Interesting email I recieved today......

[Larry Edgerton]

19 Facts About The Deindustrialization Of America That Will Blow Your Mind

The United States is rapidly becoming the very first "post-industrial" nation on the globe. All great economic empires eventually become fat and lazy and squander the great wealth that their forefathers have left them, but the pace at which America is accomplishing this is absolutely amazing. It was America that was at the forefront of the industrial revolution. It was America that showed the world how to mass produce everything from automobiles to televisions to airplanes. It was the great American manufacturing base that crushed Germanyand Japan in World War II.

But now we are witnessing the deindustrialization of America . Tens of thousands of factories have left the United States in the past decade alone. Millions upon millions of manufacturing jobs have been lost in the same time period.



The United States has become a nation that consumes everything in sight and yet produces increasingly little. Do you know what our biggest export is today? Waste paper. Yes, trash is the number one thing that we ship out to the rest of the world as we voraciously blow our money on whatever the rest of the world wants to sell to us. The United States has become bloated and spoiled and our economy is now just a shadow of what it once was. Once upon a time America could literally out produce the rest of the world combined. Today that is no longer true , but Americans sure do consume more than anyone else in the world. If the deindustrialization of America continues at this current pace, what possible kind of a future are we going to be leaving to our children?

Any great nation throughout history has been great at making things. So if the United States continues to allow its manufacturing base to erode at a staggering pace how in the world can the U.S. continue to consider itself to be a great nation? We have created the biggest debt bubble in the history of the world in an effort to maintain a very high standard of living, but the current state of affairs is not anywhere close to sustainable. Every single month America goes into more debt and every single month America gets poorer.

So what happens when the debt bubble pops?

The deindustrialization of the United States should be a top concern for every man, woman and child in the country.



But sadly, most Americans do not have any idea what is going on around them.

For people like that, take this article and print it out and hand it to them. Perhaps what they will read below will shock them badly enough to awaken them from their slumber.

The following are 19 facts about the deindustrialization of America that will blow your mind....

#1 The United States has lost approximately 42,400 factories since 2001. About 75 percent of those factories employed over 500 people when they were still in operation.

#2 Dell Inc., one of America ’s largest manufacturers of computers, has announced plans to dramatically expand its operations in China with an investment of over $100 billion over the next decade.

#3 Dell has announced that it will be closing its last large U.S. manufacturing facility in Winston-Salem, North Carolina. in November. Approximately 900 jobs will be lost.

#4 In 2008, 1.2 billion cell phones were sold worldwide. So how many of them were manufactured inside the United States ? Zero.

#5 According to a new study conducted by the Economic Policy Institute, if the U.S. trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.

#6 As of the end of July, the U.S. trade deficit with China had risen 18 percent compared to the same time period a year ago.

#7 The United States has lost a total of about 5.5 million manufacturing jobs since October 2000.

#8 According to Tax Notes, between 1999 and 2008 employment at the foreign affiliates of U.S. parent companies increased an astounding 30 percent to 10.1 million. During that exact same time period, U.S. employment at American multinational corporations declined 8 percent to 21.1 million.

#9 In 1959, manufacturing represented 28 percent of U.S. economic output. In 2008, it represented 11.5 percent.

#10 Ford Motor Company recently announced the closure of a factory that produces the Ford Ranger in St. Paul , Minnesota. Approximately 750 good paying middle class jobs are going to be lost because making Ford Rangers in Minnesota does not fit in with Ford's new "global" manufacturing strategy.

#11 As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time less than 12 million Americans were employed in manufacturing was in 1941.

#12 In the United States today, consumption accounts for 70 percent of GDP. Of this 70 percent, over half is spent on services.

#13 The United States has lost a whopping 32 percent of its manufacturing jobs since the year 2000.

#14 In 2001, the United States ranked fourth in the world in per capita broadband Internet use. Today it ranks 15th.

#15 Manufacturing employment in the U.S. computer industry is actually lower in 2010 than it was in 1975.

#16 Printed circuit boards are used in tens of thousands of different products. Asia now produces 84 percent of them worldwide.

#17 The United States spends approximately $3.90 on Chinese goods for every $1 that the Chinese spend on goods from the United States.

#18 One prominent economist is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040.

#19 The U.S. Census Bureau says that 43.6 million Americans are now living in poverty and according to them that is the highest number of poor Americans in the 51 years that records have been kept.

So how many tens of thousands more factories do we need to lose before we do something about it?

How many millions more Americans are going to become unemployed before we all admit that we have a very, very serious problem on our hands?

How many more trillions of dollars are going to leave the country before we realize that we are losing wealth at a pace that is killing our economy?

How many once great manufacturing cities are going to become rotting war zones like Detroit before we understand that we are committing national economic suicide?

The deindustrialization of America is a national crisis. It needs to be treated like one.

America is in deep, deep trouble folks. It is time to wake up.























Thoughts?

Larry

[Mike Henderson]

I didn't read your whole post, but manufacturing is going to go where it cheaper to manufacture the goods. The only way the US could compete would be for the workers to be paid what we would consider poverty wages. Would you want to see that in the US? A whole class of people who are working but living on the street, or in some shanties thrown up on the side of the road.

If the US is to maintain it's standard of living, we (the workers) have to be able to produce things that have value and that cannot be easily moved to lower cost workers in another country. That probably means jobs that involve more education, and probably creativity. The financial services are doing very well in the US, and silicon valley is growing again.

Other opportunities involve jobs that are personal service and cannot be moved off shore (well, certainly not easily). Health care is one of those fields. Electricians, plumbers, etc. will always be needed in the US.

You're never going to see the kind of good blue collar jobs that used to exist in this country, certainly not in any significant numbers. There will be auto workers building American cars but a lot less than in the past.

We have the choice of looking forward, or looking back. We can look back and wish things were like they used to be but that world is gone. Or, we can look forward and see the opportunity that exists today. And it does exist - it always does - you just have to find it.

Mike

[Ken Fitzgerald]

First..... The absolute validity of the details in the email should be checked. So much of what is sent around on email is extremely erroneous or contains information from a biased perspective without showing all the information so the readers can accurately determine or weigh fairly or completely for themselves what the information means.

Secondly Mike is right.

Companies make a profit or go out of business. Companies that go out of business don't support any workers or retirees. Everyday the consumer votes for the next decision by what products they buy, in what price range and where it was manufactured. The costs of doing business are effected by taxes, labor costs, material costs, transportion costs and the costs to meet environtmental standards and more. But the turning point isn't now nor was it a decade ago. The turning point was when businesses like Walmart became so popular with the consumer.

Over 20 years ago, a x-ray department manager in a local medical center was working on his MBA. In a conversation, he stated the US economy was beginning to make a transition to a service based economy and his comment was we were in the right place for the future. He was right. The last I talked with him, he was sales manager with Siemens and had just come back from spending his 1 year term working at the company's home office in Germany.

Continued lamenting isn't going to change the situation and as Mike suggested, the smart thing to do is to find a niche and get trained for it.

Education and flexibility in the future will be more valuable than ever before.

[Brian Elfert]

America could produce more goods than just about anyone if wage cost wasn't a factor. We have automated factories that can produce massive amounts of goods with minimal labor. Even with automation it still costs more to make stuff in America than in China or other countries. The total cost to operate a factory in America is way higher than in China in most cases. I saw a documentary showing how flip flops are made in some 3rd world country. Everything was essentially done by hand and they still produce for less than an automated factory.

Yes, we'll still have auto factories in the USA, but they will no longer be the place you can depend on to raise a family and retire comfortably. The wage for new workers is $14 an hour instead of $28 an hour for older workers. A lot of the benefits for new auto workers have been scaled back. We allowed the cost of American production to get so high that corporations started looking elsewhere to produce goods.

There are big pushes by corporations to push down labor costs which in turn means lower standard of living for employees. I don't think these corporations understand they need well paid employees to buy the goods they are selling. If all of their employees are outside of the USA how is anyone in the USA going to buy anything? Right now, there are a great many electricians, plumbers, and the like unemployed. There is almost no job that is completely recession proof. Banks are starting to lay off employees because people aren't taking out loans these days. or they are paying off the ones they do have.

[Sal Kurban]

I agree with Mike. Competitiveness is determined by cost and cost is determined by the cost of productive resources adjusted for their productivity. To compete with the Chinese in a sector you have to pay your workers what the Chinese pay adjusted for productivity. This is plain impractical and undesirable. The way we can compete is not to go back and design some industrial policies or engage in protectionism but focus on education, training, and enhancing productivity. Productivity is what makes wages high. To enhance productivity we need education, training, innovation, investment in research, patent protection and such.

[Sal Kurban]

.... [snip] The turning point was when businesses like Walmart became so popular with the consumer. [snip]
....

Over 10 percent of all Chinese exports end up on the shelves of Walmart. Ironic is the fact that those who lament the loss of the industrial base in the US are the same people who frequent Walmart. I personally am neither for nor against any legitimate business model including that of Walmart.

http://www.businessweek.com/globalbiz/content/mar2011/gb20110317_680254.htm

[Ken Fitzgerald]

There is no one segment of a business that is solely responsible for this. All things including customers effect the profitiblity of a business. Too often, one sided arguments are used to justify or demonize one portion of a business....whether it's managment....stock holders......labor.....environmental regulations.....taxes....consumers support or lack there of through buying habits.......etc.

No one portion of the business is solely responsible for what has happened. It's the overall effects created by all of those things that effect the profitibily of a business. Typically each element acts independently without concern on the overall picture. Management has effect the overall picture and decisions have to be made to keep the company profitable. Companies that go out of business support nobody.

I don't favor any of the business models, I am just stating my observations and opinions based on what I believe has happened.

[ray hampton]

Over 10 percent of all Chinese exports end up on the shelves of Walmart. Ironic is the fact that those who lament the loss of the industrial base in the US are the same people who frequent Walmart. I personally am neither for nor against any legitimate business model including that of Walmart.

http://www.businessweek.com/globalbiz/content/mar2011/gb20110317_680254.htm

according to some reports, the majority of WalMart customers are the poor people, how can poor people afford some much ?

[Leo Graywacz]

There is a lot of regulation that is in America that is not in those other countries. A lot of the pollution regulations we have to deal with no other country does. And it shows. The insurances that companies have to hold to protect their employees is not required over there, there are no unions. A lot of it is government sponsored whereas we have to have private funds for our companies. The tax rates that we pay here are much more than the other countries.

It is just an expensive place to do business. Eventually the countries that are producing cheap products will start to become more modernized in their thinking. Their citizens will start to demand higher wages and eventually they will become like us. Then other third world countries will take over. What is happening to us will happen to them.

We need to look at a lot of things that hinder a business from being profitable and able to continue on and provide jobs. It is going to have to be a big restructuring of the way the taxes are implemented on businesses. And now they want the businesses to take over the paying of the health care system for the countries population. This will not help a business flourish. It will kill it.

The biggest problem I think is greed. A person 50 years ago was willing to work for 40 years to attain his wealth. Now everyone wants to be able to retire at 35 and will take all kinds of draconian short cuts to get there.

This was really hard to do without mentioning the government. Oh darn, just did. :D

[Ken Fitzgerald]

Ray...Nobody is berating poor people....people from all walks of life shop at Walmart but you missed the main point. The point Sal and I were making is that when you buy the Chinese made products at Walmart, the higher priced equivalent US made products don't sell...so eventually the US factory closes and they move it to China so that this company can compete with the products sold at Walmart.
Now we have more workers out of work who can't buy the US made products so they shop at Walmart....though they probably were when they were working.

The economic decisions made by the US consumer well over 20 years was one of the factors that started this decline. But it is ever so more complex than that. Don't believe anyone who tries to sell you a simple solution to the economic problem. It's far too complex and none of the factors involved....none of the groups will accept any of the responsibility that they may have contributed and yet.....none of them are solely responsible. Yet all in their selfishness failed to see what effect their individual part played on the BIG PICTURE......20 little pieces sum up to a big piece....

We have become a society of consumers that don't look at long term effects and expect short term, immediate satisfaction. Look at all the consumer credit card debt people are carrying. Now, you can say some of it is a result of the current economy but people were defaulting or opening new credit card accounts and transferring debt well over a decade ago. The short term effect........yes...you bought that big flat screen television at Walmart and it's at home.....and the game boy.....the long term effect.....you can't make but the minimum payments which means you could die of old age and not have the credit card debt paid off.

