SharedEconomicGrowth.org
A proposal for smart tax reform
Restoring America's economy, job security, and middle-class market power through smarter, fairer tax that favors work over financial speculation

Shared Economic Growth: Fixing Our Economy Now and For the Future, Without Increasing the Debt
This website, which dates back well before the financial crisis of 2008, provides extensive background from across the political spectrum that explains what is fundamentally wrong with our economy, and offers a simple, three page piece of legislation that would go a long way towards fixing it. If you are tired of a do-nothing government that  acts like our problems can't be solved, please spend some time with this site and encourage others to do the same, and then to contact their legislators to demand action.
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Globalization is hurting a broad group of American workers. Given a choice between paying U.S. wages and paying workers in a developing country $1.00 an hour, companies are choosing the latter. In some industries this trend cannot be reversed, but America cannot and should not try to compete for those low-wage, low-skill, low-value jobs. Trying to do so would cause us to sacrifice standards that are important to our society, such as the minimum wage. Instead, we must seek to obtain the promised upside of globalization: good, new jobs in high-value industries with companies that can afford to pay U.S. wages.

But the companies creating those choice jobs are sensitive to tax burdens. Their profit margins are high, so tax is a major consideration in deciding where to locate their factories, laboratories, and offices.

Unfortunately, instead of tilting the equation in America’s favor, the outdated U.S.corporate tax system is helping to move those good jobs offshore.

How is the current system broken? If a U.S. company operates overseas through a foreign subsidiary, the income from those operations won’t be taxed by the U.S. until that cash is brought home as a dividend. Originally designed in the mid-20th century to help U.S.businesses be more competitive, this “deferral” system operates in our current global economy to provide an incentive for companies to keep their earnings offshore and reinvest them elsewhere. Why? Because a U.S. corporation will have to pay a 35% tax on its profits the minute they hit the U.S. border. So when the U.S. corporation is considering how best to expand, it considers that an investment of $100 in foreign operations will have the same net earnings cost as an investment of $65 in the U.S. In other words, because of the U.S. tax system, its dollar will go farther offshore. In light of that, where would you put your factory?

The U.S. could afford such a system back when it led the world in technology, wealth, and the education level of its workforce. But we can no longer afford it. We are now a debtor nation. We have lost much of our technical lead, and we are no longer able to retain good jobs in the face of foreign competition. Even companies that staunchly maintain their loyalty to the American workforce are competing against other companies that will use cheap foreign labor. Eventually they, too, must fall in line or risk being acquired by a foreign company that can instantly make their business far more profitable simply by moving the U.S. operations offshore and pushing the resulting income beyond the reach of the punishing U.S. tax laws.

But what is the best way to correct these skewed incentives?

The Shared Economic Growth proposal would fix the broken U.S. corporate tax system.

How? It’s simple: by providing corporations with an incentive to distribute their earnings to shareholders in exchange for not being taxed on those earnings themselves, Shared Economic Growth would make U.S. operations attractive and would encourage companies to bring home the cash they have invested abroad. Under Shared Economic Growth, a corporation wouldn’t be penalized by the tax code for building a plant in the U.S. instead of offshore. In fact, the U.S. would immediately become a preferable location over any foreign country that imposed any tax at all. Shared Economic Growth would provide extraordinary benefits to the U.S. economy – benefits like encouraging corporations to invest hundreds of billions of dollars in foreign cash in our economy, helping to ensure a secure and dignified retirement for American workers, promoting the efficient allocation of capital, and helping to foster corporate transparency and responsibility. No other proposal does that.

We invite you to browse this Web site, www.sharedeconomicgrowth.org, to learn more about this exciting proposal. Its time is now.

Note: The links contained on the pages of this site are to neutral sources as well as to the writings of persons and organizations from all parts of the political spectrum. These are not partisan issues, they are American issues, and they demand a solution that breaks the bonds of partisan sound bites and draws upon the most uncommon commodity in politics - common sense.

Through the site you will see words that look like this. Click on them to go to other pages in this site or externally that provide more information on that topic.

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We are not the only ones who think so:

"After all, the corporate tax is our worst tax. Shouldn't the goal of any tax reform be to get rid of it? Especially when full individual tax is being collected on that income? If all businesses could get that preferential treatment, we would have to agree. True tax reform would completely eliminate the double taxation of corporate income. Short of that, we should reduce its effects across the board, not piecemeal." Dr. Martin Sullivan, left-leaning tax economist and former economist for the U.S. Treasury and the Congressional Joint Committee on Taxation, 131 Tax Notes 1015 (June 6, 2011).

Avi Yonah on the dividends paid deduction

McCardle  on corporate tax

Clausing and Shaviro on the foreign tax credit offset

IMF on the destabilizing effect of corporate tax and advantage of allowing equivalent deduction for equity

Desai and Dharmapala on mobility of corporations

Shaviro on mobility of corporations

Rogoff on the competitive disadvantage of over-concentration of wealth

Altshuler et al on the preferability of swapping corporate tax for preferential capital gains rates (note - their math is different because they are not using the full Shared Economic Growth mechanism)

Canadian study on the relative social cost of corporate tax versus individual-level tax

Howard Gleckman of Tax Policy Center on shifting tax to shareholder level

Daniel Halperin of Harvard on shifting tax to shareholder level

CCH Taxblog concluding that dividends paid deduction is the best solution

Fritz Hollings (though his solution is not as good)

"The primary goal of corporate tax reform should be to improve the performance of the U.S. economy by making the U.S. a better place for starting and building businesses and improving the ability of U.S.-based businesses to compete more effectively against foreign companies. At the same time, it is important that corporate tax reform not add to the Federal budget deficit.Corporate tax reform also should encourage a more efficient allocation of capital throughout the economy by repealing tax provisions that inappropriately distort investment decisions and using the revenue raised to lower corporate statutory tax rates. In addition, corporate tax reform should make the tax code simpler, thereby improving compliance, and put in place tax rules that are more certain and stable." Emily S. McMahon, Acting Assistant Secretary (Tax Policy), U.S. Treasury.

The ongoing polarization of U.S jobs is clear:

MIT study

The Lookout

Sample commentary by Shared Economic Growth:

Harvard Magazine

Tax Notes magazine

House Ways and Means Committee transfer pricing hearing and tax reform hearing

Yahoo news

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