The economy doesn’t have to be this bad!!!

The rate of unemployment for the young is the highest it has ever been, overall unemployment is near 10% and many economists talk about a jobless recovery. The sad news is it doesn’t have to be this way. In addition, Mark and I have boys graduating from college in May, so we have a personal stake in making sure that the job market is better in a few months.

Our solution – the THOR Plan (www.thorplan.com). We believe this is still the best solution to generate job growth in our economy. We appreciate the efforts of Senator George Voinovich in trying to have the plan up for consideration in the Senate. Unfortunately, it did not go far. As States compete for businesses to relocate, so do countries. We need a lower corporate tax rate to compete on the world’s stage and create jobs in America again. As the THOR Plan outlines, this will also help the most vulnerable in our society and improve corporate governance. A win-win proposition.

Investors Business Daily published an article in August discussing this point on corporate taxes (http://www.investors.com/NewsAndAnalysis/Article.aspx?id=503108). Here are a few additional points worth considering:

• The 90’s were a great time for the US economy, the stock market and job growth. One of the main reasons was that the US had a lower tax rate than other OECD countries. Capital flowed to the US which in turn created jobs.
• Europe is slowly realizing that to compete on a global basis, they must lower taxes. The reason for Monday’s jump in global stock markets was Merkel’s win in Germany with a center right program of tax cuts and less regulation. Why? Because lower taxes will spur growth.
• US politicians should have learned long ago that raising taxes in a severe recession is the worst thing you could do for the economy. President Hoover clearly demonstrated this point when he did just that during the Great Depression. Whether taxes are raised at the corporate level or the individual level, increased taxes make us less competitive and hurt job creation. The best time for the government to raise taxes is when the economy is frothy. Why? Because raising taxes will slow down the economy. The exact opposite of what we need today.

Given the above thoughts, one of the reasons (there are many others) that we are currently overweighting the large company growth style in your portfolio is their access to economies across the globe. If the US really does experience a jobless recovery, which several economists are predicting at this time, those companies will be positioned to benefit from growth opportunities outside the United States as they continue to lower their tax rates.

Sincerely,

Your THOR Team