Posted on 10/27/2010 5:01:22 AM PDT by expat_panama
With campaign season comes predictable charges that Candidate X favors "tax breaks for corporations that ship US jobs overseas." It's a bogus claim.
With unemployment still stubbornly high, Americans are rightly worried about the economy. And politicians of both parties -- from President Obama on down -- have seized on US multinational companies as a convenient scapegoat.
The charge sounds logical: Under the US corporate tax code, US-based companies aren't taxed on profits that their affiliates abroad earn until those profits are returned here. Supposedly, this "tax break" gives firms an incentive to create jobs overseas rather than at home, so any candidate who doesn't want to impose higher taxes on those foreign operations is guilty of "shipping jobs overseas."
In fact, American companies have quite valid reasons beyond any tax advantage to establish overseas affiliates: That's how they reach foreign customers with US-branded goods and services.
Those affiliates allow US companies to sell services that can only be delivered where the customer lives (such as fast food and retail) or to customize their products, such as automobiles, to better reflect the taste of customers in foreign markets.
In 2008, US companies sold more than $6 trillion worth of goods and services through overseas affiliates -- three times what US companies exported from America. And, no, those affiliates aren't mainly "export platforms," set up to ship goods back to the United States: Almost 90 percent of what they produce abroad is sold abroad.
It's not about access to "cheap labor," either: More than three-quarters of outward US manufacturing investment goes to other rich, developed economies like Canada and the European Union. That's where they find the wealthy customers, skilled workers, open markets, efficient infrastructure and political stability to operate profitably.
(Excerpt) Read more at nypost.com ...
We used to make TVs in America. We used to make shoes. Now we don’t. There is some truth to the “myth”.
ok, so when a furniture manufacturer closes their American operations and sets up shop in China, it’s not to avoid taxes or to find cheap labor?
ping
This is not to say that there are no instances of communities suffering due to a company picking up stakes and moving out of the country; it happens all the time. But in the aggregate, it appears to be a non issue. Doesn't make it any easier on someone who lost a job, of course.
From the article: Indeed, US manufacturing companies invest a modest $2 billion a year in China, compared to $30 billion a year in Europe.
Still, the taxes in host countries tends to be cheaper so yes of course they are trying to avoid taxes. As for the cheap labor, the same thing happened when unionized shoe and textile factories moved out of New England into the lower taxed and right-to-work states of the sunbelt. No one wept for New England then. In general, this gripe about sending jobs overseas is very typical union propaganda.
On the other hand, we used to make gazillions of shoes. Then the Italians made gazillions of shoes. Then the Brazilians. Then the Chinese. Now the Indians.
Yet, the world's most efficient athletic shoe maker is still in America and he has an almost totally automated and roboticized operation.
Do you really think the Italians, brazilians, Chinese and Indians can ultimately compete against shoe making robots?
What we are having to deal with in manufacturing is TECHNOLOGICAL CHANGE and IMPROVEMENT. That factor eliminates more jobs than outsourcing ever did.
Wanna see a liberal disconnect? Here’s an editorual from Ann Arbor complaining that low paid ($14 per hour) manufacturing jobs aren’t an economic answer.
These idiots look down on the lowly blue collar workers but will happily blame republicans for jobs being shipped overseas.
The next step is to move the corporate headquarters out of the US. Then the US operations will gradually become a small part of the business, and eventually will be sold off as too much trouble.
As productivity increases, as more work is able to be accomplished through automated processes, we seem to be finding less need for "workers".
We may find that 25% unemployment is normal. We have plenty of "stuff", and we get by with the productive labor of much fewer people. That will fundamentally change society.
I’ll bet the Ann Arbor News had employees making $14/hour when it still appeared in print.
Hearing this, we did the same thing in our house. She amended her homework, "American people, food and buildings are made in America. A few things are made in Korea and Malaysia. Everything else is made in China."
Isn’t $14 an hour twice the minimum wage?
I don’t understand how HDTV manufacturers make any money at all, frankly. What does a simple one go for nowadays, anyway? 300 bucks?
So, if they try to tax those multinational companies for the “profits” they make “overseas” in other countries, then those companies will pull out of here completely and then the Amerikan consumer (Clueless at best) will REALLY pay through the nose.
This hopelessly Socialist government will also start charging huge protectionist tariffs like FDR tried to do. But there will be no World War to force industrial expansion. Instead, places like China, India, Pakistan, etc, will shift the economic flow into their treasuries. We will then see the greatest depression known to the Universe........At least here on this continent.
“In fact, American companies have quite valid reasons beyond any tax advantage to establish overseas affiliates: That’s how they reach foreign customers with US-branded goods and services.”
This doesn’t explain why I can’t find American made goods on the shelves at my local stores.
My issue with the 2 billion dollar “investment” is that its taxpayer money to begin with. Taxpayer money is the lifeblood of Ann Arbor so it doesn’t surprise me that they want the money. They say beggers can’t be choosers but Ann Arbor’s open hand comes with a list of demands.
Unfortunately companies only go to Washtenaw county because of “investments” like this. Next door here in Jackson county they could pay half the wage and not face as much of a threat from unions but they apparently wouldn’t get the subsidy.
Even more important they are light weight.
They're probably making a minimum of 50% of the cost as pure profit ~ and once they've paid off their initial cost of capitalization for plant, equipment and design they'll be making 90% if they can keep prices constant.
The successor technology is under development as we speak and it will be even lighter, better, longer, lower, faster, cheaper and efficient. You'll probably be able to fold it up and stuff it in a coat pocket.
Yes it will. America will be just like Zimbabwe. But it will be really nice for the handful of folks who control everything.
Until the mobs come for them, that is.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.