Recent Articles

Oct 16Roger Kohl

What the …

Oct 16Roger Kohl

… so let’s try a few pictures. The above chart evidences the sharp ’08/’09 decline of Corporate After Tax Profits as well as a recovery to record/near record highs.

Chart above shows wages are close to/at an all time low as a % of GDP. There are many reasons for this — principally a relatively new global economy with a less expensive labor pool overseas. China and India, the two most populous countries are the primary source of this less expensive labor. Additionally there are some very real inequities in our tax code that I touched on in this post and our need for tax reform.

I think we’ve all heard more than enough about unemployment in the U.S. so let me just say that it’s high — except for a relatively brief blip in the early 1980s higher then since you know when.

Our — I can’t worry too much about elsewhere in the moment — economic position presents some very interesting dichotomies. Please allow me to reiterateI’m not an Economist” but, and here’s the good news, I’ve had some pretty good success turning around under-performing operations, finding solutions. I have some thoughts on how to remedy. I welcome your input, your critique.

Please let me say that I don’t fault US companies for looking to maximize their bottom lines. If you owned a company (perhaps you do) would you strive for something else? Would you expect differently from me in a supporting role? Would you charge me with paying more taxes?

The Problems in a Nutshell and The FixesIn my view

Problem – Our corporate tax structure tops out at 35% that puts us at the top of the worldwide curve along with Japan. However and it’s a BIG HOWEVER through a myriad of typically US only tax breaks, accounting maneuvers that shift profits to low-tax countries, investing profits offshore, loopholes, lobbyists and other complexities that frequently only the largest companies benefit — hangs Main Street out to dry — has turned the US into a “haven for US based multinational tax avoidance“. See more here.

Solution – Our Corporate Tax Code that rewards companies doing business / shipping jobs overseas MUST BE COMPLETELY REFORMED. We cannot continue to be a tax avoidance haven.  Our existing code PROMOTES THE PROBLEM.  Jobs shipped overseas must be brought back home. The only way to correct, to motivate companies to do this is to tax overseas labor and eliminate the economics of cheaper overseas labor. I’m not any fan of government involvement in commerce – there is NO other solution in my view. AND eliminate the loopholes that enable companies to shift revenues and profits elsewhere. GE’s 2010 profit was $14.2B their US Corporate Tax … $0.00! Jeffery Immelt, GE’s Chairman, has been appointed to Head President Obama’s “Jobs Council” that’s tasked with creating jobs.   Are you kidding me? $14.2B profit, $0.00 Tax, a wolf guarding the hen house? WHAT is wrong with this picture? The short answer …. “EVERYTHING!”

A few years back I met then Senator Byron L. Dorgan from North Dakota (who just happens to have shared the same side of the aisle as our President) … he’s sharp as a tack, his book “Take This Job And Ship It ~ How Corporate Greed And Brain Dead Politics Are Selling Out America” sheds some great insight from inside the Washington juggernaut – I encourage you to read it.

We must scrap our tax code and replace with a structure that puts us in the middle of the pack worldwide!

The Bigger Problem – Our politicians – it’s not partisan – are Bought!

Solution – Fire every politician who doesn’t embrace this posture. “Money and politics is the root of all political evil. It is corruption at it’s worst. And until we step up and kick that out of the park it’s gonna be the same system all over.”  Only the President and Congress can do that! Dylan Ratigan & Jimmy Williams nailed it! Vote wisely.

Does that make sense? I welcome your comments.

B2B CFO®

Free Discovery AnalysisTM

Fill out the form to receive your
Free Discovery AnalysisTM (a $1600 value)