My letter to the Budget, Revenue and Deficit Committees on corporate tax holidays

I write today to urge the Committee to strongly object to any corporate payroll tax holiday to allow repatriation unless it is offset by an immediate increase in dividend tax rates to their statutory levels. Such tax holidays have never been shown to do much for hiring - they are mostly paid out in dividends.

I can understand the rush to do this now, because dividend rates are going back to normal income levels in 2013. This is exactly why no tax holiday should take place until after 2013, so that this revenue is not lost to the Treasury.

This action would be a temporary provision to fund a temporary action because the 15% rate expires anyway, so there can be no objection that temporary stimulus is being funded by a permanent tax change.

Wealthy individuals are already spending without restraint, they do not need tax benefits to spend more and most corporations are flush with cash, so not further investment is required either. There is no downside for the economy in recouping some of these repatriated dollars through taxes.

Thank you for the opportunity to share these views on this emerging topic.