Posted on 12/21/2005 11:28:48 AM PST by groanup
Edited on 12/21/2005 12:00:48 PM PST by Admin Moderator. [history]
December 21, 2005
Fair Tax Solution for American Manufacturing and American Jobs
Merrill Bender
One of General Motors key parts suppliers, Delphi Corporation, filed for bankruptcy on October 8th and has sought wage concessions from its Unions to lower the average wage from $27/hour to as low as $12/hour. Wage pressure comes primarily from the low almost slave like wages paid in foreign countries to their workers and those foreign countries being able to export their cheap goods to the U.S. This high cost of wage argument has been a consistent problem and call by American Manufacturers that are trying to compete in a global marketplace as well as compete within the American Marketplace.
CNN's Lou Dobbs almost competes with Bill O'Reilly in his level of indignation and outrage on how American Manufacturing Jobs are leaving American Shores. However, they and many other Americans misunderstand and dismiss the serious grassroots support and supporting research for a solution that will truly help the "little guy" and restore good paying American Jobs. (The Fair Tax HR 25/ S25. www.fairtax.org)
The Solution For Delphi and for American Manufacturing in General is not trade barriers or tariffs but is fair trade. But how do you get Fair Trade when competing countries do not pay a Fair Wage? American Workers do not need to compete globally by lowering their wages to such Draconian levels.
American Manufacturing goes where it costs them the least to do business. Even with the higher costs of fuel to ship those goods from overseas the low wage is what helps some countries compete and it is the Lower business taxes that helps other countries compete. In Europe, Ireland has had the strongest economic growth and best employment numbers because they have the lowest taxes on business(Corporate tax 12%)
The Solution for America is Lower Taxes on American Manufacturing not Lower Wages on American Workers. The incentive for business to stay in America and not outsource is lower taxes on Corporate earnings with less tax compliance costs. Ultimately, It is the consumer that pays the business tax in the end on all products and services. Business taxes like business costs for manufacturing are just worked into the price. The Consumer pays the tax not the business.
What if the United States had the lowest Corporate tax in the World. Would not business flock here to manufacture? What if instead of the Bahamas being the Offshore tax haven for business or Corporate headquarters that for Tax purposes those businesses made New York, or California, or Chicago their Corporate home and their preferred place to manufacture from and ship around the World?
Excerpt. Continuing at: Opinion Editorials.com
Oops. This is an excerpt.
ping
The fair tax would allow manufacturers to cut tens of billions of dollars off taxes and the overhead of complying with a 50,000 page tax code.
What if the United States had the lowest Corporate tax in the World. Would not business flock here to manufacture?
Kill the taxes on manufacuring altogether and go to a retail sales tax, we become the tax haven of the world.
Chairman of the House Ways and Means Committee,
Rep. Bill Archer (R-TX)
August 12, 1996
- "A recent survey was done, in Europe and Japan, of the major corporations and I was astounded at the results. They were asked, 'If the US abolished its income tax and went to a sales tax, would that have any impact on your decisions?' Eighty percent of the corporations said they would build their factories in the United States of America. Twenty percent said they would move their international headquarters to the United States of America."
A Taxreform bump for you all.
If anyone would like to be added to this ping list let me know.
John Linder in the House(HR25) & Saxby Chambliss Senate(S25) offer a comprehensive bill to kill all income and SS/Medicare payroll taxes outright and replace them with with a national retail sales tax administered by the states.
H.R.25,S.25
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.Refer for additional information:
I thought gubmint's job was to impede business- except for the ones that pay their extortion dues.(sarcasm,sortof)
`SEC. 905. WITHHOLDING OF TAX ON NONRESIDENT ALIENS AND FOREIGN CORPORATIONS.
`(a) In General- All persons, in whatever capacity acting (including lessees or mortgagors or real or personal property, fiduciaries, employers, and all officers and employees of the United States) having control, receipt, custody, disposal, or payment of any income to the extent such income constitutes gross income from sources within the United States of any nonresident alien individual, foreign partnership, or foreign corporation shall deduct and withhold from that income a tax equal to 23 percent thereof.
`(b) Exception- No tax shall be required to be deducted from interest on portfolio debt investments.
`(c) Treaty Countries- In the case of payments to nonresident alien individuals, foreign partnerships, or foreign corporations that have a residence in (or the nationality of a country) that has entered into a tax treaty with the United States, then the rate of withholding tax prescribed by the treaty shall govern.'.
