A fresh take on taxes to make America's workforce stronger
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You don’t need to be a grad school professor to understand that 35 percent of zero is zero. That equation is effectively keeping an estimated $2.4 trillion in profits off American shores. Coming up with a new equation is not only an opportunity to improve the U.S. economy, but also a chance to foster a bipartisan approach towards vital policy.

Congress took a stab at enticing companies to repatriate their offshore earnings back in 2004 with a tax holiday, but the “fool me once, shame on you” approach resulted in participating companies cutting more than 20,000 jobs.

Instead of focusing the repatriation tax policy on activities that are not permitted, such as dividends, stock repurchases and executive compensation, the next administration and Congress should focus on creating tax-free activities for companies. For instance, companies should be allowed to repatriate revenue tax free for the purpose of developing and administrating job training programs.

When I graduated from college with a degree in government, I didn’t know anything about business. Yet a year later, after participating in MBNA’s management development program, I was an officer of the bank able to make loans and service customers. That’s because they formally educated and rotated me through every operating area of the bank, taught me written and verbal business communications, and introduced me to every executive of the company.

While filling an immediate workforce need for MBNA, I learned skills in that program that I have carried with me throughout my career across several industries. Similarly, the emphasis shouldn’t just be on keeping existing jobs from moving overseas, it should also be focused on educating Americans to thrive in the new economy. Providing companies with the capital for job training programs will lead to both a more efficient, sophisticated and competitive workforce.

Other tax-free activities should include research and development, investment in technological infrastructure and new product development. Allowing companies to utilize repatriated funds to conduct these activities has a double bottom line impact. New jobs will be created to conduct the activities and accelerating the rate of product deployments will increase workforce demands, resulting in new jobs. This would be a good way to leverage all of those job training programs.

Companies should also be encouraged to support entrepreneurial activity. A fantastic model that could be leveraged is Y Combinator’s seed acceleration model, where resources and advice are provided to aspiring entrepreneurs. Enabling companies to establish incubators in the U.S. for early stage companies as a tax-free activity will greatly accelerate the inception of new businesses across multiple sectors.

Rather than the government attempting to make direct investment in startups, put the funds and oversight in the hands of executives that are experienced in developing, scaling and managing business and can directly advise fledgling businesses. This model would not only create new jobs as businesses grow and spin out from the incubator, but would also expose mainstream companies to cutting edge technology, engineering practices and new market opportunities.

Finally, community investment by companies in their respective locations throughout the country should be a tax-free activity. Putting in state-of-the-art facilities, improving green space and creating community programming doesn’t just benefit the employees of the company, it benefits everyone.

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Incentivizing companies to either refurbish existing infrastructure, like turning an old abandoned concert hall into conference center, or putting up a new building with outdoor campus facilities, is a great way to take money that’s offshore and use it to revitalize the infrastructure here at home.

Incentivizing companies to expand their charitable activities by allowing direct investment and oversight in community centers, shelters and social programs will also improve the environment in the communities where these companies operate.

Instead of fighting over rates and limitations, enacting a tax-free activity approach enables both parties to take their first critical step on the road towards a non-partisan policy that benefits our whole country. Everyone constantly argues over the net impact of a change in the federal income tax rate.

Who can rationally argue that we don’t want an educated workforce, more advanced technologies, a greater selection of consumer products and better infrastructure for our communities?

Jason Hogg is senior advisor and CEO partner at Tritium Partners, a private equity and venture capital firm. He is a senior lecturer in innovation and technology at Cornell University’s Johnson School of Management. He previously served as president of American Express Serve Enterprise.


The views of Contributors are their own and are not the views of The Hill.