I speak from experience on the credit card debt. I met my wife 12 days before I left for Navy bootcamp and we were married 2 days after I got home from bootcamp in 1968. 25 years ago in 1986 she came to me in tears stating we had a financial problem, she was the main cause and if I wanted a divorce, she'd understand. Then she explained though I never used credit cards, she had run up over $10,000 in debt and was only able to make the minimum payments. This was in 1986. $10,000 was a pretty large sum. Luckily for us? The large corporation who employed me, had sold our subsidiary to a much larger corporation and they wanted me to do something with my 401K. So, I closed it out and paid the taxes and penalties. I told my wife set 30% of it back for income taxes and pay the rest on the credit cards. It paid the credit cards down by about $6500. So then we cut up all but 1 credit card and I told her....if we can't pay for the charged amount at the end of the month, we don't need it or buy it. Period. And.....we never paid JUST the minimum payment on the balance we still owed. We paid the minimum plus more every month. In about 18 months we had the credit card totally paid off. We would still be paying on it if we had not used the money from that 401K. We learned the lesson of short term buying satisfaction, the hard way and were lucky enough to find a way out. But seriously, it wasn't luck that had me putting money in the 401K for the previous 10 years.

And home loans....when I got out of the US Navy after 8 years, the bank that handled my GI loan for our first house made us show our financial status and if IIRC, our home loan monthly payment couldn't exceed 30% of our net monthly income. Some of the crazy loans banks started inventing 25 or so years ago.....variable rates....etc. Short term gain...instant gratification.....with little regard to the long term effect.....and if you didn't get that promotion with the giant pay raise or you couldn't sell it for a profit before the rate raised.....Well....HELLO? What did you think was going to happen?

That's just part of the consumer involvement....there are the other elements too that contribute to it.....stockholder greed.....corporate greed...labor costs...taxes....materials cost....environmental regulations......so terribly complex.....

[Bill ThompsonNM]

One thing that always surprises me, however, is how many things we should be able to manufacture cheaply, but we don't. Take, for example, hypodermic needles. Surely they are made entirely with almost no human labor. Yet why do they all come from pakistan or china?Surely we can excel at automation?

[John Fabre]

Well our Sawmill creek is produced here still.

[anthony wall]

hey the usa is not on its own in this the uk has already gone through all of the same problems and has become as they say a nation of shopkeepers

[Keith Outten]

I won't weigh in on the cause of the problem, suggest a solution or point my finger at who I think is to blame.

I do feel that our ability to protect our way of life is directly related to our ability to manufacture. We could never build planes, tanks and airplanes at the level necessary to support a major war today as we did in the past. This situation would leave us with nuclear warheads as our only means of defense which is unacceptable given the fact that America will use its military at the drop of a hat and since the 1960's our motives have been suspect at best.

According to a TV News program just two days ago there are about 9 million manufacturing jobs left in America. The loss of huge numbers of jobs also brings with it the loss of valuable experience that cannot be replaced overnight. Some jobs take generations to train and to produce master tradesmen.

Americans are the hardest working humans on the planet, unfortunately we are spoiled rotten and have forgotten how to be fiscally responsible. Our children and grandchildren will pay dearly for our sins.
.

[Larry Edgerton]

Now we have more workers out of work who can't buy the US made products so they shop at Walmart....though they probably were when they were working.

The economic decisions made by the US consumer well over 20 years was one of the factors that started this decline. But it is ever so more complex than that. Don't believe anyone who tries to sell you a simple solution to the economic problem. It's far too complex and none of the factors involved....none of the groups will accept any of the responsibility that they may have contributed and yet.....none of them are solely responsible. Yet all in their selfishness failed to see what effect their individual part played on the BIG PICTURE......20 little pieces sum up to a big piece....

.....

Read the Wallmart Effect, it shows how this evolved.

I would agree with this entirely. It all seems so large that no one feels that they are at all responsible. Not at all true of course, but what ever it takes to sooth the beast.

We want to much, as a country, and we are not willing to work hard enough for it, and it is coming home to roost it seems. We were willing to work hard once, but that time has past. The cost of government to our productivity is staggering. I see this in my own business. I agree with Mike that we need to find a competitive edge, but we also need to make some other basic changes. We need to learn personally, and in government, that we are not entitled to anything, we only get what we work for.

Need coffee...

Larry

[Hilel Salomon]

The fact is that we produce engineers, computer science people and qualified personnel in other technological areas. Corporations don't want to hire Americans, pay them decent wages, social security taxes, provide health care benefits etc., when they can farm these jobs out (thanks to communications improvements) to foreign workers. Even more damaging is the fact that many of our corporations which still have great technological processes developed in the US, make deals with China (and to a lesser degree India) whereby the processes, patents, etc. have to be shared and eventually are stolen from us. The CEO's who make these deals don't care that the end result will cripple their own corporations. They have stocks and balloon clauses in their contracts which will allow them to bail out with incredible wealth long before the corporations sink. This process of selling America began a while back as our automotive industry sat on home grown technology and watched as Japan used this to cripple our own car makers. It has, unfortunately spread everywhere.

[Ken Fitzgerald]

Hilel....I retired from one of the largest corporations in the world. They employ thousands of US engineers. I disagree with your statement.

Yours is another example of a biased view of only one side of the picture.

Before you demonize one side, try to give an accurate picture of the whole process.

US corporations would love to do business here in the US but they are in the business to make profit. When taxes, labor costs, material costs and ecological regulations make it less profitable to manufacture products here, to continue making profits, they will move the plants over seas.

Companies that don't make a profit soon go out of business and don't support any workers or retirees.

[Keith Outten]

Ken,

Large companies don't employ the majority, small companies are where the rubber meets the road.

I think there may be some good news in this story. We may see a massive increase in the number of small businesses. The tradeoff between economy of scale and lower overhead may be able to level the playing field at some point in time.....I hope so.

Consider that a local woodworker might be able to purchase a CNC machine and right out of the gate be able to support other small companies in his area. Basically what could evolve is a "BORG" collective that combines the talents and energy of many shops that might be able to compete with large corporations that operate offshore and have to deal with shipping and unreasonably high management salaries.

My products are made in Virginia, the materials I purchase are all made in America and I have found a way to be profitable, so can others if they are innovative and willing to take some risk.
.

[Ken Fitzgerald]

Keith,

As of June of this year, the large corporation from which I retired employs 133,000 US citizens and if I remember correctly around 288,000 people world wide.

Beyond that, since 2007 it has hired 8,000 new US employees and 7,000 of those were for US manufacturing jobs.

The subsidiary I worked for employs thousands of engineers...........recently a big thing was made that they were moving the x-ray business headquarters to China and training 65 Chinese engineers. The corporation thinks the US public is going to get their wish. There will probably be a US national health care system in the next few years. Currently the US x-ray market is stagnant and once a national health care system is engaged, the market will become a diminishing market. China's health care system is expanding and is thought to continue this trend for the next 30 years. So to better interface with the people in the expanding market, the headquarters for JUST the x-ray portion of the business is moving there and they are training 65 Chinese engineers to interface with the doctors and hospital administrators fluently in the native languages there. It only makes sense. But the email going around that caused concern to a very dear older cousin of mine made a big thing about training those 65 engineers. In the Pacific Northwest we have over 80 engineers and that just takes in the states of Washington, Alaska, Oregon, northern half of Idaho and Hawaii. Those states have a very low population density. We have individual states that have more than 100 engineers. 65 is nothing but the email, politically motivated and bent, makes a big deal of 65 engineers.

And just like the auto companies, this large corporation contracts a lot business out to small US businesses which aids economies. I know, I have often hired local machine shops to manufacture one time parts for me to fix a machine....hired a specific crane operator and rigging company out of Spokane to move all of our 18,000-25,000 pound MR magnets into and out of hospitals without destroying the supercooled magnet or the hospital....hired local heating, air conditioning and plumbing companies to work on the cooling systems for MR scanners.

Large corporations are made up of everyday people who live in your local community, attend your churches and shop in you local businesses. It's wrong to demonize an entire business based on corporate CEOs salaries and benefits. I won't defend what the CEOs make. I don't think it's right either.

Why aren't people just as aggressively attacking baseball player salaries or football players salaries? I would suggest that the degree of education and skills to operate an international business is as least as great and important as being a professional athlete.

Keep in mind, because of its global presence, large corporations help reduce the trade deficit by exporting products and bringing profits back to the US.

[Scott Shepherd]

Keep in mind, because of its global presence, it helps reduce the trade deficit by exporting products and bringing profits back to the US.

I think you need to do some more fact checking there Ken. Last time I heard, there was over 4 TRILLION dollars sitting in companies overseas that they can't get into the US because it will be taxed so heavily. The CEO's of many of those companies, that are sitting on billions and billions of dollars said they would bring that money into the US and foster R&D and production if allowed to get it into the country. However, they can't. If you had $100 billion dollars sitting in the bank, overseas, and you could spend it somewhere that allowed you to spend it all, or you could take it to a place that said "Sure, you can bring it here, but you'll need to give me 35% of all of it first", which would you do?

With all the screaming about spending money to create jobs, why not allow these global corporations to bring their money here and invest in the USA workers?

Fact is, they can't bring their global profits here without massive taxation, taxation that's almost unequaled anywhere else in the world. That's well documented and not an opinion, that's a fact.

[Rich Engelhardt]

It's all immaterial....

Even if the jobs were here,,,,,it's far too "comfortable" for far too many people to fill them.

I know of no less than 5 able bodied immediate family members that consider "having a disablity" as a valid career goal.

[Ken Fitzgerald]

Scott.......... When is the last time you voluntarily paid more taxes than the law requires? Corporations are not in the business of paying taxes.

133,000 well paid US employees with benefits........check that fact out Scott.

Profit is not a bad word. Businesses....small or large make a profit or go out of business.

Read my first post.......the cost of labor......taxes......materials......transportatio n...ecological regulations......consumer spending..and other things...all factor in to why manufacturing jobs left this country........

I will not defend everything large corporations do............but it is just as wrong to condemn them across the board as the great evil too.

[Scott Shepherd]

Scott.......... When is the last time you voluntarily paid more taxes than the law requires? Corporations are not in the business of paying taxes.

133,000 well paid US employees with benefits........check that fact out Scott.

Profit is not a bad word. Businesses....small or large make a profit or go out of business.

Read my first post.......the cost of labor......taxes......materials......transportatio n...ecological regulations......consumer spending..and other things...all factor in to why manufacturing jobs left this country........

I will not defend everything large corporations do............but it is just as wrong to condemn them across the board as the great evil too.

Ken, what are you talking about? Where did I say anything about corporations not paying taxes? I said, they have a ton of cash, sitting in banks, and they won't bring it here because of the taxes on that. Seems to me I was agreeing with what you said.

133,000 US employees, so what? What's that prove? That you can cite 1 example of a large company with a large US footprint? One example doesn't make a trend, it makes it an exception to the rule. You don't discredit what's happening because you have one example you know. That's like people where the unemployment is at 3% saying "There's no problem with the economy these days". Sure, not where you live, but tell that to the people where the rate is 12%. Again, citing your personal experience in one company doesn't mean anything.

I'd like for you to find where I said that corporations were bad, or making a profit is a bad thing. I never said either. I simply stated that there are TRILLIONS of dollars in cash, in overseas accounts, of US based corporations, sitting on the sidelines, waiting to be invested. It sits there because of the taxes, not because of anything else. Solve that issue and allow them to bring the profits back into the USA and it would pump trillions of dollars into the economy, which, in my personal view, would be a great thing.

[Paul McGaha]

Just my $.02 but it seems to me that since Chinese (and others) labor is so much cheaper than American labor, and the products they turn out are as good as they are (say Grizzly tools for example) I think these manufacturing jobs are gone for good.

In regard to manufacturing, The 20th century was no doubt America's time. The 21st century appears to me to probably belong to someone else.

Things change. Sometimes for the better and sometimes for the worse.

Our vehicles are built better and last much longer than say vehicles built in the 70's. Our lawnmowers and appliances are built much worse and dont last nearly as long as those made in the 70's ????

Still, You have to have faith, do your part, make decisions the best you can, Hope America will be ok. It is true that some things are bad but there is still more good than bad that can be said about our country. No place I'd rather be.

PHM

[Mike Henderson]

Ken, what are you talking about? Where did I say anything about corporations not paying taxes? I said, they have a ton of cash, sitting in banks, and they won't bring it here because of the taxes on that. Seems to me I was agreeing with what you said.

133,000 US employees, so what? What's that prove? That you can cite 1 example of a large company with a large US footprint? One example doesn't make a trend, it makes it an exception to the rule. You don't discredit what's happening because you have one example you know. That's like people where the unemployment is at 3% saying "There's no problem with the economy these days". Sure, not where you live, but tell that to the people where the rate is 12%. Again, citing your personal experience in one company doesn't mean anything.

