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tatupu70
2015 Feb 11, 12:37pm
But why do businesses care what the tax rate is? Reality said that the customers pay the taxes so it's just a pass through to them.
indigenous
2015 Feb 11, 12:49pm
It is if they can, if they can't they have to stay offshore to remain competitive.
tatupu70
2015 Feb 11, 12:52pm
It is if they can, if they can't they have to stay offshore to remain competitive.
They don't offshore jobs to save taxes. They offshore so that they can pay the employees $1/day rather than $20/hour.
MisdemeanorRebel
2015 Feb 11, 3:58pm
Here's a way for US companies to be competitive without rushing for the cheapest labor: Tariffs. The All-American, Traditional major form of taxation.
indigenous
2015 Feb 11, 4:14pm
Here's a way for US companies to be competitive without rushing for the cheapest labor: Tariffs. The All-American, Traditional major form of taxation.
You are very well read but your knowledge of economics is poor. Even Krugman says comparative advantage is imperative and tariffs kill trade.
Just one small example the tariffs on sugar keeping out foreign sugar and has created the entire corn syrup industry. You Libs don't like corn syrup, well get rid of the tariffs on sugar.
tatupu70
2015 Feb 11, 6:17pm
Oh, I see.... Employers don't pay a portion of the employee's employment taxes???
We won't even touch the part in the article relating to paying additional taxes on real estate on larger operations.... You wouldn't understand that part either!!
Here's a quick lesson for you.. The labor savings derived from moving offshore can be ~$15/hour per employee. Say 200 employees/factory and that gives you 8,000 hours/week * $15 savings = $120K/week. Yes, I made up those numbers. If you dispute them, please provide your own. The point is that the labor savings dwarf any potential tax savings.
indigenous
2015 Feb 11, 6:26pm
No, they offshore jobs to save labor cost.
They save multiple ways not just on labor costs, not to mention corporate tax. The only rational way to look at it is unit costs, IOW you look at the cost per unit instead of by the hour. Some things you have to have made in the US no matter what because the unit cost is lower because the US has the best trained people in e.g. software.:
"Tax havens like Ireland are favored by global giants like Apple, Google, HP, Facebook and Twitter. In May 2013, the Senate Permanent Subcommittee on Investigations said Apple avoided $9 billion in U.S. taxes in 2012 alone via offshore units with no tax home. Calling it the “holy grail of tax avoidance,†Sen. Levin claimed that Apple saved billions by claiming companies registered in Ireland are not tax resident anywhere. Apple’s CEO Tim Cook testified it was nothing illegal.
Everyone seems to do it. Facebook flipped more than $700 million to the Cayman Islands as part of a Double Irish tax reduction strategy. Google used the Double Irish and the Dutch Sandwich, saving billions in U.S. taxes. The Double Irish involves forming a pair of Irish companies to transform payments on intellectual property into tax-deductible royalty payments."
indigenous
2015 Feb 11, 6:33pm
Don't waste your time trying to explain total business costs to Tat... He just won't understand any of it.... He thinks hourly wages are the ONLY thing that makes up company costs.
Good Advise.
tatupu70
2015 Feb 11, 6:44pm
Don't waste your time trying to explain total business costs to Tat... He just won't understand any of it.... He thinks hourly wages are the ONLY thing that makes up company costs
What indigenous describes is not even offshoring. Not surprising that you play along though.
Strategist
2015 Feb 11, 7:03pm
Don't waste your time trying to explain total business costs to Tat... He just won't understand any of it.... He thinks hourly wages are the ONLY thing that makes up company costs
What indigenous describes is not even offshoring. Not surprising that you play along though.
Isn't anything you buy not made in America really offshoring?
Businesses trying to save money by utilizing outsourcing are only doing what we all do. We all buy from Walmart because it saves us money.
tatupu70
2015 Feb 11, 7:43pm
Isn't anything you buy not made in America really offshoring?
Businesses trying to save money by utilizing outsourcing are only doing what we all do. We all buy from Walmart because it saves us money.
Yep, and what indig describes is creating a shell company to avoid taxes. It has nothing to do with relocating actual production.
tatupu70
2015 Feb 11, 7:46pm
That's not the point, the point is that Tat thinks the only thing that matters to a company when making business decisions is the actual hourly wage or salary they pay. No other costs (hidden or otherwise) makes a difference. Since he's never run/owned a business, he'll just keep living in his fantasyland.
lol--just a tip for you CIC. Any time you think you know more about business or economics or really anything than me--stop what you're doing, go get a glass of water and splash it on your face. Hopefully that will snap you out of your delusion.
The point isn't that other costs don't make a difference--the point is that those other costs are dwarfed by the labor savings. If you'd run a large manufacturing business, you'd understand that.
Everyone knows that business eats all the cost & the consumer only pays for the small company profit. That's why everything is so cheap,even when costs increase. FMTT!
indigenous
2015 Feb 11, 8:26pm
lol--just a tip for you CIC. Any time you think you know more about business or economics or really anything than me--stop what you're doing, go get a glass of water and splash it on your face. Hopefully that will snap you out of your delusion.
