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Just the word reform. I mean, reform is usually when taxes are cut. These will be tax changes, but whether the tax system will be better depends on how it is built, and... Well, our corporate taxes are what puts American corporations at a disadvantage. Not very. Not very. No, I can't think of any business we do where our tax rate puts us at a significantly worse position than foreign countries.
First, they are not as high as we often think. They are not that low. That's where our corporate taxes are 2%. Instead of paying 35%, many companies pay much less than... And 2% of GDP is not much by US standards, and if you compare that to 17% on healthcare, then, you know, every businessman will say that our taxes are too high.
And if they really try to make it budget neutral, I do n't think it will work. Because those for whom taxes will increase will oppose it much more actively than those for whom they will decrease. This is great for lobbyists and such. So, if they say it's going to be... They always say it's going to be tax neutral.
If it's tax neutral, it will pass . Yes, tax neutrality is one way, but other people we talked to, including Steven Mnuchin, said, "Look, we have dynamic valuation that can provide that." And as a result, we believe that we can significantly reduce taxes, and not necessarily have full cost recovery.
Well, of course, everyone was inspired by the world's success in printing money without much consequence. Everyone has the idea that you can simply lower taxes and don't need to increase revenues. This is a very dangerous thing. The fact that it worked a few times doesn't mean it will always work. Dynamic assessment ...I've never seen anyone present it and say that things will turn out worse than the numbers show.
I...and sometimes it's really not , I'm very skeptical about dynamic grading. But do you agree that there is some kind of Laffer curve, where you raise taxes to a certain point, and the law of diminishing returns applies? You raise taxes to 100%. In fact, some would have worked even then, but there are very few of them.
No, this is not an argument at all for changing my taxes, you know , except in an upward direction. Anyone who wants a tax cut hires scientists who look for dynamic valuations and assure me that the country will be better off if I pay less tax. It's very...I mean, I don't blame them. This is understandable.
And so be very, very, very careful with dynamic evaluation. If we had a simpler tax code that didn't leave so many loopholes, that didn't force big companies to hire legions of accountants to exploit those loopholes, wouldn't that be better? If only it would level the playing field so that everyone paid the same.
If you freed up the workforce that is currently busy with meaningless procedures and directed it to work in the market system, to do what the market needs, that would be a plus. This is beyond doubt. We have another issue—the stability of the tax code and the need to leave it alone. If you're constantly changing everything, saying, this change got rid of a few points, now another change will get rid of something else, then everyone has to learn something new, and uncertainty is bad.
You know, it's worth choosing a tax system and leaving it alone for a long, long time. Yet we hear from one business leader after another that this situation is uncompetitive . If you are an American manufacturer, you have quite a few obstacles. If you're a technology company, you probably hold a lot of money offshore.
Bill, do you think it would be better to reform the tax system? You were a bit more reserved on this issue. I don't think the success of the tech sector will improve with any tax changes. Technology companies are not in trouble right now, and this question only arises when there are profits, and these companies have very high profits.
So we won't become stronger in the technology sector just because stockholders get richer. Apple has a quarter of a trillion dollars, most of which they hold offshore. Would it make sense to return this money to the United States? Does it matter? I would say, yes, it matters. And I don't understand why we allow people to artificially transfer money to foreign jurisdictions to avoid paying taxes in the US.
But it's not artificial if you really earn money abroad and there are no high taxes there. Uh, why should we care if someone makes a lot of money abroad and brings it back with low taxes? I think that accumulating all this money abroad and then artificially borrowing against it is a pointless system.
So how do you fix this? Well, I think they'll get them back if they do a one-time forgiveness, and I don't think it'll hurt anyone. Tax breaks, we tried that under the Bush administration. Yes, it worked. This worked temporarily. back. Yes. But uh, if you're hosting a vacation, it encourages more investment abroad, especially in artificial locations.
To wait for the next vacation. There are some countries, very small ones, where a lot of business is done. Yes, and if the result of this is that you get a big discount every now and then, you will try to do it more often. This does not increase investment in the United States. This increases investment in places where you still have a low rate.
Maybe you'll bring them back again. I would crack down hard on all those schemes where you transfer an invention created here to Liechtenstein and collect all the royalties. This is simply manipulating the system. But assuming you actually earned the money overseas and the taxes there are low, I see no reason why we should charge a large tax when it is brought back.
Charlie, you would be a pretty harsh dictator if you were in charge, would n't you? He is definitely still a thug. I don't like that if fraud thrives anywhere in this system, it spreads like cancer. So you have to constantly monitor it. Many people simply don't want to do this work. This is a huge mistake because you are ruining your company because everyone is getting involved in fraud because that is what others are doing.
So I'm a big advocate of punishing this harshly, much harsher than the government or anyone else is doing. Hello, thank you for watching CNBC on YouTube. Subscribe to stay up to date with all the most important news of the day. You can also click on any video next to me to watch the latest content from CNBC. Thank you for watching.
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