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All Sides of America’s Politics

Tax Cut Part Two --- Corporate Tax

by Half-Lady Lisa

30 September 2019

A story : a son promises to his father that 'he will study very hard to get good grades if father buys him a car'. The offer sounds good. As every father wants their children to study well, they quickly take whatever their children's offers are put on the table.

However, soon after the son gets a new car, he drives the car everyday and all day. He picks up his male and girl friends for rides. As time goes on in school, his school grades get worse with no focus on school. When his father asks him what happened to his promises, he begins to complain that his father controls his life too much -- or general speaking, he has a bad father!

As political ideology starts at home, the family issue learned from Part One : "Father isn't fair to all of his children equally", this Part Two is another learning -- "Children often lie to parents".

Just before the time President Obama stepped in the office of his first term, big businesses asked for government's bailed out. With their promises to Obama, they said they would spend the bailed out money to benefit workers by keeping companies opened rather than laying off workers. Paying higher wages to workers and investing more in America. Sounds great if all those promises could happen.

Soon after big businesses received the money from Obama, they spent their money on paying high salaries and bonuses to CEOs. Even worse, some businesses soon received the bailed out money they quickly moved their businesses out of the country the very next day!

Paying to feed businesses by government is easy so government should keep it for the last option. The reason that businesses can't continue opening in America is because the system in the country doesn't implement businesses. Change the system in the country can bring jobs back and government should try it first. If paying to feed businesses is often the way to solve problem, government has to pay again and agian in the future as which never solves the problem because the problem is not at the money. Moreover, more businesses line up to get the bailed out.

The case of "Children often lie to parents" has happened in the past. As all parents love their children, they never learn to solve the case but allow children continue lying to parents. Now lets move to President Trump. Businesses convince Republicans that the tax cut will pay higher salaries and benefits to workers and help business grow and be put on more investments in the country.

As now businesses receive tax cut from President Trump, the question is : "Do workers receive higher payments and benefits?" What I have seen on TV news since President Trump has given tax cut to businesses are many "strikes on job" even more than in the past as workers demand higher wages and benefits. Only Union gains more business at this time.

"Does the corporate tax cut help business grow?" From what I hear on TV news , for example, recession fear are on the rise! Some bars and restaurants have closed after being opened for over a hundred year since their great grandparents opened the businesses. Some big businesses that have been in business for long time have filed for bankruptcy!

"Are there more investments in the country from tax cut?" Recently I heard on the news that workers protests from the auto companies to move back home from Mexico. All factories that have gone out of the country are showing interest and signs of moving back? It seems hopeless, yet the ones are still operating in the country seem like they are starting to pack. Why doesn't President Trump tell those workers who are on the protest to stop protesting and believe in President Trump's tweets that the unemployment rates are dropping, the stock market is rising up and America has great economy ever? The irony is that, America should not be concerned about jobs lose. 'Go out and find a new job, there are still plenty' is what President Trump should be writing on his tweet.

What I hear everyday on the media is that the economic condition is a contradiction to what President(s) / politicians convince people therefore I am confused by who actually creates fake news.

However, I agree that America corperate tax is too high. I disagree over the ways to solve high tax. Not the Obama way to hand out free money to feed businesses through the bailed out. Not the Trump way to simply cut tax. But the America father way to tell his sons -- in order to get a car, he wants to see all of his sons show their promises first!

Republicans want the corporate tax cut by 15 percent. Democrats want businesses to pay more of their share say at 35 percent. I say -- keep both rates to prevent war between Republicans and Democrats. How does this work?

Simply as follows. If at any year a company invests on their profits in the country, such as pay higher salaries and benefits to workers, open new stores in the country, that year use 15 percent to calculate their cut. In case, a company doesn't need to invest anything else, simply save money in the country.

However, as we now live in global economy, especially in a democratic country, government should not limit freedom to invest elsewhere outside the country. If at any year a company transfer their profits to invest outside country, that year leverage 35 percent to calculate their costs.

In this way we can separate the good guys and bad guys. Good and bad guys in this case have noting involve in moral behaviors. Good guys (to the Country) choose to invest in America. This will be unfair as they choose to help America workers by paying higher costs of doing business but being punished by paying same tax rate as bad guys who choose to invest less money outside country to maximize profits. My new corporate tax proposal plan gives reward to good guys with low tax rate and give incentives to foreign investors to open branches in America.

It's unnecessary true that cheap production costs from poor countries help Americans pay less.

One day I found a simple dress, plain design in a clothing store cost $ 400 made from China while this simple dress could be produced in America less than $ 30 then retail for $ 120 still makes good profit. Another example, some products made in China cost pennies to produce. To sell $ 5, a company still earns good profits but the company put a price tag of $ 19.99. Cheap or expensive prices America customers pay are not only depended on the costs of production but there are depended on many factors such as companies' marked up prices, demand - supply and business competitions. If you live and work in America, you can definitely afford America-made products. Too-low prices cause Americans throw away things easily which waste natural resources unnecessary.

Think -- without low costs of productions from poor countries as compared to production costs in developed countries, no one would have ever thought about which price is considered cheap or expensive. Until countries like China sets a new standard of retail prices to developed countries. Americans and all developed countries are now addicted to the new standard of prices and these prices are never able to produce in America and other developed countries.

