In my last blog article, I talked about how to cut taxes for small businessmen, who are the backbone of this country.
There is also talk of cutting the corporate tax rate since America has one of the highest corporate tax rates in the world today. The problem is there is no guarantee that will lead to a massive amount of jobs. I do agree that it will help, but I have an even better solution.
Make 25 percent of all dividend payments by C corporations tax deductible, provided that they use at least 60 percent of that money to hire U.S. citizens for new jobs by the end of the calendar year.
Let me explain.
Johnson & Johnson now pays almost $5 billion in dividends to its shareholders and does not receive a tax deduction for those dividend payouts.
However, Johnson & Johnson could receive up to 25 percent — that would be almost $1.25 billion — in tax credits if it spent at least 60 percent, or $750 million, hiring U.S employees in new jobs.
See, if you don’t put the restriction of “new” jobs, then these companies will just give raises to present employees, and that doesn’t tackle our unemployment problem.
This would help stockholders, as the company would be more productive. It also would help many seniors and those living on their dividends by providing more incentive for companies to pay higher dividends.
It would help businesses through increased sales.
Also, think of the millions of discouraged or unemployed Americans who would be getting jobs and paying taxes. It would help state and local governments that have been burdened with unemployment payments.
And, it would dissipate the overall fear that has been pervasive in the entire economy and that is depressing consumer spending.
Also, the wealth effect would cause a massive spike in these blue chip stocks and encourage Americans to be buying them, instead of gambling on high beta names many of which are selling at a price much higher than their true worth.
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