The way to compete in the 21st Century is not to cut our wages in half the way to compete in the world is to provide the incentive for business to do business inside the US. The Fair Tax Legislative package does so much in so many ways. Our American Economy will boom when American manufacturing is growing in the US. The Fair Tax is the best vehicle to do that.
Rep. Bill Archer, Chairman, House Ways and Means Committee:
"A recent survey was done, in Europe and Japan, of the major corporations and I was astounded at the results. They were asked, 'If the US abolished its income tax and went to a sales tax, would that have any impact on your decisions?' Eighty percent of the corporations said they would build their factories in the United States of America. Twenty percent said they would move their international headquarters to the United States of America."
The large influx of new jobs, among other things, means the current trade imbalance (deficit) will balance out and likely tip to USA advantage. In other words, a greater percentage of products and services will be made in USA and exported, thereby foreign governments will see their tax receipts decrease.
In order for foreign governments to retain their present level of tax receipts they'll have to replace their outdated, economy-draining tax systems with a consumption based sales tax.
The USA can lead the way to honest economic freedom and financial privacy the world over -- beginning with it's own citizens.
With outsourcing by American based companies, many of which are also building new manufacturing plants in foreign countries it would only deepen the trade deficit if a major first world country beats USA to the punch by implementing a consumption based sales tax first. That country would get the new jobs and USAs trade imbalance would widen.
It's not a matter of if consumption-based sales tax will gain dominance the world over, but when, and which country will lead the charge and which countries will play catch up.
The United States must take the lead.
That's the short list. For more information see fairtax.org
If they set up their headquarters here they are no longer foreign corporations. I don't get your point.
Surely it's been pointed out to you that this section is intended as an incentive for foreign corporations to become non-foreign if they wish to do busines here. If not, they can pay wat amounts to the FairTax rate on their gross income.
Sewems to me that makes it a pretty big incentive.
I think his quibble must be this:
"What if the United States had the lowest Corporate tax in the World. Would not business flock here to manufacture?"
This could be interpreted to mean the Foreign Corporation does manufacturing here without relocating its HQ or without forming a new US-based Corporation.
Your point is correct, however. A Foreign Corporation could start a new Corporate entity in the US to do its manufacturing and realize all the benefits of untaxed manufacturing. Corporations do this all the time. They also control the transfer price between divisions in different countries to take best advantage of the different tax regimes. If the US had the best tax climate, meaning compliance as well as taxes paid, then it would be a favored locale.
This is true no matter what tax scheme you favor. Removing taxes and compliance burden from businesses and taxing only individuals would make that locale a lodestone for business. More business means more employment.
The 30% price increase at the end would still be a deterrent to any savvy (foreign or domestic) manufacturer.
If they set up their headquarters here they are no longer foreign corporations. I don't get your point.Are they going to get all their investors to move to the U.S., too? Otherwise, how are they going to get a return on their investment without paying the tax?
I think you're right, the way this is worded it excludes foreign investors from equality with dometstic ones. That would also apply to foreign holders of treasury debt. Needs to be changed unless I'm reading it wrong.
A sales tax would increase the prices of goods produced and sold in the US and also of goods imported and sold in the US.
A reduction in the income tax would lower the cost of goods made in the US and would do nothing to the cost of goods made abroad.
DING DING DING. This would be really good for domestic manufacturing vs. foreign manufacturing.
What 30% price increase?
Oh my, is this where you say that taxes and tax costs don't have to be paid?.. that they don't show up in prices?
You see, the eliminated taxes and tax costs very nearly offset the nrst amount. No, we don't know exactly how much - estimates average price increases of 28.2% due to the costs of the income tax system.
And in case you're lost, the 28.2% is the exclusive rate. It's really, really easy to go back and forth between the two rates. Have you figured out how to do it yet? If so, what's 28.2% as an inclusive rate? Maybe you have it by now?
How so? His costs would still be lower. The selling price has no affect on where a product is manufactured other than the cost of manufature in relation to the price. If the 30%, as you insist on calling it, makes sales here a problem they will just export it and sell it elsewhere, putting the balance of trade in our favor. Win, win!
Yes, it needs to be changed. Taxing income is bad for business.
At least capital gains taxes would not be paid on their stock sales or would there be taxes on their dividends earned here. If they have to pay at home that would be a problem they need to work on there.
Actually, the best way is to eliminate social security, unemployment taxes and workmen's comp costs. Income taxes are only calculated on profits. These other reductions will make manufacturers more competitive by lowering costs.
Don't get me wrong, I am in favor of lowering income taxes on businesses which will give them greater returns on their investments, create jobs, etc. but adding a sales tax to make their goods more costly will do nothing to help.
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