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Missing Piece for Job Creation - Real Time Insight

Posted
7/30/2013 10:30:00 AM
By: Zacks.com
Referenced Stocks:IWM;QQQ;SPY

The White House announced this morning that President Obama will give a speech today in Chattanooga, Tennesse where he will call for a "grand bargain" with Republicans to create more middle-class jobs via corporate tax incentives.

The speech will be given at an Amazon.com distribution center, which is likely not an unrelated coincidence with the fact the giant  web retailer just announced it was hiring 5,000 more workers for its warehouses, which it also plans to build more of to have the goods closer to its customers.

From Bloomberg...

"As an alternative to seeking quick passage of the deficit-reduction formula that has eluded lawmakers for two years --some combination of increased tax revenue and entitlement curbs -- Obama will propose spending more on job creation efforts. The initiatives would include help for manufacturing, worker training, and infrastructure improvements."

The main thrust of the proposal will be to offer a tax break on the repatriation of roughly $2 trillion in foreign profits sitting overseas. There would be a "one-time transition fee" that will take less of a bite as long as the initial cash is used to create jobs.

Addressing the fat chunk of corporate change rotting in Europe, Asia, and the Caribbean seems like a much needed piece of policy. I wonder why the Obama administration waited so long with a call to grab this low-hanging fruit.

But will the ploy work? From ABCnews.com...

Obama long has called for a cut in corporate tax rates, but previously insisted such business tax reform be coupled with an individual tax overhaul. He's dropping that demand and says instead that he's open to the corporate tax cut that that businesses crave to create more jobs.

House Speaker John Boehner's office said Obama's proposals were hardly a compromise.

"This proposal allows President Obama to support President Obama's position on taxes and President Obama's position on spending, while leaving small businesses and American families behind," Boehner spokesman Michael Steel said.

Congressional Republicans have long insisted on tying corporate and individual tax reform so that small business owners who use the individual tax code would be offered cuts along with large corporations.


But little gets done besides finger-pointing. And in this year's State of the Union address, Obama proposed $50 billion to put Americans to work repairing roads and bridges and other construction jobs. I think it's been four years since the last such good idea.

Clearly, the two sides seem to always have trouble agreeing on any compromises that move the economy forward. And I am skeptical about the chances of a good idea getting launched because of politicking and neither side wanting the other to look good.

But let's see if we can discuss the merits and potential of the proposal without getting too political.

First, do you believe that some form of tax incentives for corporate cash to flood home is a good idea? And is tying those incentives to job creation a resonable deal?

Second, with budget deadlines looming in the fall, is this a good battle line for the Dems and GOP to have now? Or will a good idea now simply get destroyed in the same old political process?

The floor is yours.



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