I'd like for you to find where I said that corporations were bad, or making a profit is a bad thing. I never said either. I simply stated that there are TRILLIONS of dollars in cash, in overseas accounts, of US based corporations, sitting on the sidelines, waiting to be invested. It sits there because of the taxes, not because of anything else. Solve that issue and allow them to bring the profits back into the USA and it would pump trillions of dollars into the economy, which, in my personal view, would be a great thing.
There's no guarantee that if companies could bring profits back to the US that they would do anything with it besides pay dividends. Companies are not starved for cash. Many, today, have lots of cash in the US but are not investing it because they don't see enough demand for their products.

If we were to allow those foreign profits to be brought back tax free, the only people who would benefit are the stockholders. And, incidentally, companies get credit for taxes paid to foreign governments on their foreign profits - so the taxes they would pay are the difference between US rates and foreign rates.

And don't you think it fair that companies pay their fair share. It shouldn't only be the middle class that pays tax.

Mike

[Ken Fitzgerald]

Mike,

Has it ever occured to you that a lot of middle class people are shareholders?

And....the statement that only the middle class that pay taxes. Absolutely absurd statement that can't be factually backed up. Period. Certainly shows a political bias however.

[Phil Thien]

It's all immaterial....

Even if the jobs were here,,,,,it's far too "comfortable" for far too many people to fill them.

I know of no less than 5 able bodied immediate family members that consider "having a disablity" as a valid career goal.

That is worth repeating, so I'm quoting it.

We've made it too easy on people that just refuse to work.

[Samuel Butler]

The cost of health care is also a major factor in the movement of manufacturing jobs oversees.

We can lament the passing of the old ways or we could look to the information age as an area where the US will excel.
And would we really want to exchange clean air and water (ie less government regulation) for more manufacturing jobs? Seems short sighted.

[Leo Graywacz]

The US seems to think that it is the business mans responsibility to take care of the health care aspect of the population. I don't see why businesses should be responsible for it. If they want to provide it it is a nice perk. But to have it mandated that you provide it for your employees is just something that will drive the business to countries where this isn't required.

If the people want healthcare provided to them they should be taxed as an individual to have the service. I see no reason why a business should be responsible for the health of their employees. It is beneficial to have a healthy workforce, but the individual should be responsible enough to take care of their own care.

[Scott Shepherd]

There's no guarantee that if companies could bring profits back to the US that they would do anything with it besides pay dividends. Companies are not starved for cash. Many, today, have lots of cash in the US but are not investing it because they don't see enough demand for their products.

If we were to allow those foreign profits to be brought back tax free, the only people who would benefit are the stockholders. And, incidentally, companies get credit for taxes paid to foreign governments on their foreign profits - so the taxes they would pay are the difference between US rates and foreign rates.

And don't you think it fair that companies pay their fair share. It shouldn't only be the middle class that pays tax.

Mike

That's easy to write into law- spend "X" amount on R&D and you get "X" amount of a break.

Also, you mention "shareholders" benefitting. Last time I checked, shareholders are people just like you and me, not some dirty word. Last time I checked, most people's 401K's and other retirement plans are based around increasing their "shareholder" value. So do I think bringing money back into the US and giving it to shareholders is a bad idea? No, I think it's a great idea. Anything that puts money into the pockets of the American people without having to take it out of someone else's pockets is a great idea, in my opinion.

Define Fair Share for me Mike. I'm always amazed at how some people believe hitting corporations with taxes is a great idea. Let's take oil as an example. Tax the crap out of it. What do you think is going to happen? They will just accept lower profits (which happen to be some of the lowest percentages in the corporate climate anyway)? No, raise their tax $1 per gallon and the gas prices at the pump will raise $1 per gallon the next day. So who gets hurt? The average person. So the great idea to "tax" the fat cats always ends up costing the middle and lower income people, who can't afford it. I'd challenge anyone to list examples of when additional taxes or burdens were put on companies that they didn't pass on.

How many people reading this have been called into the conference room and told this - "Our Health Care costs are rising, so effective 01/01/2011, your health care costs will go up"? I'd venture to say almost everyone working for someone has had that conversation. So when you raise prices, who pays? Did your employer eat the increases in their cost? No. They passed them straight through to the people working for a living.

So, yeah, let's tax the heck out of everything. It'll do nothing but help all the little people, right?

[Mike Henderson]

That's easy to write into law- spend "X" amount on R&D and you get "X" amount of a break.
That's been tried but money is fungible. Let's say that a company is going to spend $1M on R&D. So they repatriate $1M of their foreign profits and tell the government "Look, I took $1M home and I spent $1M on R&D so no tax". The problem is that they would have spent $1M anyway.

Things have been tried to get around that. For example, only an increase in R&D spending will qualify for the tax break. But the company was planning to increase their R&D spending anyway, so now their increase is tax free. It's extremely difficult to craft a law that will achieve it's real goals.

It's true that many people hold shares in corporations but if you look at the statistics of ownership, the wealthy people in this country own the majority of the wealth, which means shares of the corporations. So when you give a benefit to "shareholders" you're mostly helping the wealthy increase their wealth. Certainly, if that's your goal, those are the policies you should support.

Fair is a complex question. Corporations are people in the eyes of the law. As a matter of policy, I believe all people should be taxed in a fair manner. Different people will have different ideas about what's fair - but as long as the goal is "fairness" I think we'll come to some acceptable compromises.

Mike

[Mike Henderson]

The US seems to think that it is the business mans responsibility to take care of the health care aspect of the population. I don't see why businesses should be responsible for it. If they want to provide it it is a nice perk. But to have it mandated that you provide it for your employees is just something that will drive the business to countries where this isn't required.

If the people want healthcare provided to them they should be taxed as an individual to have the service. I see no reason why a business should be responsible for the health of their employees. It is beneficial to have a healthy workforce, but the individual should be responsible enough to take care of their own care.
Ah, if it were only so simple. There are lots of people who are so poor that they cannot pay for health insurance. People who lost their jobs and their health insurance are a good example. When you have no income, how are you to buy health insurance?

Mike

[Sal Kurban]

I think we are drifting from the original discussion. Let me state couple of facts. More than 70 percent of all costs are labor costs in the overall economy (that is also the share of labor compensation in US national income). So that is going to weigh more heavily than any other factor. In traditional manufacturing, where production technology is common knowledge, is there any way the US can compete? Answer is no because China and other countries have cheaper labor. The US can focus on sectors where technology is not common knowledge. There is a consensus in economics that protectionism or industrial policy is not the answer. The simple fact is specialization and exchange make everyone better off and that is why even at the individual level we specialize and engage in exchange.

What we should also blame is the current international monetary system which leads to excessive "global imbalances" (some countries are chronic net borrowers like the USA and some countries are net lenders, like Germany, Japan, China, oil exporters). In the US, the corporate sector, households, and government play a role in the indebtedness. We just spend like there is no tomorrow. When spending exceeds income, we run trade deficits, and borrow the difference. The US national saving rate is near 10 percent and in China it is in excess of 50 percent. The US is in a unique position because US currency is used as an international reserve which allows the US to just issue debt at near zero interest rates and print money to finance the deficit. That is another source of complacency. Someone is willing to lend you at zero percent, and should not you accept?

Why anyone would lend at zero? Because of the safety of US assets and because of the key position of the US dollar as a reserve currency. Another factor is that China and other emerging markets feel safer when they sit on a stash of US assets mainly treasuries. That is because they use these reserves as an insurance policy against financial crises of the likes we have seen in 1997 in the Asian meltdown. If you sit on trillion dollar reserves, no capital flight can shake you. You see the current system has created a dependency and all parties have something at stake. Unless we switch to a multipolar world and/or other reserve currencies emerge, the current system is here to stay. China will artificially keep its currency undervalued so as to export more and we are willing to export our treasuries which have virtually no yield. This also keeps US interest rates at historically low levels which feeds spending binges and so on...

[Leo Graywacz]

Ah, if it were only so simple. There are lots of people who are so poor that they cannot pay for health insurance. People who lost their jobs and their health insurance are a good example. When you have no income, how are you to buy health insurance?

Mike

Tax the people directly, don't go through the businesses. There are already a lot (near 46%) of people who already don't pay federal income taxes that still receive the benefits of the taxes paid by others. What makes you think that all businesses can afford to have medical benefits for their employees? Anything beyond a paycheck is a perk as far as I am concerned. If you accept a job that has no benefits then that is what you get. If you couldn't or didn't get an education that can get you a job that does have these perks or don't have the skills that may get you into a field that has perks then you probably don't deserve perks. Ya, cruel.

[Mike Henderson]

Mike,

Has it ever occured to you that a lot of middle class people are shareholders?

And....the statement that only the middle class that pay taxes. Absolutely absurd statement that can't be factually backed up. Period. Certainly shows a political bias however.
I think I answered the question about middle class people being stockholders.

Regarding your other point - you're correct that I should have worded that differently. But let me use that as a springboard to discuss some philosophy.

When I look at certain countries that I've been to, I've seen societies without much of a middle class. There are lots of poor people and a few wealthy people who own most of the wealth of the country and control the government. Often this leads to societal unrest (including revolution) when the people rise up to demand opportunity. Of course, usually this just changes the people at the top and things go back to the way they were.

I would like to see the United States adopt policies that encourage the growth of the middle class, because a thriving middle class brings lower crime and stability to a country. Policies that allow people who were not born to wealth to be able to get a good education, to get jobs (to not be discriminated against) and to be able to start a business without an establish large business doing things to destroy the upstart. For this last thing, if you remember Standard Oil, before there were laws against it, Standard Oil would go into an area and drop the prices below cost because they could support doing that. Once they drove all the small oil companies out of business, they would raise prices significantly above market because there was no competition. I'd like to see small business protected from the modern equivalent of the Standard Oil technique.

So that's why I'm an advocate for the middle class. I believe that a thriving middle class is key to the future of our country.

Mike

[Mike Henderson]

Tax the people directly, don't go through the businesses. There are already a lot (near 46%) of people who already don't pay federal income taxes that still receive the benefits of the taxes paid by others. What makes you think that all businesses can afford to have medical benefits for their employees? Anything beyond a paycheck is a perk as far as I am concerned. If you accept a job that has no benefits then that is what you get. If you couldn't or didn't get an education that can get you a job that does have these perks or don't have the skills that may get you into a field that has perks then you probably don't deserve perks. Ya, cruel.
There's not much difference between our positions. But let me address your "cruel" comment first. It's very difficult to turn your back on a person who was in an automobile accident and is bleeding to death simply because they don't have health insurance. Or to turn our backs on children who were born to poor parents and are now sick. So we provide health care for those people. That health care is paid for by taxes or indirectly by health insurance premiums that are higher because hospitals have to charge the paying people more to cover the cost of providing care to the poor.

I agree with you that we should stop this charade. You suggested doing it by taxing people directly and I'm okay with that.

Mike

[John Fabre]

When you have no income, how are you to buy health insurance?

Mike
Medicaid with welfare

[David Larsen]

50 years ago our fathers and grandfathers knew how to build a house. With that I mean each and every step from the ground up. Today there are framers that don't know the first thing about finish work, etc. We as a society have evolved. We specialize! We do more of the same things over and over and become more efficient. I think there is a piece of the pie for everyone. It just so happens that China has a manufacturing piece of the pie at the moment. We are good at other things.

[Mike Henderson]

Medicaid with welfare
Yep, that's exactly right. And we pay for that through taxes. Of course, there are people who are really trying, working long and hard, and make just a bit more the cutoff amount, but still can't afford health insurance. So the very poor are taken care of and the wealthy take care of themselves, but the people in the (lower) middle are left out. So if their child gets seriously ill, the logical and reasonable thing for them to do is quit working.

Mike

[Scott Shepherd]

You can call them wealthy people and want to take their money from them. I prefer to call them "the people 95% of the rest of the people work for". I'm a job creator. I hire people and I pay people wages, all of which taxes are taken out of. If you raise my taxes as one that creates jobs, guess what I'm going to do. Not hire people, cut my expenses or do whatever else I have to in order to make my business survive.

I have yet to see one factual statistic that show that raising taxes encourages people with money to hire, to give their employees more, or to invest in new machinery, people, or technology.

I've not seen any evidence in that ever being the factual case. However, there is plenty of factual data that shows when you cut taxes, it spurs that sort of spending. History is there for that.

