Don't look now, but New York's senior senator has just endorsed a key proposition of supply-side economics: That high tax rates influence behavior, and that in turn has consequences for tax revenues.
As The Post recently reported, Schumer has been talking to business leaders about a plan to lure multinational corporate profits parked in offshore accounts back to this country. His proposal: Declare a tax holiday in which the tax rate for repatriating money would be lowered from 35 percent to just 8 percent.
The idea is that if the United States could entice back the estimated $1.7 trillion in accumulated offshore earnings, it would generate $136 billion in revenues under the 8 percent rate. Others say the more realistic return would be in the range of $50 billion.
AP
Chuck Schumer
Either way, it raises the obvious question: Why not just lower the tax rates permanently so we can keep money from heading overseas in the first place?
President Obama's new nominee for commerce secretary, Hyatt Hotel heiress Penny Pritzker, might have an interesting perspective here. A major bundler for the Obama campaign, Pritzker is something of an expert on how high US tax rates send money overseas, given her family's spats with the IRS about their offshore accounts.
Whatever the reason for Schumer's move, it's a big improvement over the approach he took last year when he introduced a bill to penalize Americans who renounce their US citizenship for tax reasons. In other words, people such as Facebook co-founder Eduardo Saverin.
So two cheers for Schumer's new effort. We'll reserve the third for when he extends his bid for a tax holiday into a permanent vacation.
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