The key plank of kavipsian economics is to raise the top marginal tax rate. Ironically this does not raise taxes; it forces companies, businesses, wealthy people, and multinational corporations, to invest their money into real capital, in order not to pay those higher taxes.

When the top marginal tax rate was raised during WWII, we had a booming economy. While the top marginal tax rates were astronomical during the 50’s, and 60’s, we had a booming economy. When the top marginal tax rates were raised by Bill Clinton, we had a booming economy stretching across the entire nineties (which coupled with solid Democratic leadership), gave our government a budget surplus, raised the income levels for every quintile of the American public, and created a booming economy.

As soon as those rates are dropped (ironically to stimulate the economy), the economy stagnates, falters, sputters, and fails….

Recently Obama proposed that the US corporate tax rate, now standing at 30 percent, be deploded by 2/3rds, to around 20%…

Unfortunately this has put the inner sanctum of Dupont on edge. You see, in their wisdom they have invested their profits into working capital, and actually pay an average corporate tax rate of around 20%, … because of it…

If the corporate tax rate plummets, their competitors will now have the same rate, with much more liquidity, thereby putting our local business at a disadvantage in the race to woo stockholders, because of their lower recorded profits.

Against common perception, raising the marginal tax rate (or in this case keeping it high), does not really generate that much income for governments. People find a way to invest and dodge their way around them.

But, those investments and dodges, are a huge gain for this nation.

Still don’t get it? Try this example.

Earnings: $100 million.
Corporate tax rate: 30 %
Gross tax assessment: $30 million

Currently under Democratic leadership, there is a deduction of costs of building a wind farm supplying a major metropolitan area. Assume one can deduct 30% off the amount invested. Investing the amount of taxes to be paid, $30 million, yields an additional write off of another $10 million dollars, dropping the total due at tax time, … to $20 million dollars or 20% of the companies earnings.

Sadly the federal government lost $10 million dollars of revenue. But, … a $30 million dollar investment was made in…… say Delaware. Some of that went to local wages, which circulates throughout the economy creating additional tax revenue to local, state, and federal governments. Other of that money is used to pay for the raw material, or parts, and the labor that assembles them, as well as the transportation that brings them offshore and sunk into the sand off Rehoboth Beach.

Over the past four years, FPL has paid just $88 million in taxes on earnings of nearly $7 billion. FPL spokeswoman Jackie Anderson says the company is merely taking advantage of incentives to develop renewable resources.

If every company has to build something to lower their tax rate, our nation booms back to financial stability real fast….

Raising the tax rate ( or keeping the tax rate high) benefits everyone in the economy, provided they can write off their taxes by investing in real capital projects.

What happens when you lower tax rates, giving corporations and the wealthy large amounts of cash? What do corporations do with cash?

They simply hoard them.

Even the Wall Street Journal says so.

The Federal Reserve reported Thursday that nonfinancial companies had socked away $1.84 trillion in cash and other liquid assets as of the end of March, up 26% from a year earlier and the largest-ever increase in records going back to 1952. Cash made up about 7% of all company assets, including factories and financial investments, the highest level since 1963″.

At $50,000 a job, $1.84 trillion yields 36,800,000 new jobs. Currently 13.9 million are unemployed…..

Duh, the reason they are unemployed is because tax rates aren’t high enough…….

It doesn’t take a genus to figure it out. Anyone who knows American history, who knows when boom times occurred and when busts were felt, can figure it out themselves from looking at this.