Like I said, I'm running a business. If you make it harder on me, why in the world would you think I'd take the risk to hire anyone or pay anything for them. So by raising my taxes, you're making sure I don't hire people, I don't invest, and you get no taxes from all the employees I'd hire, no sales tax from all the things I'd buy and use to run my business.

I've spent my time outside the USA as well and I don't see many social models out there that are fairing better than we are.

The issue I see is just because I think we should encourage businesses to grow and hire people, doesn't mean I think we should ignore those that need help. It's not an "either, or" situation. Last time I checked, Bill and Melinda Gates have invested more money to help people's health than just about anyone else on the planet. They weren't taxed into doing that. They did it because they were fortunate and believed that they could help people.

[Mike Henderson]

The issue I see is just because I think we should encourage businesses to grow and hire people, doesn't mean I think we should ignore those that need help. It's not an "either, or" situation. Last time I checked, Bill and Melinda Gates have invested more money to help people's health than just about anyone else on the planet. They weren't taxed into doing that. They did it because they were fortunate and believed that they could help people.
If everyone would voluntarily contribute some of their money to help less fortunate people in this country, we wouldn't need taxes. But, of course, that won't work. Gates, and Buffet, are extraordinary exceptions but even if they gave their whole fortunes to help education (for example) it would be a drop in the bucket and would probably last only a couple of years. Then we'd be back to where we are now.

I'll quote Russel Long - "Don't tax you, don't tax me, tax that fellow behind the tree." If you don't tax me, I'll be able to grow my wealth more quickly and I promise to use it to help people before I die. But you and I both receive benefits from this country and we both should help pay the costs.

Mike

[Greg Peterson]

I'm a job creator. I hire people and I pay people wages, all of which taxes are taken out of. If you raise my taxes as one that creates jobs, guess what I'm going to do. Not hire people, cut my expenses or do whatever else I have to in order to make my business survive.

You succinctly describe the widely accepted paradigm. Business owners are the job creators and if you don't reduce the job creators tax burden (even though it is at a fifty year low), they will take their ball and go home. Game over. We've swallowed this pablum for so long now we've forgotten the most basic concept of business.

Consumers are the job creators. Without consumer demand for a goods or service, there is no business. No one ever hired a worker simply because of some short term tax incentive. At least no successful business. Conversely, show me one business that did not engage in a sensible commerce activity or investment because of the tax rate on the potential gain.

A strong, thriving consumer class raises all boats. By now it should be obvious that the supply side model at best did not work as advertised and at worst was a fraud.

Left to the whims of economic anarchy, 99% of us would be living in abject poverty, the likes as seen in third world nations. The middle class would not exist were it not for some basic ground rules.

[Leo Graywacz]

Only problem is right now the consumers have run out of money and credit because a lot of people have lost their jobs. So now we have to start the engine up again and the only way to get things started are to have the job providers start hiring so the consumers can once again buy things. There are a lot of jobs that don't require the sale of an object. Service jobs and infrastructure jobs to name a few.

[Greg Peterson]

The AJA is comprised in large part, as was the stimulus previously, of payroll tax cuts. Put money into a middle class family's pocket and that money gets recirculated instantly. It was argued that the stimulus plan was far too small to get consumer spending to the level where business would have to hire workers to meet demand. In retrospect, I think those claiming the stimulus was too small were correct.

The US has one of the highest corporate tax rates in the world. But the effective tax rate that is actually paid is well into single digits. This notion that corporations are persons is a stretch. They exist to fill a consumer demand. Why should they be given the high ground as some kind of super citizen when they are nothing more than a legal entity? The largest, wealthiest, multinational corporations have unequal access and thus representation. Small business is the engine that drives our economy and should be afforded the same attention as BP, IBM or DuPont.

How we got to this juncture is at once complicated and not complicated. Suffice it to say though that we are in a pickle and doubling down on the past thirty or forty years of policy seems to me the very definition of insanity.

[John Fabre]

Yep, that's exactly right. And we pay for that through taxes. Of course, there are people who are really trying, working long and hard, and make just a bit more the cutoff amount, but still can't afford health insurance. So the very poor are taken care of and the wealthy take care of themselves, but the people in the (lower) middle are left out. So if their child gets seriously ill, the logical and reasonable thing for them to do is quit working.

Mike
With the job market the way it is, more and more kids nowadays consider welfare a way of life.

[Glen Butler]

Going back to the original post . . .

The line items in the email are simply numbers and percentages. Now, I only know what I have been told or read, but just a couple months ago Rush Limbaugh did a segment that sounded more hopeful than this doom and gloom, and he is usually doom and gloom. He said essentially that even though manufacturing jobs seem to be lost oversees, the USA is still the largest exporter of goods in the world. Although I cannot recall the exact details, it was astounding how much the number of manufacturing jobs available and value of products exported by the US still exceeds any other nation, even China.

I currently have a manufacturing job and my company just got a contract back that went to China because they couldn't produce the piece to spec. I believe that manufacturing will continue to thrive in the US because China doesn't have the technology and capability for precision. They make junk. I personally have chosen not to purchase products made in China, with all the recalls and dangerous substances found in their products. On a few occasions, I haven't had the choice, because I knew of no other product to substitute, but I try my best.

[Scott Shepherd]

You succinctly describe the widely accepted paradigm. Business owners are the job creators and if you don't reduce the job creators tax burden (even though it is at a fifty year low), they will take their ball and go home. Game over. We've swallowed this pablum for so long now we've forgotten the most basic concept of business.

Consumers are the job creators. Without consumer demand for a goods or service, there is no business. No one ever hired a worker simply because of some short term tax incentive. At least no successful business. Conversely, show me one business that did not engage in a sensible commerce activity or investment because of the tax rate on the potential gain.

A strong, thriving consumer class raises all boats. By now it should be obvious that the supply side model at best did not work as advertised and at worst was a fraud.

Left to the whims of economic anarchy, 99% of us would be living in abject poverty, the likes as seen in third world nations. The middle class would not exist were it not for some basic ground rules.

Two points here- one- name me a single time in history,real life history, not theory, that raising taxes in a down economy created private sector jobs and turned the economy around. I'll wait for that example.

Second point- if you taxed the "rich" at 100% and took every single penny they earned, you couldn't begin to resolve this problem. So once you've taken all their money, the problem isn't solved and now there's no one left to invest in companies and create jobs, which is a downward spiral. So taxing isn't the solution. If it were the solution, you could increase taxes by "X" percent and it would solve some problem. However taxing at 100% doesn't resolve the problem. It's such a small number relative to the hole we're in, you won't even see a ripple in the pond from it. So if taxing is the answer, yet you can't tax more than 100%, how's that going to solve the problem? In fact, it'll make the problem worse, because those "job creators" will now have no income. I don't know too many business owners that would stay around long making zero dollars for themselves.

You can't tax your way out of this issue, there's not enough money there to tax. So what will you do, tax the rich at 600% so you can resolve the problem? The only way to resolve the issue, is as mentioned by a previous post, is to grow your way out of it. You can't grow your way out of something when you the people that "grow" things won't take any action because you're going to penalize them.

The amount they want to tax the rich is so small, you couldn't build a bridge to nowhere with it. If it's that small of any amount, relative to the situation we're in, let's head back to the drawing board and figure out a solution that resolves the problem, rather than just prolongs it for the next generation.

[Chuck Wintle]

not trying to minimize the economic problems in the us but, as a rule, capital will generally go where the best deal is found in terms of wages, laws and lowest government interference. what is happening in the us has happened to other countries in the past. In my view jobs will continue to leave the us for asia regardless of whatever jobs bill may come from the government. In fact the government is borrowing from paul to pay peter. The next generations be footing the bill. As one poster said wages paid in asia are too low for americans. the cost efficiencies of setting up in china are too great. I am still wondering why jeffery immelt is sitting on the economic recovery board when his own company, GE, is moving thousands of jobs to china. The fox seems to be guarding the hen house?

[Larry Edgerton]

Very interesting discussion on a subject that concerns me very much. The original post was put up for just this reason. I appreciate all of the different views, and if the US was populated with people such as the members in this discussion, I do not believe we would be in this discussion at all. We have a very level headed group here.

I, like Glen, do what I can to purchase American made products. We are led to believe that nationalism is a bad thing on many fronts, and at a governmental level I would agree. But at the consumer level it is a vote to support your neighbor, and in turn a vote for yourself. At my insignificant size, it is my only real vote.

I work for on a personal level CEOs almost without execption, and many have become friends to the extent that we have long conversations most often about the current economic climate. I used to be one of those "punish the rich" sort of resentful people, until I got to know some of the people that I once resented. I have since learned that for the most part, of course with a few exceptions, these people are extremely motovated, very intelligent individuals that work very hard indeed to get where they are, and that further they are the people that make things happen. They are the leaders, and we do need leaders as most people are sheep. They are the ones that make things happen. Now I will agree that there are a lot of CEOs that are not any more than psychopaths that have no interest beyond their own personal gain[ watch GE] but they are the exception rather than the rule I would hazzard to guess. I am a firm believer that one should not be punished by taxation disproportionally just because they are willing to work harder that the average. The average citizen resents these people, but they were not willing to make the commitment it takes to be excellent in the first place, and so as is most often the case they are in the position that they are in because of this lack of commitment, and natural talent to some extent.

We only hear about the bad CEO's, there are thousands and thousands that are excellent and are the spark plugs in our economic engine.

I know we can not discuss politics, but I do not believe further government intervention is the answer. A basic change in attitude of the general public seems to be in order, a move away from the idea that we are entitled to certian things, and away from the idea that what is good for us alone is all we are concerned with.

Must run, its Sunday, but as a small business owner, there is no rest......

Larry

[Leo Graywacz]

Two points here- one- name me a single time in history,real life history, not theory, that raising taxes in a down economy created private sector jobs and turned the economy around. I'll wait for that example.

Second point- if you taxed the "rich" at 100% and took every single penny they earned, you couldn't begin to resolve this problem. So once you've taken all their money, the problem isn't solved and now there's no one left to invest in companies and create jobs, which is a downward spiral. So taxing isn't the solution. If it were the solution, you could increase taxes by "X" percent and it would solve some problem. However taxing at 100% doesn't resolve the problem. It's such a small number relative to the hole we're in, you won't even see a ripple in the pond from it. So if taxing is the answer, yet you can't tax more than 100%, how's that going to solve the problem? In fact, it'll make the problem worse, because those "job creators" will now have no income. I don't know too many business owners that would stay around long making zero dollars for themselves.

You can't tax your way out of this issue, there's not enough money there to tax. So what will you do, tax the rich at 600% so you can resolve the problem? The only way to resolve the issue, is as mentioned by a previous post, is to grow your way out of it. You can't grow your way out of something when you the people that "grow" things won't take any action because you're going to penalize them.

The amount they want to tax the rich is so small, you couldn't build a bridge to nowhere with it. If it's that small of any amount, relative to the situation we're in, let's head back to the drawing board and figure out a solution that resolves the problem, rather than just prolongs it for the next generation.

Here is a video that pretty much proves your point.

http://www.youtube.com/watch?v=661pi6K-8WQ

http://www.youtube.com/watch?v=661pi6K-8WQ

[Brian Elfert]

I shop at Walmart and I am far from poor. I also shop at Target, Kohl's, and other discount type stores. I want my money to go as far as it can. I will try to buy Made in the USA where possible, but it isn't always possible.

Let's say I wanted to buy a silicone basting brush. I highly doubt I would ever find one made in the USA without perhaps going online to order one. I suspect even one I found in the housewares dept at Macy's would still be made outside of the USA.

There was a brand of hand operated can openers Made in the USA. The owner of company died and a new corporate owner took over. The new owner closed the USA plant in 2009 and shifted production to China. Our Boy Scout troop really wanted to buy this particular can opener because they are quite durable and they were made in the USA. The Scoutmaster was disappointed to learn they are now made in China.

I used to buy Vermont American screwdriver bits exclusively because they were Made in the USA. They shifted production to China and the new bits are different and not quite as nice. I can no longer find any screwdriver bits made in the USA, but I haven't looked extensively either.

[Mike Henderson]

I, also, have had the opportunity to work with some very talented and driven people. To me, it's a tribute to our economic system and country that they were able to take advantages of the opportunities afforded them and build the companies they did. They should be richly rewarded as an incentive to others to do the same.

At the same time, we need to do everything possible to make it possible for others who are not born into wealth to accomplish the same thing. Not so much for that individual, but for our country. When talented, driven people rise, we all benefit. So I advocate policies that provide support for those born without wealth to (first of all) get a good education, because education changes lives, to have equal opportunity, and to have a level economic field.

