Cutting Small Business Taxes Will Boost Economy

My last article, “Helping Seniors, Working Poor Will Make US Great,” was the first of a three-part series in which I tackle the challenge of restoring America to greatness.

This is part two of my solution to restore America to prosperity. It is about corporate changes. After surveying and reading the suggestions of more than 400 business owners, I came up with two changes that actually will stimulate the economy.

First is to cut the tax rates for all corporations that have profits of less than $1 million by 10 percent. This is simply an act of good faith that tells the small businessman, who has risked his life’s savings in many cases, that the government appreciates all his hard work and effort.

Many will argue this will raise the deficit. Fact is, the multiplier effect of this savings will be felt throughout economy. Small businesses will have more capital and incentive to expand and grow.

Fact is that, when Presidents Kennedy, Reagan, and G.W. Bush cut taxes, the total amount of tax revenues to the Treasury increased for the next three years.

Many people choose to ignore these facts, but ignoring them does not make them less true.

Here’s another idea: 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 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.

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 depressing consumer spending.

Let me add this before I close: The best part about writing this article is the tremendous feedback I get from readers who e-mail me with their own “tweaking” of my ideas. I believe in listening to constructive criticism and civilized debate.

So in response to readers’ suggestions and to keep it simple for our senior citizens, I want to take away the 15 percent penalty for early withdrawal of the bonds for seniors that I suggested in part one and leave the rules the same as a bank’s certificate of deposit rules.