Op-Ed: Obama's Tax Plan Should Include a Capital Gains Holiday of Zero Taxes on New Investment to Revitalize the U.S. Economy

WASHINGTON, Sept. 13 /PRNewswire-USNewswire/ -- The following op-ed was released by Jeffrey M. Busch, a former investment banker who is the Founder and Chairman of Safe Blood International Foundation:

Many economists believe that the housing bubble collapse of 2007 and the later collapse of the financial markets will cause the U.S. Economy to have slow growth and high unemployment for a decade or more. The only way to avoid a lost decade is substantial new investment in business.  U.S. companies, banks and individuals are hoarding cash while the unemployment rate remains at a record high.  The amount of uninvested cash and cash equivalents is unprecedented in U.S. history.  There are estimates that banks alone have more than one trillion dollars sidelined as they borrow at rates near zero and convert into modestly yielding securities. American consumers have tried to do their part, but when they increase their spending there has been no follow-on by business investment.  The resulting decline of jobs causes consumers to cease spending and the spiral cycles downward.  The US Economy is in danger of a continuing malaise in the style of Japan in the 1990s.  This cycle could persist until we work off the excess of the bubble or stimulate the economy with trillions in investment.  A well structured Capital Gains Holiday could get the cash off the sidelines and into productive investment.  

This Tax Holiday would allow for a tax rate of Zero% on all NEW qualified investments during a period of 24 months and after which gains could be realized tax free.   Qualified investment would be in new business and business expansion and would exclude housing and publicly traded stock. The purpose of the Holiday is to spur on the economy with real growth and job creation, not to create new bubbles.  Real Estate has been overbuilt in the last decade and will take years to absorb.  Incentivizing investment in publicly traded stocks would encourage a new bubble and not create the intended employment increase.

A Capital Gains Holiday will encourage investment in manufacturing, research and development for new products, biotech and other countless ideas that will emerge from the entrepreneurial spirit of Americans.  Businesses, which are having unprecedented profits, and individuals are hoarding cash because there is currently too much risk and the potential for low returns.  A Tax Holiday would result in over 2 Trillion Dollars in US and foreign investment exactly where it's needed and create 15-20 million new jobs bringing unemployment below 6%.    Foreign investors avoid U.S. investment because of the tax rate.  

Though it may seem that a Capital Gains Tax Holiday would deny the Government tax revenue, this is not the case because the money being invested under this plan is currently idle.  The benefit that would be derived from putting those currently out of work back into the workforce and the consumption that new business formation produces will generate tax revenue from a variety of sources that will be absent if the economy continues to languish.  In addition, the potential for innovation and ideas that would otherwise go unexplored could create a renaissance in sectors like manufacturing, biotechnology, energy and transportation.  The opportunity for investors to realize tax-free gains is just too tempting for them to resist.  The immediate influx of cash, the jobs created and the enlivening of the economy will create a brighter future for the United States of America.  

SOURCE Safe Blood International