Providing some of those advantages requires that we spend a certain amount of money. The wealthy people in our society should pay their fair share, like everyone else. Especially since their success may have been helped by those exact policies in the past.

Mike

[For example, I was able to get a college education although I came from a poor family. Today, I doubt if I would be able to do that.]

[Brian Elfert]

China can produce stuff that is every bit as good as stuff made in other countries. It is all in what the importer specs. The iPhone and iPad are both made in China and I don't hear many complaints about the quality. Most cell phones (and indeed most electronics) are now made in China.

I have seen some high end electronics products where they shifted production to China. I can't tell any difference between the two items other than the Made in China sticker.

I would much rather buy stuff made in the USA, but it becomes more difficult by the day. It is hard to believe some of the cost differences between an American item and a Chinese item. I've seen tools where the American one is $75 and the Chinese one is $15. The American one is finished nicer than the Chinese one, but the item was not a precision tool that requires a nice finish.

If the importer says they want the cheapest crow bar possible they'll get get something that is rough and resembles something cast in the backyard sandbox. If they spec they want a smooth finish without cost being a real issue they'll get a nice product.

[Greg Peterson]

Scott - I'm all for tax cuts. But how much more can they be cut? They are already at a fifty year low. Raising taxes on business in the past has forced them to reinvest their capital gains into their business rather than pay taxes on those gains. Something as simple as painting the building, upgrading office equipment or the repair shop buying a new state of the art alignment rack. Business's are consumers too. The smart money goes to reinvesting those gains rather than pulling them out of the business and investing in whatever investment product Wall Street is currently promoting.

I think for the sake of clarity we need to establish a definition of 'rich'. IMO, how one earns their income should not matter. The gals and guys that punch a time clock and produce a good or provide a service should not have a higher percentage of their compensation taxed than someone whose income is generated from picking winners and losers on Wall Street. There are relatively few tax loopholes for the average wage earner. I just don't see the current arrangement as equitable.

When you look at the board of directors on the largest corporations, it is is a veritable Who's Who of the corporate elite. You have folks whose sole source of income is simply being a member of a board of directors. Small business, namely owner/operator corporations are the engine that drives the economy. The free market ought to be reward enough to those that want to bring a good or service to market. If they have something that meets or generates consumer demand, they will be rewarded with revenue.

I also read others talk about regulations need to be relaxed or removed. Sounds fine, but they need to provide some specifics. This is a large, complicated society and I would imagine some regulations are out dated or obsolete. However, consumer safety, clean air and water should not be on the table.

[mark r johnson]

I too am a small business owner; in fact more than one. You could reduce my tax load to nothing and it will not add one single employee to the staff. Consumers are what I need to build my business. So many consumers have been taken out of the purchasing market over the last few years.

I don't mind paying my share of taxes and not mine losing those deductions (like home loans) to do so. I would be just as comfortable living in an 8,000 sq ft house instead of my current 12,000 sq ft. I often thank my kids for paying part of my house payment.

[Scott Shepherd]

Here is a video that pretty much proves your point.



Thanks for sharing, I hadn't seen that. Exactly what I was talking about.

Big fat companies employee people. People like you and me.

[Scott Shepherd]

I don't mind paying my share of taxes and not mine losing those deductions (like home loans) to do so. I would be just as comfortable living in an 8,000 sq ft house instead of my current 12,000 sq ft. I often thank my kids for paying part of my house payment.

No one's stopping you from paying more. You are free to pay all the taxes you want. The IRS even has a place setup to take anything extra you'd like to give. So let's see some of the big mouth fat cats like Buffett who thinks his taxes are too low to whip out the old check book and write a check to Uncle Sam for what he thinks is fair.


http://www.youtube.com/watch?v=-ifpEROFT-U

[Greg Peterson]

Big fat companies employee people. People like you and me.

So long as they have customers they do. Business 101. I simply fail to understand why big business is held up on a pedestal as some kind of super citizen. They meet a consumer demand, meaning they fill a void in the supply line. Why they should be rewarded above and beyond what the market will bare, needs to be explained to me.

Back in 1993, for a 1,000 acre site, Alabama paid $77.5 million to improve water, sewer, gas, and electrical services, $92.2 million to improve and develop the factory site, and $60 million to train employees that would be working at the Mercedes-Benz factory. M-B also received a twenty year exemption on property taxes. The plant was expected to employ about 1,500 workers. That works out to about $200k per job.

I understand these jobs were going to end up in someones back yard, so whoever made the best offer was going to most likely get the plant. But it's a race to the bottom. Does the state really ever get a return on that investment? Does a small business owner get the same breaks as a multinational corporation?

Wall Street has demonstrated time and again their allegiance to greed and the quick buck. It's time we start doing what we can to keep our dollars as close to home as possible. The market should be rewarding the winners and punishing the losers.

[Kevin W Johnson]

Ah, if it were only so simple. There are lots of people who are so poor that they cannot pay for health insurance. People who lost their jobs and their health insurance are a good example. When you have no income, how are you to buy health insurance?

Mike

And likely an equal number of people who COULD afford insurance, but choose not too. Because doing so would mean giving up the cable/satellite tv, cigs, multiple cell phones, etc. A two pack a day habit can be $300 a month by itself. Add $100 or so for cable and high speed internet, cell phone plans aren't cheap, so add another $100-200 a month depending on the number of phones.

I personally don't have a problem in figuring how to take care of those who CAN'T, but have no intention of doing so for those who WON'T.


As for manufacturing jobs, i've seen one comment that touched on this. Wages are still a small portion of the reason for job losses to overseas locations. EXCESSIVE taxes, regulation, healthcare costs, liabilities, EPA regs, OSHA, etc., are a bigger cost concern for businesses. Now, don't take that as me saying we should not have EPA regs, OSHA, etc. But when companies don't have to deal with that in other countries, it puts us at an unfair disadvantage when a company factors their total cost to do business here, vs. overseas.

[Kevin W Johnson]

No one's stopping you from paying more. You are free to pay all the taxes you want. The IRS even has a place setup to take anything extra you'd like to give. So let's see some of the big mouth fat cats like Buffett who thinks his taxes are too low to whip out the old check book and write a check to Uncle Sam for what he thinks is fair.



Yeah, why is it the folks who complain taxes are too low, NEVER send the IRS an extra check.

[Scott Shepherd]

Why they should be rewarded above and beyond what the market will bare, needs to be explained to me.

I'll give that shot, not that it matters, because my opinion doesn't mean much, but here's why they should be rewarded. They came up with the idea, service, product. They invested millions into that said service, product, or market, they spent capital to build buildings for their stores, buildings that contractors built, and people in factories made products for. They took the risk. You didn't. To the flip side of your point, why should you, who have done nothing to create or employee people, all wages, which you pay taxes on, your employees pay taxes on, your trucking companies buy gas to haul, which they pay tax on, why should you get a break and they get nothing in return?

They took all the risk.

Take a look at Circuit City. Are you saying that there was no costumer demand for their products? Their services? Sure there was. But they put some idiot in charge that gutted the company and after 50 years in business, the company disappeared overnight. All the people, all the tax revenue from their payroll, all their trucking expenses and taxes, all their shipping costs, UPS, FedEx, and all of that. All gone. So there was a risk people took, and in that case, they lost.

But they took the risk. Taking that risk employed 100,000's of people over 50 years. That's food on the table, cars in people's driveways, and mortgage payments, all made possible because someone took a risk and started a business.

Those same consumers are out there now, so if the consumer is the deciding factor for driving everything, where'd Circuit City go? The consumers are still there. The consumers had nothing to do with CC going out of business. Their CEO ran the company into the ground because he was an idiot, not because they didn't have products people needed or wanted.

There is a huge return on investment for states giving benefits like you mention. What would you do to have Apple's HQ in your state? Can you image the tax revenue your city or state would have from a company like that? You want me to give you $50,000,000 so I can get a bite of all your sales from now on? I'd take that bet.

[Mike Henderson]

Any company gets the reward that the market will bear. Nothing more, nothing less. When someone builds a successful company, they get rewarded by the market. When they are no longer successful, they disappear. Creative destruction. That's what our economic system is all about, as long as the playing field is level. Companies are constantly trying to tilt the playing field in their favor, either through certain laws or through tax advantages. It's just human nature to try to get those extra advantages. As a country, we need to make sure the playing field is level and no company has an unfair advantage.

Mike

[Whether a company employs two people, or two hundred is immaterial. They need to be successful on a equal playing field. As a county, we've tried to keep sick industries alive but it's never been successful long term. An example is the steel industry in the 1980's.]

[Leo Graywacz]

Any company gets the reward that the market will bear. Nothing more, nothing less. When someone builds a successful company, they get rewarded by the market. When they are no longer successful, they disappear. Creative destruction. That's what our economic system is all about, as long as the playing field is level. Companies are constantly trying to tilt the playing field in their favor, either through certain laws or through tax advantages. It's just human nature to try to get those extra advantages. As a country, we need to make sure the playing field is level and no company has an unfair advantage.

Mike

The playing field hasn't been level in a long time.

[Mike Henderson]

The playing field hasn't been level in a long time.
I'm not sure what you're referring to, whether it be the advantage large companies have over small companies or whether it's between countries. A bit more detail would help.

Mike

[Greg Peterson]

Scott, Mike answered my question. But it was a rhetorical question that I asked. Perhaps that was less than obvious.

More to the point, why should a corporation receive something more than the profits they generate? Why should they not be taxed at the same rate as I or any other wage earner?

There is a very clear under current of anti-worker sentiment simmering in this country these days. Corporations are constantly mistaken as job creators. This is a false assertion with no evidence to the contrary.

Consumers/customers are the job creators. I don't care if you create the greatest whiz bang gadget in the history of mankind. If no one wants it or will buy it, no one will get hired to manufacture it. And if you can get customers and generate a profit, you too get to pay for the services that enable your operations to thrive.

[Leo Graywacz]

Corporate taxes are 35% and they pay half of the employees federal taxes, they have registration and licensing fees and all the rules and regulations to comply to. You sure that is what you want your tax rate to be?

[Greg Peterson]

If I had access to same number of write offs, sure. Our corporate rate is one of the highest in the world. But the write offs are equally numerous leaving many corporations tax liability well into single digits. 35% sounds scary until you start looking at all the deductions.

How many corporations would settle for a flat 18% tax rate in lieu of 35% with all the available write offs?

On the other side of the ledger, I never understood why parents get a tax credit for having kids.

[Leo Graywacz]

The gov has decided they want to push a certain lifestyle to be the norm. You get a mortgage deduction so you want to buy a house. You get a deduction for children so you maintain the population. If you have no children then you get no deduction. But the deduction you get for each child is a pittance to what is required to raise them. I have 2

[Greg Peterson]

Full disclosure: I have a step son and own my home.

Leo, yes kids are expensive. But I don't think the race exactly needs an incentive.;)

Same for the mortgage deduction. Not sure that would be a deal breaker for most buyers. Of course the average selling price might drop a little.

[Scott Shepherd]

Consumers/customers are the job creators.

And those consumers and customers get their money from who......? Does it magically appear? Do they walk to the mailbox once a week and pull out a handful of cash? Does it rain from the sky and they collect it with a bucket?

They get that money to spend from WORKING for companies. I've said it about 3 times now and no one addresses it. If you increase the burden on an employer, do you think they are just going to absorb the burden and carry on? If you raise taxes on oil, do you think Exxon is going to leave the price the same? If you put a tax on the airline industry do you think your ticket will cost the same? You can't name a single example of when taxes get raised on corporations that they don't directly pass it through to consumers. So if the consumer is the all mighty in your world, how is this "fair share" thing working out for you when you taxed an oil company at the top level and now the poor people that make $20,000 a year pull up to the pump and see $5.00 a gallon gas. At no point does taxing the top level ever NOT hurt the people at the bottom.

If the price of computer chips and hardware goes up, do you think Dell leaves the price the same? Who pays that higher price? The consumers. So explain how raising all these taxes does anything other than cost the little guy, because it doesn't. You're speaking in theory, not reality.

I've never seen a corporate tax that they couldn't find a loophole around.

I used to do a lot of work for Philip Morris. Huge, huge company. Those people were so far ahead of the government it wasn't funny. They had the best lawyers money could buy and I watched them put things in place 3-4 YEARS ahead of what the government did to hurt them. By the time the government got around to passing something, they had already restructured around it so it had no impact. So anything you do is going to go that same route. You want to tax capital gains from them, no problem, they'll find a way to make their balance sheet look like it didn't have any. You'll never get a single penny of that money. Business will outsmart government day after day, week after week, year after year.

