It was a few days before the Christmas of 2008. I was standing in the checkout line at a Wal-Mart, waiting to purchase the Tonka trucks and Buzz Lightyear action figures I had selected for my grandsons. As I looked around the store, I had to chuckle to myself. Somehow, that Wal-Mart reminded me of Sam Walton himself.
My father’s generation left Ann and me and our children an America of unlimited possibility, a land where individuals starting with little other than an idea –Sam Walton, Walt Disney, Bill Gates and Steve Jobs — could build vast engines of employment, prosperity and wealth, not only for themselves but for millions of their countrymen. Each generation hopes to leave a better future to those who follow. It isn’t so much the presents under the tree that matter, but our children’s freedom to achieve their potential in a land of opportunity.
— from the Introduction to No Apology – Believe in America by Mitt Romney
Evaluating those words with Mitt Romney’s speech to the Detroit Economic Club that featured his plan …
I will make an across-the-board, 20% reduction in marginal individual income tax rates.
I will make our business taxation globally competitive.
I will reduce the corporate tax rate to 25%.
I will abolish the death tax.
I will shrink the size of the federal workforce by 10% and link the pay and benefits of federal employees to those of their peers in the private sector.
We’ll repeal the union giveaway called the Davis-Bacon Act to save taxpayers over $10 billion per year.
Romney called for ending the repatriation tax, under which the federal government taxes U.S. corporations’ overseas profits if the cash is brought home “It is estimated that there is a trillion-dollar offshore that could come back here and create American jobs.”
Interestingly, Warren Buffett said it’s “baloney” that corporate America’s tax rates are too high and says companies should not be allowed to repatriate profits tax-free as it will just encourage more investment to flow overseas. “I find the argument that we need lower taxes to create more jobs mystifying, because we’ve had the lowest taxes in this decade and about the worst job creation ever.”
In fact, most American-based multinational corporations are not heavily taxed while many smaller corporations zero out their profits with deductible shareholder “salaries” and other often easily manipulated expenses … consider the “family farm” in which capital equipment (tractors) are purchased based on accrued earnings (not need) while personal expenses of the ‘family farmers’ whose home, car, health insurance and everything else are “owned” by the farm corporation.
The tax repatriation program has been tried before when the “American Job Creation Act of 2004″ passed with a very low tax rate for repatriated funds resulting in very little job creation.
Consider, a study by the Institute of Policy Studies addresses what it calls the “dangerous myth” that “corporate tax cuts create jobs” and the “disastrous results” of the 2004 tax holiday. It reminds us that a government report found that 12 of the top repatriators brought home $100 billion (a third of the total repatriated under the earlier provision) and yet laid off 67,000 workers in the two years after the windfall. Further, the 2004 holiday allowed 843 companies to use $312 billion in repatriated funds while avoiding $92 billion in taxes. The worse factoid of all is the one that shows that U.S. taxpayers “provided a huge subsidy to corporations that destroyed jobs“: 58 corporations that accounted for about 70% of the repatriated funds cut almost 600,000 jobs.
Mitt Romney, with his investment funds set up in the Cayman Islands, a notorious Caribbean tax haven, knows all too well who will benefit from tax repatriation … but that’s his plan … and he is offering NO APOLOGY for it.
So, there’s Mitt Romney giving a speech in Michigan … a place that was known at one time as the home of K-Mart’s headquarters (Troy MI) … but to some workers in New Ulm must wonder if Romney ideas would make a difference in their employment.
On Thursday, it was announced that the K-Mart (a competitor of Wal-Mart) was closing two stores in Minnesota — one in New Ulm and one in Monticello — effecting 40 to 80 workers in each store.
The New Ulm K-Mart history is probably one that Romney can relate to … think of Staples. Staples became the Big-Box office supply place that took out other existing businesses … for more on Staples, read this.
K-Mart established it’s presence in New Ulm in 1985 … built a new store on the north edge of town in 1990. Last decade, Target came and built a store on the south edge of town — the arrival of Target only somewhat slowed K-Mart’s growth.
But, this decade, the area expanded with road and sewer for a new strip mall and Wal-Mart (complete with a food/bakery/pharmacy/auto).
With Wal-Mart there, there is not enough demand for the market to support all these businesses.
It’s DEMAND that drives businesses … low taxes are nice, but without DEMAND, there is not profits … without profits, there are not corporate income taxes to pay.
Some workers in New Ulm will be glad to hear that Menards is coming … but that may not be good news for other existing New Ulm businesses – Puhlmann Lumber & Design or Manderfeld Lumber and Design Home Center.
Yep, NO APOLOGY … that’s business … the biggest thrive … the small dissolve. Especially in smaller communitities … it happens all the time … when the lumber yard or the pharmacy goes and the community shrinks as people migrate to find jobs … but if these jobs are overseas, then what ?
Yep, so from Grandpa Romney’s book, we learn that Mitt shops at Wal-Mart … buying toys … Tonka Trucks and Buzz Lightyear.
Hmmm… Minnesotans remember Tonka Trucks … Mound Metalcraft, the company that gave Tonka Toys to the world, was founded in 1946 in Mound, Minnesota, near Lake Minnetonka. Millions of trucks were sold by the time the company was acquired by Hasbro in 1991. Today, the steel trucks are still being manufactured (though in China, and with some plastic parts). Hasbro was one of the companies that participated in the 2004 Tax Repatriation program.
Oh, and that Buzz Lightyear toy, it probably came from Dongguan KAidi Arts and Crafts Factory in China.
Nothing against Wal-Mart … nor any company that sources it products overseas, but why should voters believe Mitt Romney that his ideas of lower taxes will produce American jobs ? Some American workers may just be shifting jobs while others are displaced … needing new careers … voters have been promised that lower taxes will trickle-down leading to prosperity … as exemplified by another observation from the NO APOLOGY :
In election after election, candidates have told us simple measures will solve our challenges, and there election alone will guarantee a bright future.
Sure sounds like Mitt Romney is forecasting his own campaign.
Mitt Romney is offering NO APOLOGY and no plan that will benefit the vast majority of our country … but if you are worried about paying a Death Tax instead of paying for your groceries, Mitt Romney has a plan for you … especially if you have cash overseas that you would like to return for bonuses via the repatriation tax … otherwise, Mitt Romney the candidate promoting NO JOBS and NO APOLOGY.