Monthly Archives: May 2014

A Proposed Tax Law Change To Encourage Our International Corporations To Bring Home Cash Held Overseas To Invest In Transporatation Infrastructure Projects

Our transportation infrastructure is a national disgrace. We are the richest country in the world and yet we fail to upgrade, or even maintain, the vital paths of commerce. The main reason is that our states and cities, which are primarily responsible for infrastructure projects, are saddled with ever-growing welfare and employment obligations and excessive debt. We must find a way to supplement transportation infrastructure funding.

President Obama, as he has every time an important election nears, is attempting to promote a plan for HUD funding of infrastructure spending. Why should Congress approve the president’s request for funding? A large portion of previously approved infrastructure funding has not been used by the Obama administration for shovel ready projects, but to promote Democrat candidates and to reward friends. Republican Congressmen don’t trust or like President Obama who disregards Congress and abuses Republicans at every opportunity. They are unlikely to approve the funding he seeks.

This writer in his book entitled “Perpetuating American Greatness After The Fiscal Cliff”, published in March 2013, has proposed changes in the corporate income tax laws to encourage the creation of “Jump Start America Bonds”. Such bonds would be sold offshore by states and their transportation agencies to our international corporations to finance transportation infrastructure construction projects. Jump Start America Bonds would have properties to make them a win, win, win for the investing corporations, the states and the federal government. The corporations would receive a fair return and be protected against loss of principal resulting from default or interest rate risk. They would also be able to repatriate the funds over a term of years at favorable tax rates. The states would get transportation infrastructure construction funding on reasonable terms. The federal government would collect outstanding taxes on overseas profits at reduced rates and would benefit from dynamic economic growth leading to middle class job creation and increased income tax revenues. See my previous article on this blog entitled “Jump Start America Bonds Represent the Perfect Economic Stimulus”.

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Short Selling Does Not Promote Pricing Efficiency

Only fools, who do not understand the interplay of short selling with  chart theory, stop-loss orders, margin calls, and panic selling in market downturns, think that short selling is a price discovery mechanism that leads to pricing efficiencies. In fact, it generally exaggerates price swings. Short selling is often used as a manipulative device and it should be banned or carefully regulated. The up-tick rule should be reinstated immediately. In addition, all short selling in a security should be banned when its price has declined substantially from its 52 week high.

You should read the short chapter entitled “Short Selling and Stock Market Manipulation” in my book entitled “Perpetuating American Greatness After The Fiscal Cliff”. My earlier book entitled “Homeland Security And Economic Prosperity” written after 9/11 and the bursting of the .com bubble, but while the up-tick rule was still in effect, proposed strengthening the up-tick rule to prevent bear market raids by short sellers. Subsequently, the SEC ignored the bear raids in 2007 and 2008 and ignorantly eliminated the up-tick rule. My original paper on the subject was written while I was a third year law school student in 1963. Since then SEC regulation of bear raids has gotten worse, not better.