I still can't see how taxing the top level does anything but make all of our purchases go up in cost. That's reality.

[Greg Peterson]

Scott

I guess we'll have to call it a draw. It's the age old chicken-egg paradox.

However, I've never witness an employer adding a liability to the payroll account for which that liability was not justified. Never.

Perhaps this not uncommon in Fortune 500 companies, but I have never seen this done within the small business sector. When the landscape guy has more customers than he can handle by himself he hires a worker. When the quickie mart decides it would be profitable to be open 24 hours, they hire someone. When the auto repair shop gets more customers than they can handle, they have to expand and hire more technicians.

[Scott Shepherd]

So still not input on what's going to happen to gas prices at the pump, which affect middle class and poor people, if the oil companies are taxed $1 per gallon? Do you think the prices will stay the same as they are now? If you think the prices will go up at the pump, then you agree with the actions I say will take place if it happens.

If your landscaper example hires more people because he's busy, and suddenly, he has to pay more taxes (his fair share), do you think he's going to leave the prices he charges the same? He'll have less income to pay for the same expenses. So he'll be forced to do one of two things. He'll have to raise his prices or cut the payroll. If he raises prices, who's that hit? The consumer.

In every single example you have cited, if you tax someone more, then the consumer is the one that suffers and pays the bill. I have yet to meet a small business owner, or large business owner that just "sucks it up" and says "I'll eat it".

[Mike Henderson]

So still not input on what's going to happen to gas prices at the pump, which affect middle class and poor people, if the oil companies are taxed $1 per gallon? Do you think the prices will stay the same as they are now? If you think the prices will go up at the pump, then you agree with the actions I say will take place if it happens.

If your landscaper example hires more people because he's busy, and suddenly, he has to pay more taxes (his fair share), do you think he's going to leave the prices he charges the same? He'll have less income to pay for the same expenses. So he'll be forced to do one of two things. He'll have to raise his prices or cut the payroll. If he raises prices, who's that hit? The consumer.

In every single example you have cited, if you tax someone more, then the consumer is the one that suffers and pays the bill. I have yet to meet a small business owner, or large business owner that just "sucks it up" and says "I'll eat it".
Of course, things are not that simple. A business can only raise prices if the consumer is willing to pay. If your competitor will do the job for less, you'll have a hard time raising prices.

But let's examine your assertion a bit more. If you're a business owner and can simply raise prices to pay any additional tax on you, what do you care? If that's true, you should be indifferent to whatever tax was levied on your business.

Perhaps the truth is different. An attempt to raise prices may cause the consumer to purchase less of your product and will affect your profit, which is perhaps why you are so vociferous in your objection to business taxes.

Everyone, including businesses, should pay their fair share of taxes. Your business benefits from the advantages of this country and it's economic system and you should pay your share to support it. The question is "How much?" and that's to be resolved by discussion and compromise.

Your protestations are the usual protestations: that everyone, except me, should be taxed. Every person, every entity, can give lots of reasons why they should not pay taxes.

Mike

[Policies that allow (or encourage) the consumer to spend more will do more for our economic system, will put more people back to work, than anything else. Consumer spending is the driver of job growth.]

[Scott Shepherd]

Your protestations are the usual protestations: that everyone, except me, should be taxed. Every person, every entity, can give lots of reasons why they should not pay taxes.

Mike

[Policies that allow (or encourage) the consumer to spend more will do more for our economic system, will put more people back to work, than anything else. Consumer spending is the driver of job growth.]

Mike, let's stick to the facts here and not make up things I said. I never said a business should not pay any taxes. Never once have I said that or suggested that. What I have said, and what you haven't answered either, is that if you raise taxes on businesses, it isn't going to solve the problem. Did you watch the first video on here that someone posted?

Businesses DO pay taxes. They pay taxes all day long. They pay taxes for their employees too. I know we have to match the payroll taxes, so yes, we're paying taxes. We're also selling items and collecting taxes on that, that we give to the state. We ARE generating income for the government every single day.

My question which continues to remain unanswered, is if you raise the price of fuel, that raises the price of trucking. If you raise the price of trucking, you raise the price of farming and getting food to market. If you raise food prices, you are hurting those that need it most. I haven't seen a company yet eat the cost of high fuel prices. I've asked that question about 4 times now and I have yet to get an answer, instead, I get cast as someone that thinks business should pay zero taxes, which hasn't been uttered from my lips.

You can't tax your way out of the problem. And all those marvelous "spending consumers" you keep mentioning, they all have to get a check from somewhere. Who's giving them the checks so they can keep spending? They are earning those checks at businesses. Hurt the businesses and you'll hurt those people that are getting the checks. Don't believe me, then explain how come the unemployment rates has gone from 4% to 9%. The fact is that businesses have been hurt in the economy, so who suffered? The people that worked for those businesses. So once again, when things get tough on businesses and their numbers aren't hitting, they do what......? They lay people off because they can't afford to keep them and have their numbers look right. So who suffered? Business or the employee? The employee. The business almost never takes it on the chin, the employee almost always takes it on the chin.

[Mike Henderson]

Mike, let's stick to the facts here and not make up things I said. I never said a business should not pay any taxes. Never once have I said that or suggested that. What I have said, and what you haven't answered either, is that if you raise taxes on businesses, it isn't going to solve the problem. Did you watch the first video on here that someone posted?

Businesses DO pay taxes. They pay taxes all day long. They pay taxes for their employees too. I know we have to match the payroll taxes, so yes, we're paying taxes. We're also selling items and collecting taxes on that, that we give to the state. We ARE generating income for the government every single day.

My question which continues to remain unanswered, is if you raise the price of fuel, that raises the price of trucking. If you raise the price of trucking, you raise the price of farming and getting food to market. If you raise food prices, you are hurting those that need it most. I haven't seen a company yet eat the cost of high fuel prices. I've asked that question about 4 times now and I have yet to get an answer, instead, I get cast as someone that thinks business should pay zero taxes, which hasn't been uttered from my lips.

You can't tax your way out of the problem. And all those marvelous "spending consumers" you keep mentioning, they all have to get a check from somewhere. Who's giving them the checks so they can keep spending? They are earning those checks at businesses. Hurt the businesses and you'll hurt those people that are getting the checks. Don't believe me, then explain how come the unemployment rates has gone from 4% to 9%. The fact is that businesses have been hurt in the economy, so who suffered? The people that worked for those businesses. So once again, when things get tough on businesses and their numbers aren't hitting, they do what......? They lay people off because they can't afford to keep them and have their numbers look right. So who suffered? Business or the employee? The employee. The business almost never takes it on the chin, the employee almost always takes it on the chin.
The cost of running the country has to be paid. It seems that you would prefer that it be totally paid by consumers directly. My problem with that is my belief that every person and entity should pay their fair share of the cost of running the country. So if taxes need to be raised, you should pay your fair share of that increase. The burden of those costs should not fall only on the individuals. The amount each entity and person should pay is the subject for debate and compromise.

Mike

[Heather Thompson]

Scott,

Simple qestion, GE made over 13 billion in 2010, paid NO tax and got a huge return, can you explain that to me.

Heather

[Leo Graywacz]

Good account and and lawyers, plus a ringer in the White House.

[Larry Edgerton]

And those consumers and customers get their money from who......? Does it magically appear? Do they walk to the mailbox once a week and pull out a handful of cash? Does it rain from the sky and they collect it with a bucket?

They get that money to spend from WORKING for companies. I've said it about 3 times now and no one addresses it. If you increase the burden on an employer, do you think they are just going to absorb the burden and carry on? If you raise taxes on oil, do you think Exxon is going to leave the price the same? If you put a tax on the airline industry do you think your ticket will cost the same? You can't name a single example of when taxes get raised on corporations that they don't directly pass it through to consumers. So if the consumer is the all mighty in your world, how is this "fair share" thing working out for you when you taxed an oil company at the top level and now the poor people that make $20,000 a year pull up to the pump and see $5.00 a gallon gas. At no point does taxing the top level ever NOT hurt the people at the bottom.

If the price of computer chips and hardware goes up, do you think Dell leaves the price the same? Who pays that higher price? The consumers. So explain how raising all these taxes does anything other than cost the little guy, because it doesn't. You're speaking in theory, not reality.

I've never seen a corporate tax that they couldn't find a loophole around.

I used to do a lot of work for Philip Morris. Huge, huge company. Those people were so far ahead of the government it wasn't funny. They had the best lawyers money could buy and I watched them put things in place 3-4 YEARS ahead of what the government did to hurt them. By the time the government got around to passing something, they had already restructured around it so it had no impact. So anything you do is going to go that same route. You want to tax capital gains from them, no problem, they'll find a way to make their balance sheet look like it didn't have any. You'll never get a single penny of that money. Business will outsmart government day after day, week after week, year after year.

I still can't see how taxing the top level does anything but make all of our purchases go up in cost. That's reality.

Steve

This is true for large corporations that can spare the resources to deal with the governments manipulations, but small corporations like my own do suffer. We often just do not have the cash to make the moves we need, nor do we have the resources to find out what those moves should be.

I would agree that taxes on large corporations have a net 0% gain for consumers, but they [government]are continually able to sell it to the voting public who is woefully uninformed. I do notice a trend where more and more people are pulling their head out of the sand to see what has happened to their buying power.

Larry

[Larry Edgerton]

Scott,

Simple qestion, GE made over 13 billion in 2010, paid NO tax and got a huge return, can you explain that to me.

Heather

Don't forget the jobs that they shifted off-shore. That their CEO is in the White House is an insult if not worse.

Larry

[Greg Peterson]

Scott - I manage a fleet of twenty three delivery trucks. The company has had to absorb the fuel expense in order to remain competitive. We cut corners elsewhere. We can't cut back on workers as we have no 'spare' workers to remove. The upside to challenging times like this is it forces you to examine your operations and sort out inefficiencies. When business gets better we will be better able to deliver our goods and services.

The only incentive we have for hiring more workers is if our customers get busier.

Corporations have been granted personhood so they should have to pay like any other person.

[ray hampton]

Greg, the twenty three trucks, are you talking about pick-up trucks/ semi-tractor or a different size of truck
the dollar spread between a pick-up and a semi-tractor is 1 to 5 or higher . I think that companies need to pay more taxes BUT I DO NOT KNOW HOW MUCH MONEY THEY PAY TAXES ON and none of the stories about their taxes that I read mention this FACT

[Greg Peterson]

Pick up trucks. Scott citing the cost of gasoline as an argument, so I provided a real world example. Was not trying to mislead anyone. Never even occurred to me.

The rest of your post I don't understand.

This thread has been very interesting. I think the mods have shown tremendous restraint, as have the participants. It's refreshing to see civil conversations can occur on subjects that normally create unfortunate word selection.

[ray hampton]

Greg, will you explain why you do not understand the rest of the story

[Greg Peterson]

"I think that companies need to pay more taxes BUT I DO NOT KNOW HOW MUCH MONEY THEY PAY TAXES ON and none of the stories about their taxes that I read mention this FACT"

I do not understand this sentence. I am not trying to be difficult or smarmy. I simply do not understand your meaning.

[Gary Hodgin]

The U.S. corporate tax is highly inefficient. That is, it doesn't raise nearly as much revenue as it otherwise would if it were not for the distortions it creates. This is evident in international comparisons of statutory tax rates and effective tax rates. U.S. corps would appear to pay high rates compared to other OECD countries based on statutory rates. However, the effective rate paid by U.S. corps is one of the lowest. There are a lot of loopholes in the corporate code and they've been there for decades. Of course certain corps have more convenient loopholes that others.

I don't mean to suggest anything politically, but both parties seem to agree that they tax structure is inefficient and it looks to me like they could get together and lower statutory rates and remove loopholes. This is a win-win for republicans, democrats, tax payers, and corporations. Lower tax rates, more tax revenue and more efficient use of the nation's resources. Corporates could focus on the economic merits of their decisions and pay less attention to the tax consequences.

Although the situation may be a little different today (not much), here is a 2005 study by the Congressional Budget Office that looked at international comparisons of corporate statutory and effective rates. The tables are somewhere around pages 12-15 if interested.

http://www.cbo.gov/ftpdocs/69xx/doc6902/11-28-CorporateTax.pdf

[Greg Peterson]

Scott,

Simple qestion, GE made over 13 billion in 2010, paid NO tax and got a huge return, can you explain that to me.

Heather

Corporations are allowed to deduct their losses. GE had a net loss of $408 million in the US. They did generate $10.8 billion in profits overseas.

