Today I was on the Mike McConnell show to discuss the THOR Plan. The interview went very well, especially because some of the typical questions about the Plan’s success were brought to the table. I would like to address them here.

Mike brought up the theoretical opposition by some that suggest the Plan is corporate welfare. I would suggest that it is the exact opposite of corporate welfare because it is actually improving the fundamentals of the companies that choose to adhere to the executive pay changes. That is exactly why we believe a response to acceptance of the plan would be an increase in the stock prices of the respective companies. Welfare implies a benefit with no structural changes; our Plan is most certainly not giving anything away. In general, the public would have a big interest in these results as there would be more jobs, more benefits, increased responsibility and decreased Pension funding burdens.  The Plan would also free up spending elsewhere in the economy that would stay in the country. As American dollars stay in America, our relative wealth increases and our economic fundamentals improve.

A second question asked about how we came to the conclusion of a 15% tax rate. Based on our analysis, 15% is considered to be an optimal tax rate because of its competitiveness relative to other national tax rates. Another consideration that American corporations face that some other countries do not is the impact of local taxes. When those are considered, the effective corporate rate would be around 20%, still a rate more attractive than most developed countries where the average rate is just above 26%. While other developed nations have decreased their corporate taxes, the United States has not. This is putting us at an even larger competitive disadvantage as the paradigm of global economics is shifting. We cannot afford to sit idle and hope that things will get better. We must make proactive changes to our system to compete with others. Just like Team USA Basketball made the necessary changes to the Olympic Team after realizing the World had caught up to them, so too must American companies.  

One final headwind Mike addressed was the problem of selling people, especially politicians, on the Plan. We realize it will be difficult to spread the word to the public, but because of the plan’s simplicity and far reaching benefits, we are confident the plan will increasingly make its way into more hands. What sets our Plan apart from others that have recently been conceived is that corporations are doing the heavy lifting, not the government. Governmental stimulus generally has a short-term benefit, but they do not repair the fundamentals of the system. This Plan will improve those fundamentals, and the resulting investment, both in companies and in jobs, helps public employees’ Pension Plans, tax revenues, re-investment and confidence in the system.

In economics, cycles dominate. Because of human nature, psychology causes cycles to overshoot and undershoot. The THOR Plan will break our current cycle as investor fear and cynicism dissipate, bringing much needed cash off the table and back into the system. From there, the cycle feeds on itself. Creating jobs and providing stimulus is necessary right now, but it doesn’t impact every industry and reach out to all citizens. By targeting the corporations that drive our economy, THOR’s Plan would spark a stimulus that would grow stronger over time, not disappear. Since 2000, Americans have experienced several bubbles that have grown and burst. The THOR Plan would not create a bubble but rather replace the issues that have been causing them. Governmental stimulus has just delayed them to another point in the future.