Funding Our Infrastructure

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Gabe Griess talking with UC Davis college students about college debt/ Photo by Alex Cornell du Houx
Gabe Griess talking with UC Davis college students about college debt/ Photo by Alex Cornell du Houx

By Gabe Griess

I have an idea, let’s unleash our economy with massive infrastructure expansion and replacement. Rebuilding roads, bridges, expanding commuter rail, connecting all houses and businesses to high-speed internet, growing renewable energy and investing in cutting-edge water conservation and desalination technology.

Won’t that be expensive, some will ask? Absolutely, and that’s the point. The capital injection will expand good paying jobs, stimulate the economy and put in place the infrastructure needed to grow the economy for the next 50 years. And here’s the kicker, let’s do it while simultaneously relieving tax pressure.

Crazy talk right? No.

Today, U.S. corporations have more than $2 Trillion in profits sitting on foreign shores. A recent report from Bloomberg News Review claimed that Microsoft, Google, Apple and five other tech firms now account for more than a fifth of the profits being held overseas. Ideally, companies would bring those profits home but they are facing nearly 45% tax to repatriate the funds.

I propose partnering with the federal government to allow U.S. corporations to bring those profits home and fulfill their tax obligation by funding 7-year infrastructure bonds. When the bond matures the city, state, or agency will repay the company the full principle and their State and Federal tax obligation will be fulfilled.

This is a win-win!

Shouldn’t we hold these corporations accountable? Make them pay their fair share. California and America need this type of massive capital infusion today and there is no excess money in anyone’s budget.

So let’s have a public-private partnership that creates a solution to our infrastructure challenges, improves quality of life, creates great jobs and power our economy. With an expanding job market, booming construction and foundation of the next generation of business expansion, there will be relief from current tax burden.

Gabe Griess is a retired Lt. Col and a candidate for the State Senate District 3

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Disclaimer: the views expressed by guest writers are strictly those of the author and may not reflect the views of the Vanguard, its editor, or its editorial board.

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6 thoughts on “Funding Our Infrastructure”

  1. Napoleon Pig IV

    Shouldn’t we hold these corporations accountable?

    Despite some interesting ideas, you lost my interest with this rhetorical question. Have you taken a look at the tax code lately? Have you taken a look at the reliability of government at all levels in keeping promises and telling the truth? Shouldn’t you be asking what the hell the politicians were up to when they wrote and voted for a tax code so complex that it takes an army of paid accountants and lawyers to comply with the law, or is that the whole point – another version of “full employment” at the expense of the people who actually work to create value?

    Providing an incentive to corporations sitting on large reserves of cash in off-shore locations makes sense, but it won’t work if you try to blame them for simply complying with a bunch ridiculous laws and if you also fail to address the ineptness and corruption at the heart of the political process.

  2. Tia Will

    Napoleon Pig IV

    Providing an incentive to corporations sitting on large reserves of cash in off-shore locations makes sense, but it won’t work if you try to blame them for simply complying with a bunch ridiculous laws and if you also fail to address the ineptness and corruption at the heart of the political process.”

    I see this somewhat differently. While I agree that the tax code is ridiculously and needlessly complex and I agree that there is some ineptness and corruption in the political process, as is true of virtually every large organization at some point, we have one major difference in our thinking.

    I do not believe that the owners, major investors, and top managers of corporations with vast overseas holdings are “simply complying” with a bunch of ridiculous laws. There is no one forcing them to take advantage of these laws just as there was no one forcing Donald Trump to put his own clothing manufacturing plants overseas. Was it legal to do so ?  Sure. Was it in the interests of his American employees that he now acts as though he cares so much about ? Absolutely not. Within the public sector this also applies. Was it encouraged for high level UC administrators to sit on outside boards ? Absolutely. Did anyone force Chancellor Katehi or any of the others to accept hundreds of thousands of dollars for doing so ? My guess is, no.  For me this is far more than compliance, it is a matter of using the existing system in very sophisticated ways not available to others to enrich themselves. Illegal ?  No. Unethical ?  I would say so.