[ray hampton]

"I think that companies need to pay more taxes BUT I DO NOT KNOW HOW MUCH MONEY THEY PAY TAXES ON and none of the stories about their taxes that I read mention this FACT"

I do not understand this sentence. I am not trying to be difficult or smarmy. I simply do not understand your meaning.
no1" I think that the wealthy need to pay the same percent in taxes that that the poor man pay[do not tax the poor woman ]
no2, I do not know how much taxes the wealthy pay
no3, none of the news stories furnish all of the facts, without all of the facts how can you explain about taxes

[Leo Graywacz]

The poor man doesn't pay taxes.

[Mike Henderson]

no1" I think that the wealthy need to pay the same percent in taxes that that the poor man pay[do not tax the poor woman ]

Stop and think about that for a minute. I don't know if you know what it's like to be poor, but when you are poor 20% of your income (for example) could make the difference between you living and starving. For a wealthy person, 20% may mean not taking a vacation to the French Rivera.

Taxing everyone the same percent would be cruel in the extreme.

There's a theory of marginal value. That is, how much is an extra dollar worth to a person. To a poor person, an extra dollar has a very high value. To a rich person, an extra dollar has a very low value. Taxes should strive to tax each person at the same marginal value - which means that the rich person pays a higher percent than the poor person.

Mike

[Rick Prosser]

I think I have learned more (at least thought more) about the economy from this thread. Very interesting to see rational ideas and arguments in a civil manner...

[Kevin W Johnson]

But even at the same percentage, the more a person makes, the more they pay. Why is one persons debt to society higher, simply because they make more? A flat tax rate would be as close to fair as we could get, and even then its still not totally fair. Those that favor taxing others at a higher rate are simply showing their wealth envy, and don't mind making others pay more, because they themselves won't have to pay that rate.

At a flat rate of 10%, a person making $40,000 would pay $4,000. A person making $400,000 would pay $40,000 which is still 10 times what the other person would pay. Why should his/her existance in society be that much more costly?

[Mike Henderson]

But even at the same percentage, the more a person makes, the more they pay. Why is one persons debt to society higher, simply because they make more? A flat tax rate would be as close to fair as we could get, and even then its still not totally fair. Those that favor taxing others at a higher rate are simply showing their wealth envy, and don't mind making others pay more, because they themselves won't have to pay that rate.

At a flat rate of 10%, a person making $40,000 would pay $4,000. A person making $400,000 would pay $40,000 which is still 10 times what the other person would pay. Why should his/her existance in society be that much more costly?
The idea that equal percentages equates to fairness is a specious argument. A person who makes $1M per year will have very little life change at a 10% rate. A person making $20K per year will have a significant life change at 10%. Equal percentage taxation across vast differences in income is regressive in the extreme.

Let's take your idea that each person should pay the amount that it costs society to provide for them - police service, education, etc. The poor person simply could not pay that amount, and the rich person would not even notice the payment. Very quickly, we'd become a society of a few rich people and a hoard of poor people. I don't think that would make for a strong, vibrant country.

Mike

[Gary Hodgin]

There's a lot of confusion over taxes and fairness because they're complicated issues. There is no generally accepted notion of what is "fair" when it comes to taxes. Some believe a flat tax rate (constant percentage of income paid to taxes) is fair, while others believe some degree of progressivity is fair (for the reason Mike mentioned above), while a few believe fair means everyone pays the same amount of tax regardless of income. Personally, I don't know anyone in the last category but I've heard guys around the barber shop who do. Notions of fairness also change when one considers individual circumstances, such as number of dependents, medical bills, and other non-income factors. It's not surprising that it's impossible for a large number of people to unanimously agree on what a fair tax structure looks like. Plus, there's a lot of taxes besides the Fed. income tax that people pay and these taxes factor into fairness.

I also think some of the recent confusion is over Warren Buffett's comment that he pays a lower tax rate than his secretary despite the fact that he's one of the wealthiest men in the country and the federal income tax is progressive. Buffett pays a lower rate because his income is from dividends and capital gains, which is taxed at a lower rate than the marginal rate paid by middle income people. The same applies to hedge fund managers and others whose income isn't considered ordinary income for tax purposes. If he were paid a salary he would pay a least the same rate and probably a slightly higher rate than his secretary.

Unfortunately, all of the talking heads I've seen on tv and and listened to on radio are trying to push an agenda and aren't the least bit interested in having a rational discussion of taxes and tax fairness.

[Kevin W Johnson]

The idea that equal percentages equates to fairness is a specious argument. A person who makes $1M per year will have very little life change at a 10% rate. A person making $20K per year will have a significant life change at 10%. Equal percentage taxation across vast differences in income is regressive in the extreme.

Let's take your idea that each person should pay the amount that it costs society to provide for them - police service, education, etc. The poor person simply could not pay that amount, and the rich person would not even notice the payment. Very quickly, we'd become a society of a few rich people and a hoard of poor people. I don't think that would make for a strong, vibrant country.

Mike

First off, that isn't "my idea". I simply asked why is ones debt more than anothers? As i stated, a flat 10% is as close to fair as we could possibly see, and is the tax system that i would support. Our gov't is simply too bloated. The tax rates that we see are simply unnecessary as we could provide the necessities at much lower rates. One only needs to read up on the waste issue to understand why tax increases, no matter who it involves, meets with such opposition.

If we really want "fairness" the 46 million people who file returns and pay NO federal income tax, should be paying their share as well.

[Phil Thien]

I simply asked why is ones debt more than anothers?

For of those to whom much is given, much is required?

Wait, is that an argument for high taxes, or accountability from those that receive government benefits?

[Mike Henderson]

First off, that isn't "my idea". I simply asked why is ones debt more than anothers? As i stated, a flat 10% is as close to fair as we could possibly see, and is the tax system that i would support. Our gov't is simply too bloated. The tax rates that we see are simply unnecessary as we could provide the necessities at much lower rates. One only needs to read up on the waste issue to understand why tax increases, no matter who it involves, meets with such opposition.

If we really want "fairness" the 46 million people who file returns and pay NO federal income tax, should be paying their share as well.
Many people have expressed the idea that we should reduce the size of the government. But as soon as our representatives try to cut a program (except programs for the poor), a sizable block of people (voters) rise up to protect the program. If you want to reduce the size of government, you'll need to specify what programs you want to cut and how you're going to overcome the opposition.

Mike

[Mike Henderson]

For of those to whom much is given, much is required?

Wait, is that an argument for high taxes, or accountability from those that receive government benefits?

I'd say it's both.

Mike

[Greg Peterson]

The poor man doesn't pay taxes.

This is a common statement. On it's surface it is outright incorrect. Everyone pays taxes. Somewhere around 46% of US workers do not pay federal income tax. But SSI, Medicare and unemployment taxes are taken out of each paycheck.

The question that should be asked rather than throw out that comment is why do 46% of US workers not pay federal income taxes.

First, I believe many of them are directly benefiting from the stimulus plan which cut the federal income tax obligation in 2010.

Second, this statistic clearly demonstrates that almost half the working population does not have access to good paying jobs.

So yes, 46% of the US work force did not pay federal income tax last year, but they paid SSI, Medicare, unemployment, property, gas, utility (gas, water, electric..) taxes. But you won't hear the pundits explain it with this level of detail because that would undermine their position.

[Gary Hodgin]

Overwhelmingly, the primary revenue source at the state level in TN is the sales tax and at the local level it's mostly property taxes with some additional sales tax. Combined state and county sales tax rate in my county is 9.75 percent. I believe about 6.5 or 7 percent of that is state sales tax. We do have an income tax but very few pay it. It's only paid on dividend income above a certain amount and the rate is very low. We also pay a wheel tax of around $80 per vehicle per year. There are a lot of taxes besides the federal income tax.

[Ben Hatcher]

Greg, I'm glad to see this point brought up. 46% pay no federal income tax, but if they have jobs will pay payroll tax, state and local income taxes. Don't forget that they also tend to spend all of their income (and then some) so they're paying a higher percentage of their income on gas and sales taxes as well. The effective/combined tax rate for the poor when all of these factors are taken into account should be part of the discussion.

As far as the cost to society per person, I don't think that it is the same across the board, especially when you count the corporate person. If you think about the actual cost of the services used I think that the more affluent, especially those who make their money as a business owner is much higher than that of the individual worker. For a business, who pays to educate their workforce? Who built and maintained the roads that they use to get raw materials and ship finished goods? Who paid for the police service that keeps those goods from being stolen?

The tax structure (excluding the christmas tree of deductions) is in theory fair for each income bracket. Everyone's first x $ is taxed at the same rate. The next x+1 dollar is taxed at a different rate. High marginal tax rates reduce the wealth gap. Large wealth gaps tend to lead to civil unrest. There are examples of this throughout the history of humanity. There may be a bit of socialism in that policy, but I see that as a good thing for a society. How can all men be created equal if 1% of them are created to posess ½ the wealth?

[Larry Edgerton]

In a conversation with the CEO of a small privately held corporation today the original email I posted and also shared with him came up. This company employs around 2000 people, so not large, but not small either. He had looked in on this thread as I had mentioned that as well.

One thing to keep in mind is that somewhere around 90% of the jobs are created by small privately owned corporations such as this. The large corps that are always in the news for their misc. shenanigans are actually a minority as far as the jobs created.

It was my friends opinion that there will be little hiring until the government stops handing down unlawfull mandates. There is no way to predict costs at the present time as no one has a clue what they will pull next, so to stick your neck out, and your checkbook at this time is not considered wise. They will not make wholesale investments and add new employees until they feel the government has stabilized.

I was somewhat surprised that a company of that size was feeling the same pinch as my tiny company. I will not add any employees myself until this insurance situation is sorted out. As it is stated now I will lose money every hour a person worked because in my market so many are working under the table that I could in no way raise my rates to compensate. The last time I figured it out billing out carpenters at $30 ($30@hr) an hr. I can pay no more than $18.63 an hour or I am losing money. I like to pay a good man $25 hr., so my only option is subcontracting, but I am sure that loophole will be closed soon.

Very interesting conversation......

Larry

[Greg Peterson]

Larry, what unlawful mandates (plural) is the being handed down? I hear and read about all the regulations and mandates that are strangling business but no specifics are offered.

I can appreciate your comments about the state of the health insurance industry. For years now, not just the past year or two, premiums have seen double digit rate increases. This is not a recent phenomenon. With the 46% of US workers not paying federal income tax last year (stimulus plan and/or low paying job) I would hazard to suggest that most families are little more than a serious illness away from financial disaster.

Health insurance is expensive. The alternative is to be irresponsible, reckless and is a sure ticket to debtors prison.

Personally, I think the health care plan was compromised into oblivion. Medicare should have been opened up to everyone. In return, every participant would see a tax on their wages. Don't want to participate in Medicare for all? Opt out and buy your own plan. Don't want to do that either? Don't buy any insurance then. But if you end up requiring health care, you will pay the bill. And bankruptcy will not protect the persons who opt out.

I'm all for eliminating obsolete, redundant or over onerous regulations. But clean air, water, the commons if you will, and consumer protection are not negotiable.

[Kyle Brooks]

Mr Gates and Mr Buffett both know the tax system very well. Both individuals use it to their own advantages, which is why Warren has come out and said the rich need to be taxed more. When he pays less taxes than his secretary something is not right... I look at it this way I guess, if you do not want to pay taxes and help this country there is always a plane ride somewhere else and kudos on trying to do your business there. Corporate America has sold this country down the river. I'm neither a fan/foe of Bill Clinton, but the other night he said that several years ago corporations in this country changed. It used to be that a corporation had responsibility to its workers, customers, and its shareholders and they were all pretty equal. Today corporations responsibility falls in this order, Shareholder....................................... .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. .....Customer..................................... .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. .................................................. ...........................................Worker, oh and by the way, how can we cut this job so that we can make a little more profit that we can send to Zug and keep in our off shore account. I know with the way things are going right now that America is looking for some leadership. The problem is no one wants to give anyone credit, even if the other side does think that it is a good idea. Here is one last though and I will go. If you don't want to pay taxes please enlighten me with a list of things that you want to give up... roads? bridges? flight? mass good transportation "railroads?" Just wondering what they would be?

[Leo Graywacz]

I don't think that Warren Buffett pays less taxes than his secretary. He pays a lower percentage rate than his secretary.

The funny thing about business is they are in it for the profits. Imagine that.:D

[Greg Peterson]

Leo - No one objects to a business making profits. No one objects to someone taking a risk, working hard and being rewarded by the market.

CEO compensation has gone beyond obscene. The justification for their compensation packages is an insult to the average person. Just Google Bob Nardelli's and Home Depot if you want to understand mine, and many others, outrage and contempt for big corporations.

