Obamanomics

There is plenty of evidence indicative of President Obama's socialist disposition. All one has to do at look at his policy preferences. One such policy is his plan to "encourage" American companies to repatriate their foreign profits.

Memo to Bloomberg editors: "encouragement" is certainly a creative way to phrase it. The repatriation the President wants is not voluntary. It's mandatory.

It's also confiscatory, in the true, Marxist sense of the word. The repatriation plan betrays the core belief of committed socialists. It isn't really your money. It's the government's money, that in their munificence, have deigned to let you keep.

These profits represent returns on investment in foreign countries. As capital, it should be reinvested where it most maximizes future profits. Maybe the corporation will decide that it is best to leave it in the jurisdiction in which it originated, and invest it there. Obama's plan removes that freedom of choice from the company, imposing a one-time 14 percent tax on current profits outside the U.S.

To help sell this confiscation, the President claims the revenues will be used for infrastructure projects.

Bloomberg's article estimates that General Electric is the American corporation with the largest pile of foreign profits. My bullshit detector leads me to believe that a crony capitalist like G.E. would only support this plan if they are first in line for no-bid "shovel-ready" projects.

Foreign profits of American companies should be taxed at no more than five percent, and it should be conditional on repatriation. There are those who believe that even Obama's plan is too generous. They claim it "benefits the worst tax dodgers."

Their arguments against such a "lenient" repatriation is that this money will be used for stock buy-backs, and end up "hiking the bonuses of the executive suite." That might certainly be true, and executives might get bonuses. That doesn't make me envious, though. My mind doesn't really work that way.

Stock buy-backs are a perfectly justifiable use of repatriated profits. A buy-back would probably increase the price per share. Any foreign profits "lost" by the government will be claimed eventually, in the form of taxes on capital gains and dividends.

And the money is put to more productive uses than the government would. When the equity of a company increases, it increases the amount of debt that company can assume to fund expansion. This risk-taking has positive economic multipliers. Repairing a bridge is important, but it doesn't create an economic multiplier.