Tags: Curb | deficit | corporate | tax

Loews Strategist: Curb Deficit and Corporate Tax Problem at Same Time

By    |   Sunday, 19 May 2013 08:09 PM

Loews Chief Investment Strategist Joe Rosenberg has an idea to combat both the budget deficit and corporations' need to keep cash overseas to avoid the repatriation tax.

Multinational companies, such as Apple and Johnson & Johnson, are big vendors to the federal government, he notes in a Wall Street Journal opinion piece.

"Instead of the deficit-ridden government borrowing money to buy their products, let the companies offer the government long-term, no-interest financing in lieu of cash," Rosenberg writes.

Forbes Columnist: ‘Who the Hell Cleared This?’

"In return for this no-interest loan, the companies — which would be required to source the government-purchased products in the U.S. — would be allowed to repatriate 75 cents of every dollar they lend without incurring income tax."

That repatriated cash would help the economy by flowing to U.S. workers and suppliers, Rosenberg says.

"Even though these companies would earn nothing on the loans, the cash they brought back to this country would be used productively here, triggering U.S. income taxes," he writes. "Uncle Sam would have years and years to repay the loans."

But perhaps Rosenberg's idea won't be necessary for now. The Congressional Budget Office Tuesday lowered its estimate for the budget deficit, projecting it will fall to $642 billion in the fiscal year ending Sept. 30 from $1.1 trillion last year.

“It takes a little heat off, and undercuts the sense of fiscal panic that prevailed one or two years ago,” Joel Prakken, co-founder of Macroeconomic Advisers, told The New York Times. 

“These revisions probably release some pressure to reach a longer-term deal, which is too bad, because the longer-term problem hasn’t gone away.”

Forbes Columnist:
‘Who the Hell Cleared This?’

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Loews Chief Investment Strategist Joe Rosenberg has an idea to combat both the budget deficit and corporations' need to keep cash overseas to avoid the repatriation tax.
Curb,deficit,corporate,tax
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2013-09-19
Sunday, 19 May 2013 08:09 PM
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