Wall Street likes the G-6 debt plan; I don’t


http://www.bloomberg.com/news/2011-07-23/obama-debt-limit-deal-with-boehner-upset-by-last-minute-gang-of-six-plan.html

And that is because it would make offshore earnings tax free for American corporations. As the code is today, corporations must lobby and wait for congress to declare a tax holiday to bring their earnings back home without paying taxes. Otherwise, they must pay taxes on their profits.

Passage of the tax-free offshore earnings law would trigger the exodus of most U.S. corporations from the U.S. mainland, similar to the gold rush to California in the mid/late 1800’s, with the consequent loss of tens of millions of American jobs. Unemployment could double up within 5 years.

Regardless of any virtues anybody may find with the G-6 plan, that point alone is a terminal defect in my opinion. We must be changing tax policy to penalize outsourcing; not the opposite.

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