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Obama Seeks Buffett's Counsel


Parsad
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Obama has really fudged this up. He has caved to the Republican bad ideas, and now the Left is getting blamed for them. I would prefer a conservative president implement conservative ideas. Stimulus is now a dirty word and he will get no compromise from the right, and no backing from the public.

 

Uncle Warren cant help here inmo.

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I've got a couple of good ideas, and hopefully it's what Buffett tells Obama, since he can't raise tax revenues and he can't cut the budget significantly. 

 

How about the government gives all U.S. domiciled companies with foreign subsidiaries, a one-time tax free opportunity to repatriate all their foreign capital back to the U.S., as long as they use the funds to invest here.  So all these companies like Microsoft, with huge cash hoards elsewhere, are allowed to bring that money back and invest in a weak U.S. economy with depressed asset prices.  Perhaps, even create five-year tax credits that can be applied against some of the income they earn on those investments as well. 

 

Also, the U.S. should loosen up their immigration policy to the business class for the next  five years.  If you've got $3.5M to invest and plan on employing at least 3 people, you and your immediate family get an automatic green card to the U.S. if you can pass the security background checks.  And you tailor these green cards so that the immigrants have to live in specific states that have been hit hard...thus they buy homes there, consume there, invest capital and employ people in those areas as well.  Cheers!

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Yeah Shalab, I agree with that one.  I think they should also grant some credit or total credit to professionals who have studied elsewhere, as long as certain requirements are met or they article/audit at a U.S. institution or facility.  So a doctor/engineer/etc who has studied in India, Japan, China, Australia, or Europe is given a fair shot at getting their education recognized here, and then allowed to work in areas that are difficult to fill employment or have depressed economies.  Cheers! 

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I've got a couple of good ideas, and hopefully it's what Buffett tells Obama, since he can't raise tax revenues and he can't cut the budget significantly. 

 

How about the government gives all U.S. domiciled companies with foreign subsidiaries, a one-time tax free opportunity to repatriate all their foreign capital back to the U.S., as long as they use the funds to invest here.  So all these companies like Microsoft, with huge cash hoards elsewhere, are allowed to bring that money back and invest in a weak U.S. economy with depressed asset prices.  Perhaps, even create five-year tax credits that can be applied against some of the income they earn on those investments as well. 

 

Also, the U.S. should loosen up their immigration policy to the business class for the next  five years.  If you've got $3.5M to invest and plan on employing at least 3 people, you and your immediate family get an automatic green card to the U.S. if you can pass the security background checks.  And you tailor these green cards so that the immigrants have to live in specific states that have been hit hard...thus they buy homes there, consume there, invest capital and employ people in those areas as well.  Cheers!

Regarding immigration for investors, are you aware of the E class visas?  The limit is lower (though not the same as green card).  The only reason I have come across this is that every year I get spammed by a broker/lawyer asking whether I am interested.  Funny thing is it seems even passive investments like limited partners qualify (according to those emails).

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Here is a link to, and excerpt from, a recent NYTimes piece on the 2004 tax holiday and its unintended consequences. 

 

In 2004, Congress enacted the American Jobs Creation Act, a tax holiday for companies to repatriate cash. The dividend tax was reduced to 5.25 percent from 35 percent. In exchange for this reduction, Congress required that any cash repatriated be invested in the United States. The cash could not be used for dividends or stock repurchases.

Alas, cash is fungible. A study of this tax holiday, entitled “Watch What I Do, Not What I Say: The Unintended Consequences of the Homeland Investment Act,” found that in the year following the act, repatriations increased by $230 billion from the previous year, to $299 billion.

 

Five companies alone — Pfizer, Merck, Hewlett-Packard, Johnson & Johnson and I.B.M. — repatriated $88 billion, But the repatriation did not result in increased investment. Instead, companies largely repatriated the money and used their current United States holdings to pay out dividends or engage in share repurchases. This was contrary to what Congress had intended.

 

While the cash was not used for investment, this does not mean it did not have an overall positive effect on the American economy: shareholders went on to spend this cash. The study’s authors acknowledged this, stating that “presumably these shareholders either reinvested these funds or used them for consumption, thereby having indirect effects on firm investment, employment or spending.”

 

http://dealbook.nytimes.com/2011/08/16/tax-policy-change-would-bring-cash-piles-abroad-back-home/

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I think an interesting idea is to refinance all gov't guarenteed mortgages @ 3.5% and buy-back all guaranteed "under-water" mortgages from the banks and give the banks a longer time frame to fill the capital hole left.  This would cease a good part of the litigation and provide cash to home owners.  In exchange for the prinicple foregiveness on the "under-water" loans, the gov't/Fed will get all or a large portion of the upside in the property upon sale.  This will give bones to most of the players and should get rid of the overhang in the real estate market.

 

 

Packer

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Given the way the gov't has botched up the mortgage/housing market before and after the crisis, I believe they should finally step aside and let the market rule. First and most important, lets go back to the rule of law: stop all the gov't anti-forclosure programs and let the banks foreclose. This will achieve 2 important objectives: people will finally be able to move on with their lives and get out of homes they cannot afford---they will go and rent like they should have done in the first place;  second and critically, the banks will finally be able to get their hands on these houses, package them for cents on the dollar, and sell them in bulk to vulture investors. There is plenty of money ready to pounce if only gov't will get the hell out of the way.

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