    I am a proponent of small government with one caveat. That is the acknowledgement that if everyone in both the public and private sector always acted in an ethical manner, no government at all would be necessary. I doubt that either of us believes that we have arrived at this enlightened state.

     

    1. Napoleon Pig IV

      Tia,

      As usual, you make some important points in a persuasive and logical manner. I certainly agree with you about the importance of ethics in business and also in the public sector. I’m also a strong proponent of compassion in both. However, government by its nature is often coercive, and the U.S. tax empire is particularly so. That particular politician-created empire was ordained with the right to treat people as guilty until proven innocent and to seize assets on no more than a whim.

      As a citizen, I have some minimal ability to influence the extent to which our government is corrupt and ineffective – and I consider that corruption and ineptness to be much greater threats to our civilization than the acts or non-acts of various corporations. Along with a corrupt and deliberately complex tax system, there is now a clamor to expand the right of the government to engage in slavery (adding women to the draft), and the police continue to line the pockets of government at multiple levels via civil forfeiture and selective enforcement.

      No, I don’t trust large corporations – especially at the interface between their lobbyists and politicians seeking election. Except for banks and defense contractors (among the corporations most likely to be enabled by corrupt politicians) as a consumer or as a shareholder, I may be able to influence the behavior of corporations – and should when they act unethically. However, except for their advertising, they are not out seeking my vote like Mr. Griess is. I don’t know whether Mr. Griess is ethical or not, but for him to try to pass the buck in the first essay I’ve ever read by him does not give me great confidence in his insight or intentions.

  3. Frankly

    This is an idea that actually has bipartisan support.  The problem though is that it is not a permanent tax revenue stream.  Those funds have built up offshore over years.  Once they are repatriated they will be spent and gone.  Assuming we make permanent changes to our tax code for future and ongoing repatriation, there will be a trickle of inflows.

    However, by this time we would have set a new normal for the economy that demands this government spending is immortalized.

    The better idea is to allow these companies to repatriate this money and invest it domestic business growth.   This then becomes systemic and sustainable… helping to grow the economy so that more people work and pay taxes and more tax revenue flows into government coffers.

    And while we are at it, we need regulatory change that provides incentives for companies to invest in R&D and expansion, instead of seeking short-term profit benchmarks.

    This is a great letter by the CEO of the world’s largest investor.  It tackles this issues head on.  http://www.businessinsider.com/blackrock-ceo-larry-fink-letter-to-sp-500-ceos-2016-2

  4. Tia Will

    Frankly

    The better idea is to allow these companies to repatriate this money and invest it domestic business growth.”

    And if we merely “allow these companies to repatriate this money” what guarantees will there be that they will invest it in domestic business growth ?  It seems apparent to me that those who are holding funds off shore are not using these funds for altruistic purposes. What makes you think that they will see fit to invest domestically now ? Or are you suggesting that we “incentivize them” ( not sure how this would differ from bribing them with public funds) to bring their dollars home ?

    1. Frankly

      It is simple… if the repatriated funds are booked as revenue with an offsetting liability to an accrual to spend on future R&D and expansion, then it should be taxed at a much lower rate than if the repatriated funds are simply credited as cash and the resulting increase in profit is paid out to employees and stockholders.

      A Certified Development Company (“CDC”) participates in an SBA program that requires a borrower  commitment of 1 job for every $65,000 in loan amount that the SBA approves for that CDC.  It is cumulative.  For example, if the total portfolio of loans for a given CDC exceeds the benchmark, then that CDC can lend to borrowers that fall below the benchmark.  However, if the CDC is below the benchmark then all new loans must meet the requirement.

      The government could do something similar in setting a new-job creation benchmark per dollar of repatriated funds.  With a claw-back penalty if those jobs fail to materialize.

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