For many United States-based companies, it is economically attractive to outsource the manufacturing of electronics, textiles, appliances, musical instruments, machinery and other valuable goods to countries that have much lower wages than the United States. For this reason, China, Taiwan, Mexico, India and other nations have experienced a manufacturing boom over the last forty years. As these countries have prospered, the inner cities and rural areas of the United States have suffered from neglect. These neighborhoods suffer from high crime, poor infrastructure, a lack of jobs, drug-addiction-related problems, and basically no building of generational wealth. In this article, I will propose a radical change to the United States tax system to address these problems.
Tying the U.S. Corporate Tax Rate to the U.S. Unemployment Rate
The system that I propose would be very simple. It would be a multi-tiered tax system where corporate taxes rates are a function of the U.S. unemployment rate. This would give U.S.-based companies an incentive to hire U.S.-based people. The system would also incentivize U.S. corporations to invest in the training and development of their employees: a better trained and developed employee is less likely to want to leave the company.
How would the “tying taxes to unemployment” system work?
The system would have one primary goal: keep the U.S. unemployment rate below 2.5%. If this goal were achieved, U.S. corporations would be rewarded with extremely low tax rates. The unemployment rate, and the corresponding tax rate would be re-calculated on an annual basis. Table 1 below shows how the system would work.
The system proposed above would give U.S. corporations motivation to hire people in poor neighborhoods, even if they lacked certain skills. It would give employers a logical incentive to hire people without skills, and to train them on how to do a job. It would also encourage U.S. corporations to work together in a unified fashion to address the problem of unemployment in the United States. This system would encourage companies to put more emphasis on the health and well-being of their employees because a healthy and happy employee is less likely to quit and become part of the unemployed U.S. population.