There is no question that for a capital-intensive business like manufacturing there would be a benefit from the Cain plan. (The Cain plan does NOT eliminate deductions for cost of capital investments (depreciation) but it does eliminate deductions for labor costs.)
“I do not see a significant shift between domestic corporate costs and foreign corporate costs”
In my example of the $20 in tax, there was a shift of $5 of tax onto the goods sold by the foreign corporation.
In principle, in the aggregate under the Cain plan, ALL OF THE SALES TAX collected on goods sold by foreign manufacturers is a shift of tax onto the foreign businesses, since consumers are making decisions based on after-tax prices.
Of course there is a matrix of factors businesses consider in deciding where to manufacture. But OBVIOUSLY it helps to give them more of an economic advantage to doing so domestically under the Cain plan.
But we also have to consider the differences in pre-tax prices. To carry on your example:
The foreign TV sells for $100, or an ‘after-tax’ cost of $109. If the US TV sells for $150, the ‘after-tax’ cost just went to $163.50.
Assuming the US maker had a $25 profit (17%) in that $150 TV, that company could lower its price to $141.50 and get the same after-tax benefit as the pre-999 plan of $150. (assuming 40% of the $25 profit less the new 9% rate). The ‘after-tax’ cost of that US TV is now $154.24 —still considerably higher than the foreign TV’s after tax price of $109.
Sorry, please see handle. Some say it’s a 12-step process, but I cannot help myself at times. :-)