
Also, the US manufacturer moving its plant overseas should get a reasonably computed and fair tax recapture of its Domestic Production Activities Tax Deduction for all past years in which it received this lucrative tax deduction (this tax deduction started in 2005). And further, in all subsequent years, the Domestic Production Activities Tax Deduction percentage for companies that have moved US jobs overseas would be reduced to below the present 100 percent. To derive this lower than 100% percentage, for the numerator, I would subtract the number of cumulative past jobs lost when they were moved overseas from the number of all US employees; and the denominator would be the number of all US employees.
And the money raised from the tax recapture of the past Domestic Production Activities Tax Deduction and from the disallowance of separation and related costs should be used to provide direct tax and other incentives for new manufacturers and other companies to invest in the city or area where the plant was closed and moved overseas.
And thirteenth and lastly, I would institute a highly progressive annual gross receipts tax on the lobbying revenue of firms, including some non-profit organizations, engaged in lobbying.