Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Friday, July 01, 2011

JPMorgan: Tax Holiday Would Pack 'Bigger Punch' Than Fed Policies

Thomas Lee, chief equity strategist at JPMorgan, would really, really like a tax repatriation holiday.

Lee released a report this Monday in which it asserted that a repatriation holiday -- a one-off occasion where companies could bring overseas earnings into the U.S. at dramatically reduced taxation rates -- could carry “a bigger punch than QE.”

QE refers to quantitative easing, the Federal Reserve’s long-running program of asset purchases intended to stimulate the economy. The latest round of quantitative easing, known as QE2, came to an end on Thursday.

During QE2, the Fed spent eight months buying up $600 billion in medium-term Treasury securities. The strategy has received mixed reviews, especially as it comes to an end.

According to Lee's report, a tax repatriation holiday would do a comparable amount of good for markets and the economy in general.

Lee’s report estimated that companies could have as much as $1.4 trillion parked overseas, and that they might bring between $500 billion and $1 trillion into the U.S. if Congress passes a proposal allowing business to repatriate cash at a 5.25 percent tax rate, rather than the standard 35 percent.

“In our view, this carries greater positive implications for equities compared to QE,” Lee writes. “In other words, from a market’s perspective, this likely represents a substantial catalyst.”

However, Lee’s findings stand in marked contrast to another report issued by JPMorgan in May. That release, compiled by JPMorgan researchers, concluded that even if a tax holiday is passed, most of the money would likely be reinvested overseas. In other words, it “would not result in a flood of repatriation,” according to CNBC.

JPMorgan is far from the only major corporation to call for a repatriation holiday recently. In mid-June, advocates at a corporate conference in Washington, D.C. referred to the proposed repatriation holiday as “the next stimulus.”

JPMorgan recently agreed to a $153.6 million settlement with the Securities and Exchange Commission regarding allegations that it misled investors about a mortgage securities transaction.

Full Article
Source: Huffington  

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