The point isn't that other costs don't make a difference--the point is that those other costs are dwarfed by the labor savings. If you'd run a large manufacturing business, you'd understand that.
Oh, I see now.... The only type of businesses in the US (and the world) are manufacturing businesses... Thanks for clearing that up!
Feel free to point out all the outsourced industries where labor isn't by far the biggest cost.
tatupu70
2015 Feb 12, 5:32am
Oh, I see now.... The only type of businesses in the US (and the world) are manufacturing businesses... Thanks for clearing that up!
Are there a lot of restaurants or nail salons outsourcing that I'm not aware of?
Manufacturers consider bringing jobs back home, if states can give them a break.
Winter 2015
PHOTO BY DANIEL FOSTER
In 1985, Walmart founder Sam Walton promised that the retailer would bring jobs back to America by selling more domestically produced goods. The effort eventually fizzled when the store couldn't find enough competitively priced American items. But today, saying that it wants to spur the economy, Walmart is trying again—and it may have better luck this time, since the manufacturing environment in the United States is better than it has been in 40 years. Fully reviving America's manufacturing sector, however, may depend on state governments.
Walmart wants to capitalize on a trend known as “reshoring,” which has already returned tens of thousands of jobs to the United States. By reshoring the manufacture of several of its products, GE Appliances has created about 1,000 jobs in its Appliance Park facility in Louisville, Kentucky. Caterpillar is opening a $200 million plant in Athens, Georgia, that will employ about 1,400 factory workers making tractors formerly produced in Japan. Whirlpool has brought back production of commercial washing machines and KitchenAid hand mixers from Mexico and China to a factory in Ohio.
Several factors explain the trend. Rising wages have eliminated some of the advantages of sending jobs overseas. As China's economy has grown, average pay for industrial workers there has risen as much as threefold since 2001. At the same time, energy costs have dropped in the U.S., thanks to booming natural-gas production—a boon to firms making fertilizers, petrochemicals, and aluminum. The Industrial Energy Consumers of America, a trade group, calls reshoring “just the beginning of the manufacturing renaissance the country needs for job creation and exports.”
American firms are also discovering that they can serve customers better and improve quality control by locating some plants closer to home. And some U.S. companies have grown uneasy over operating in places like China. “China is often perceived as a lawless place where anything goes,” observes a study by the Reshoring Initiative, where “individuals are frequently not prosecuted” for violating regulations and laws, such as those governing patent and copyright.
Reshoring could produce as many as 1 million new American manufacturing jobs by 2020, estimates the Boston Consulting Group. But firms looking to bring jobs back to America can face roadblocks. Though the U.S. has lost manufacturing jobs through offshoring—the shifting of jobs overseas—for decades, some states still impose excessive taxes and regulations on industrial firms that drive up the costs of operating here. State legislators show a growing tendency to saddle industrial firms with high taxes, a politically popular, though economically destructive, way to keep taxes on residents (and voters) low. A 2011 study by the Minnesota Taxpayers Association found that 39 states hit commercial firms with higher property-tax rates than they impose on residences. Manufacturing facilities, which often need lots of space, are especially sensitive to high property taxes. According to the Tax Foundation's annual ranking of state business environments, New Jersey has the highest property-tax burden, followed by Connecticut, Vermont, Rhode Island, and New York. But even some states that score well in the Tax Foundation study take a large proportion of their local taxes from businesses. New Mexico, for instance, collected 62 percent of its property taxes from industrial and commercial firms.
Another disincentive to reshore jobs is pricey unemployment-insurance taxes, which can make employing a worker in America expensive compared with other countries. The rates that firms must pay for unemployment insurance vary widely by state, topping out at 12.27 percent in Massachusetts, followed by 10.89 percent in Pennsylvania and 9.79 in Rhode Island. Certain states also take a bigger bite out of wages with this tax. New Jersey assesses its unemployment taxes on the first $30,900 of wages, while Louisiana applies its tax only to the first $7,700 that a worker earns.
Regulations—including labor-market restrictions, licensing and permit policies, and local liability laws that make lawsuits against firms more likely—are another obstacle. A study by the Mercatus Center at George Mason University ranked California, West Virginia, New Jersey, and New York as the most heavily regulated states. The costs can be substantial. In 2009, two California State University finance professors found that regulations cost companies operating in California, on average, $135,000 a year. Firms, especially smaller ones located in states with such disincentives to further investment, may never bring jobs back because the expense of employing workers in their home state may be too high. Variations in taxes and regulations will create heated competition among states, as firms focus on bringing jobs back to the most hospitable places.
States often justify their web of regulations and high costs on manufacturers as necessary to protect workers. But America already provides far more safeguards for industrial workers than do developing countries. Bringing work home is a plus for workers' rights and safety, as well as a boost to our economy. States need to learn that lesson.
http://www.city-journal.org/2015/25_1_snd-reshoring.html
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