So often we hear that the US has a unfairly high corporate tax rate, but seldom do we hear about how if companies were to spend those profits on a laundry list of items those revenues are exempt from taxes. For example, hiring new employees. The mere fact that many companies would rather pay income tax than hire new people suggests the tax rates are too low. (Or that there is no one to hire, which is another discussion.)

How much higher do income taxes have to be before it’s more attractive to reinvest that money into building a business, rather than seeking investments into financial products? No doubt companies need money for a rainy day, and good corporate governance should account for that, but having many years of profits in the bank is unnecessary for any healthy business.

As a matter of perspective, $5.1 trillion is over 1/3 of a year’s worth of entire United States economic output (GDP). 33.8% to be exact. If that money were to be spent at a rate of even 10% per year, around $510 billion annually, just in the form of dividends, and if taxed at a 35% rate would reduce the deficit by $1.8 trillion over the next 10 years. Or if spent on building their business, it would more than double the US’s economic output growth rate and put the economy at or near record growth.

We can call this new tax policy “Use It or Lose It.”