As an economist, businessman, and financial advisor, I have not only studied the subject of job creation, but have also created hundreds of jobs during the course of my career.
I recognize that every business owner knows the exact number of employees required in order to ensure their business can operate.
It’s important to understand this simple concept because no amount of cajoling, incentives, or wishful thinking will force employers to hire if they don’t need to.
It’s very clear-cut, if more employees are not needed, people will not be hired.
It would appear the politicians of both parties, from Obama to Pelosi, and from Romney to Perry, are lost in what is really happening today and just don’t understand the concept of job creation in this environment.
This week, I’ll detail the only solution for the creation of American jobs in this country today. Any candidate is welcome to adopt this strategy as their own policy, and I welcome it. (No royalty fees necessary.)
The first step is to get all corporations on a level playing field by lowering taxes.
(Yes, I know, you’ve heard that before.)
However, everyone is also saying “close the loopholes.”
The difficulty of closing loopholes is agreeing on the definition of a loophole. Who makes that decision, and how are they influenced by lobbyists? Taking a so-called loophole and doing away with it is usually not that simple.
The norm is to rewrite the loophole using different words and phrases, but to the eyes of a well paid tax attorney the rewording only serves to create an additional loophole. That’s right, one loophole replaced by another.
This results in the corporation remaining in the same situation as before, with the government receiving no additional income.
The solution is simple; lower the corporate tax rate from 35% to a flat 20% across the board, and eliminate tax loopholes.
Whether you’re GE (currently paying an outrageous 0% income tax), a doctor’s group, or the local bar, if you’re a corporation, it’s 20% of profit. (Publicly traded companies announce their earnings every quarter, so the exact amount of taxes paid would be known to all.)
Applying a flat corporate tax would take incredible fortitude by politicians because the pressure would be enormous just from those same corporations alone. However, in order to create jobs, it will require thinking outside the box and resisting all outside pressure.
In addition to creating equal opportunity for all corporations, the corporate flat tax should be implemented immediately because it eliminates the ambiguity and confusion regarding tax loopholes.In my next column, I’ll discuss the second step: Putting America back to work.
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