It's time for America, including other develped countries such as European countries to think about this issue seriously. Even today, America factories still keep moving out of the country. All are gone within just a short period of time like dam collapses -- 'free trade' causes crisis to developed countries more than enjoy paying for cheap products. To only produce cheap products from outside then ship to sell in the country isn't enough because Americans also need jobs. Losing jobs, plus paying high costs of living in developed countries cause people more stressful everyday. This allow radical ideas : violent protests and attacks, move into society easily.

If the 35 percent corporate tax still can't bring factories back to America, this means that factories still make more profits than paying the 35 percent tax rate. Then government has to increase to such as 50 percent. If the 50 percent still can't bring factories back home, means that the profits are still huge then corporate tax for bad guys can be increased to 65, 75 or 80 percent. The higher corporate tax on the profits transferred to investment outside country is to compensate the reduction of government's revenue on the 15 percent corperate tax cut given to good guys. Government has to play with it to see which the bad guys' tax rate is the perfect rate to give fair competitions to America-made products. This way is known as to prevent the future bald of America jobs.

As we now know the 'free trade' generation, whether right or wrong direction the free trade already happens. I'm still not sure that it's right or wrong to create trade war with other countries over the unfair trades because America is also one of the victims of war. But within the country, America should have full rights to create a new system to respond the unfair trade with the system that doesn't bite America itself a big wound.

The 'Free Trade' idea is given to the world too soon. It isn't a bad idea but the time the country signed the free trade it doesn't realize the consequence would be so hurtful to America. Simply forget the definition of trade that each country doesn't have equal markets while the term 'trade' should mean 'to exchange something to something else at equal values'. To prevent economic dam collapse, the concept should be tested in small areas first rather than going worldwide to see which problems are hidden.

America is a very attractive market. There are large numbers of populations, including potential buyers. Some countries also have large populations but as they are poor countries, there are small potential buyers. Other wealthy countries have large potential buyers but less populations. Moreover, the most important matter to implement trade is that Americans' beheavior loves spending money, comparing to Chinese who are more frugal. These are the reasons that every company around the world, including America companies see America market as a great potential buying country, but not necessary think of using America as a great producer.

As now is the internet generation, trade competitions have gone beyond the traditional way. Not only poor countries ship large volumes of their products by cargos, they also ship piece by piece through online businesses -- I call this effect the '360 degrees competition'. Think -- the demand in the country doesn't increase but supply from all over the world is increased overwhelmingly. Both stores and onlines fight each other for customers. This can cause economic collapse in the long term. Moreover, when Chinese post their products on such as Ebay and Amazon, they make easy sales because their products are so cheap but when Americans post their products on China websites, they become unaffordable (or facing high regulations by Chinese government). All online sales shipped from outside country should be paid another additional tax, besides sale tax. Only sale tax isn't enough to give a fair competition to the products made in America. Besides the sale tax, commercial website should be required to deduct an additional tax before transfering money to vendors outside country. (There are more details to discuss which will continue on the 'economic issue'.)

By comparing, America producers pay higher corperate tax (and other taxes) to America government than Chinese pay tax to China government. America producers pay higher wages and benefits to America workers than Chinese pay to their workers. And perhaps the Chinese government is less restricted as the Chinese companies pay health benefits (and other benefits) to workers while there are high regulations in America over workers' benefits. These cause America production costs many times higher than making in China. Chinese can sell thier products online for 70 percent discounts of the price of the products made in America and they still make great profits! Even so, China is still greedy by taking advancetages other countries with ways such as currency manipulation, intellectual property stealing. The additional tax on all online businesses shipped from poor countries is to adjusting values equal to the production cost in America.

In the meanwhile, as the Trump's trade war already starts and it affects some America businesses such as the Iowa soybean. To resolve this short term problem, President Trump should slow down the soybean imported products such as tofu, soy sauce, soy drinks and yellow noodle but encourage the make of soy products in America. Encourage Americans to eat more tofu made of Iowa soybean until trade war is over. Tofu made from Iowa soybean should be labeled on the packages. Restaurants that use Iowa soybean on the menu should tell their customers to know. And as tofu is a healthy, low calorie food, and easier for young children to take than green vegetables, tofu made of Iowa soybean should be one ingredient on all schools' lunch box.

Free Trade should be revised. As it gives unfair trade deal to developed countries, 'Free Trade' should be rebranded into "Trade Equality". I will further discuss this topic again in details in "Economic Issue".

This completes the end of "Tax Cut Part Two".

Part Three will be discussed about "Income Equality". Think -- you are not categorized as low income such as construction workers, truck drivers or you are a small business owner. You pay lots of taxes to government but when you need help, you are denied benefits by government all the time, especially health benefits, housing, etc. Based on income levels, government gives overwhelming benefits to a group of people while left nothing to the others. This will be discussed in Part Three. We will remove the income levels out of the system.

Also in Part Three I will include a suggestion to help pay hospital debts for everyone, regardless to income levels. This will not increase tax, not create a new government's spending bill and not bother the top one percent to pay more share but we will use the cash bills fall from sky to pay off hospital debts for everyone within short time.

Cartoon story — Trade Equality

© 2019, by ½ Lady Lisa. All Rights Reserved.