What is the best way to fix the economy?

A recession is essentially a shortage of money. We are exporting jobs and profit from those jobs. This is one of the main reasons why the money supply is shrinking.

I have experience in international business. I know EXACTLY what is causing us to export jobs -- and I know what to do about it.

I worked in the headquarters of a multinational corporation. Upper management felt as if there were two costs that they could control -- wages and taxes. Both were tightly linked to the various countries we operated in. Show me a country with high wages and I'll show you a country with high taxes. It's that simple.

We had an office in Hong Kong. Corporate taxes in Hong Kong were 15% at the time -- much lower than the US or Europe. Our customers were mostly US and European.

The name of the game was intra-company billing. The Hong Kong division would internally "bill" the US and European divisions for doing work that was ultimately delivered to US and European clients. Sometimes the Hong Kong division would "outsource" this work to our Chinese division.

The goal of the game was to show as much profit in low-tax countries as we could, while our operations in high-tax countries were break-even at best. Every task that could be sent offshore WAS sent offshore, so that the profit resulting from that activity could be recorded in a low-tax country. The US and European operations were mostly sales and administration -- the jobs that could not be easily exported. Every year, our accountants told the IRS a tale of woe, while the company made millions overseas.

As time went by, the offshore facilities got bigger and bigger. We had no easy way to repatriate the cash from Asia without paying US taxes, so we let it accumulate in the countries where profits were "earned". Of course, when we needed cash to expand our overseas facilities, we had cash sitting in those countries already -- how convenient!

International corporations are not [usually] run by stupid people. Tax management results in the flight of capital. I saw the money, I saw where it went, and I can say with absolute confidence that US taxes will NEVER EVER be collected on those profits.

What should government do? Cut corporate income taxes to 0%. International corporations like GE have already figured out how to cut their tax liability to zero. To think the IRS can tax corporations is pure fantasy. Allow corporations to declare as much profit as they want (tax-free) so long as they pay it out as dividends. Tax the recipients (most of whom will be US based) at whatever rate makes sense. It's a lot easier for corporations to dodge taxes than it is for individual investors.

There are TRILLIONS of US dollars sitting offshore, in a financial purgatory that exists only because of our idiotic tax policies. We have only ourselves to blame. With a corporate tax rate of 0%, that money would come back home. The intra-company billing game would be REVERSED, and capital would accumulate in the US instead of offshore. With a US corporate tax rate of 0%, corporations would stop hoarding money offshore. In fact, they would show as much profit as they could in the US, bleeding their foreign subsidiaries dry in the process. The cash would end up in the hands of the investors that own the corporations in the first place! The money would be either spent or reinvested -- a win for the economy either way.

Forget Obama's "Warren Buffett rule". Every American reading this post is paying more federal tax than GE. The only choice is whether or not we allow tax policies to export jobs and cash instead of collecting revenue for the government.

It might not be "fair" to offer such a bonanza to corporations and investors. However, my plan runs primarily at the expense of offshore operations that circumvent the current tax structure. This is found money. It's not coming back any other way.

We don't need deficit spending to stimulate the economy, we need to take back the money that we have been exporting. The amount of money available for repatriation is beyond the wildest dreams of Washington's biggest spenders.