Somehow we have lost sight of the fact that our government is meant to serve us, the people. It now seems as if business, or at least big business, is the primary beneficiary of government.

[Leo Graywacz]

I do agree that some of the CEO paychecks are obscene. But do you really want to start the ball rolling on letting the government regulate how much one can get paid?

[Greg Peterson]

Leo - Sorry if you got the impression that I was suggesting there be a regulation on CEO and board of directors compensation.

If you are unfamiliar with the Bob Nardelli/Home Depot share holders meeting fiasco, do yourself a favor and google it. The event demonstrated just how little control the actual share holder has over these large companies. When you start looking at how many members on the board of directors are connected to each other, it's quite unsettling. It is a whose who. Cronyism at its finest. And keep in mind many of these people sit on numerous boards.

But you do bring up a good point. The market has done a poor job of regulating executive compensation. There is no longer any relation between a companies performance and executive compensation. It's as if the board of directors have abandoned their fiduciary responsibilities and chosen to line their pockets.

After leaving Home Depot, Bob Nardelli now heads up the investment group that bought Chrysler. Failing upwards is a tough way to make a living. But it sure pays well.

As for the 46% that pay no federal income tax, half of those workers earn less than $20k per year. The next largest sector of citizens not paying federal income tax are senior citizens. SSI is exempt from federal income taxes. The third sector that comprises this group are low income families that earned income tax credit, the child credit, and the childcare credit.

The Economist (http://www.economist.com/blogs/democracyinamerica/2011/07/tax-fairness)

So when some extremely well paid pundit gets on the air and bloviates that almost half of Americans don't pay any income tax, that person is either woefully ill informed, in which case they need to set the record straight with their audience (if they wish to retain any credibility). Or they are complicit in knowingly spreading a lie in order to advance an agenda, in which case they have violated the terms of the FCC license. IMO, these pundits are simply not 'entertainers'.

[Leo Graywacz]

But you do bring up a good point. The market has done a poor job of regulating executive compensation. There is no longer any relation between a companies performance and executive compensation. It's as if the board of directors have abandoned their fiduciary responsibilities and chosen to line their pockets.


Sounds like our congressmen.:(

[Ben Hatcher]

I had a thought on my way in today regarding the capitol gains tax rate and investment. Wouldn't the lower tax rate for capitol gains actually tend to reduce investment in capitol intensive areas like manufacturing and increase investment in areas like finance? Why would someone spend money on a machine to make them money when that will be taxed as profit when they can invest it in some financial instument and have it taxed at half the rate?

[Gary Hodgin]

A lower capital gains tax is good for investment. It raises the present value of the investment project. But, you have a point here. The debate today seems to be over the high corporate taxes, which are relatively on the upper when you compare statutory tax rates internationally. Supposedly, this is driving investment offshore and is a major reason for the slow economy. However, the effective corporate tax rates (what corporations actually pay) are low by international comparisons. The difference between the statutory rates and the effective rates reflects the distortions created by the combination of high statutory rates and large amount of deductions and exemptions. The solution is to remove some of the exemptions/deductions and lower the statutory rates.

The difference in tax treatments (capital gains, ordinary income, etc...) is what creates the distortions and inefficiencies. Income should be treated equally regardless of its source. The system could still be progressive but treat income the same.

Although I'd like to see some changes in the tax structure, I believe the current problems with jobs and investment have little to do with the tax structure. Right now, there's a lot of excess capacity and I can't see businesses on a large scale expanding plant and equipment in response to a lower tax rate when they're not using what they've got. For some a lower rate or faster depreciation write-offs might increase investment, but not enough to make a big difference.

Also, as mention in one of the above posts, additional uncertainty created by govt has had a negative effect on the economy. This would include uncertainty about future health care costs and future environmental standards. I'm sure these things factor into businesses' decisions over hiring and technology choices. These are tough issues and they're some serious trade-offs involved in any decision.

Overall, there are population/demographic problems along with the housing/construction industry mess that have had continuing negative effect on the economy. Eventually, these things will probably work out but it looks like it's going to take a while. The Fed has tried as best it can to deal with the economy but it's been like spitting into a strong wind.

[Scott Shepherd]

There is more than a trillion dollars sitting overseas from US companies. If they bring it here, they get taxed, so they don't bring it here. So here's the option. Lower the taxes and let them bring it here, or leave it the way it is (or raise the taxes) and you can leave it where it's at now. So if you go one way, you can encourage it to come back to the USA. If you leave it alone or go the other way, and you get nothing. So you can have something, or you can have nothing. Your choice. You can't make them bring it here, they have to do it on their own freewill. If you had a pile of cash sitting in an offshore account, and you were doing just fine with it where it was, and someone said "Hey, bring that money back to the USA and we'll tax it heavily", what would you do? Probably the same thing they are doing "Thanks, but no thanks".

Right now we have none of that money here. Zero. Would you rather have a couple trillion brought here or zero. I'll take the couple trillion. If they want to invest in R&D, buy food for homeless people, or buy lottery tickets with it, I couldn't care less. It's better to have it spent here than spent somewhere else.

So zero or more than zero. I'll take the more than zero for $400 Alex.

[Mike Henderson]

There is more than a trillion dollars sitting overseas from US companies. If they bring it here, they get taxed, so they don't bring it here. So here's the option. Lower the taxes and let them bring it here, or leave it the way it is (or raise the taxes) and you can leave it where it's at now. So if you go one way, you can encourage it to come back to the USA. If you leave it alone or go the other way, and you get nothing. So you can have something, or you can have nothing. Your choice. You can't make them bring it here, they have to do it on their own freewill. If you had a pile of cash sitting in an offshore account, and you were doing just fine with it where it was, and someone said "Hey, bring that money back to the USA and we'll tax it heavily", what would you do? Probably the same thing they are doing "Thanks, but no thanks".

Right now we have none of that money here. Zero. Would you rather have a couple trillion brought here or zero. I'll take the couple trillion. If they want to invest in R&D, buy food for homeless people, or buy lottery tickets with it, I couldn't care less. It's better to have it spent here than spent somewhere else.

So zero or more than zero. I'll take the more than zero for $400 Alex.
How about if we force them to repatriate the money (tax free) but require them to distribute it to the poor so that it will kick start consumer spending? (that's said in jest in case you didn't catch it).

The problem is where the money would go after it is repatriated and whether it would do anything to help the economy. Right now, companies and the wealthy are sitting on piles of cash and don't know what to do with it. They don't see any decent investments so they buy US government bonds (which is exactly what they do with it today from foreign countries). If we allowed large companies to repatriate money tax free, or at very low rates, it's likely to wind up in the same place. Companies don't need additional capital - they have plenty. They just can't do anything with it, and that's a function of the economic situation in the US today. Until that improves, extra money will not do any good (unless it goes to consumers who will spend it).

Mike

[Scott Shepherd]

Sure they can do something with it. They can invest it in China, which is what they are doing.

Like I said, you can have zero coming into the country and a trillion spent in China's economy, or you can have it here, spent in our economy. Maybe they spend it, maybe they don't, but if they don't, it still requires people in the USA to be doing the accounting, investing, banking, and all the other things required to keep up with a trillion dollars.

You have a choice. You can leave it all in China, or you can bring it here. The current policies make it make more sense to leave it in China, obviously, because that's where it's being spent. How's that working for our economy? (hint......not too good).

[Ben Hatcher]

Scott, That argument assumes that the only thing keeping companies from spending that money is that it is costly/hard to get to. It is probably true for some, but probably not most of them.

[Scott Shepherd]

Okay, we'll just leave it all overseas then, and then we can complain there are no jobs here. That'll work.

[Ben Hatcher]

My point is that it doesn't matter where it is if the owner has no intention of using it. If there were a requirement that any money repatriated as part of the tax holiday be spent immediately, then I'd be very suportive of that plan.

[Mike Henderson]

Okay, we'll just leave it all overseas then, and then we can complain there are no jobs here. That'll work.
Yep, if we bring it back, we'll still complain there are no jobs here.

Mike

[Mike Henderson]

Sure they can do something with it. They can invest it in China, which is what they are doing.

Like I said, you can have zero coming into the country and a trillion spent in China's economy, or you can have it here, spent in our economy. Maybe they spend it, maybe they don't, but if they don't, it still requires people in the USA to be doing the accounting, investing, banking, and all the other things required to keep up with a trillion dollars.

You have a choice. You can leave it all in China, or you can bring it here. The current policies make it make more sense to leave it in China, obviously, because that's where it's being spent. How's that working for our economy? (hint......not too good).
That money is NOT invested in China. China has a controlled currency and there's significant restrictions on taking money out of the country. So if they did invest the money in China they really would be stuck. China does this to avoid speculation in its currency, and the consequent swings in value. If they allowed free trading in their currency, the value of the renminbi would rise significantly and they definitely do not want that. That money is most likely invested in US bonds.

Bringing a bunch of money into the US will do almost nothing unless it goes to consumers, who will spend it.

Mike

[David Weaver]

Bringing a bunch of money into the US will do almost nothing unless it goes to consumers, who will spend it.

Mike

Then it will go to China.

[Mike Henderson]

Then it will go to China.

LOL, How true!!!

Mike

[Jerry Bruette]

Even if the tax on this trillion dollars was zero what would be the incentive to bring it back to our shores and invest it here?

Wouldn't they invest the catital in a country where they can maximize their profit?

Jerry

[Scott Shepherd]

[QUOTE=Mike Henderson;1779240]That money is NOT invested in China./QUOTE]

I guess I misread all the articles and interviews by CEO's in the high tech world building semiconductors that said they were investing heavily in China and production facilities there. I guess I dreamed all that.

Companies are building factories in China all the time. Take Apple for example. They have a ton of production coming from China. It might not have their name on the building, but it's their products being made there, to their specs, and that money is being paid to Chinese companies. To me, that's investing your money (and production) in China.

[Mike Henderson]

[QUOTE=Mike Henderson;1779240]That money is NOT invested in China./QUOTE]

I guess I misread all the articles and interviews by CEO's in the high tech world building semiconductors that said they were investing heavily in China and production facilities there. I guess I dreamed all that.

Companies are building factories in China all the time. Take Apple for example. They have a ton of production coming from China. It might not have their name on the building, but it's their products being made there, to their specs, and that money is being paid to Chinese companies. To me, that's investing your money (and production) in China.
They build factories in China, usually in partnership with a local company, in order to tap the market in China. If you think that changing the policies on repatriating money will change one itoa of those partnerships you fail to understand why those deals are made.

And those investments are made with capital from the US, in most cases.

The question is what will companies do with the profits they made offshore. Sometimes those profits are simply produced in a foreign country because the tax consequences are better there. So an international company will transfer goods from the US to their subsidiary in that country at a low price. The US subsidiary makes little or no profit on the deal. Then the foreign entity sells the product and makes a lot of profit because they paid so little for the item. In that situation, should we allow the company to bring the money back into the US at a lower tax rate since they just rigged the books to make the profit appear in that other country?

If they're just sitting on cash in those countries, the most likely place that money is parked is in US government bonds.

But in any case, there will be no advantage to the US to allow companies to repatriate profits at a low tax rate. It won't help the country and it would just be another gift to large companies.

Mike

[Companies, such as Apple, have products built in China (by Chinese companies, I might add) not because they're sitting on a bunch of cash somewhere but because those products can be built at a lower cost in China (mostly because of low labor costs) than in other countries. I saw a report the other day that production costs are increasing in China and some jobs may come back to the US. If so, it will be because it will be less expensive to build here than in China, and not because some cash is sitting somewhere.]
[Regarding semiconductors, the two major commercial fabs are TSMC (Taiwan) and Chartered Semiconductor (Singapore). Both are fully owned by Asians, except for stock that is publicly traded and was bought by someone outside Asia.]

[Scott Shepherd]

I give up. Big companies are greedy people that want to rip us all off and take all our money. Doing anything other than soaking them with a 100% tax and taking all their money would be wrong. I think we should take all their money and make them all go out of business so they won't have any more money to take to other countries.

Like I said, I guess your sources are perfect and mine mean nothing, so I'll stop reading and listening to CEO's when they say they are trying to invest in THIS country, but there are too many obstacles in the way. I guess they are all liars, which is why we should take all their money and shut their plants down.

[Mike Henderson]

I give up. Big companies are greedy people that want to rip us all off and take all our money. Doing anything other than soaking them with a 100% tax and taking all their money would be wrong. I think we should take all their money and make them all go out of business so they won't have any more money to take to other countries.

Like I said, I guess your sources are perfect and mine mean nothing, so I'll stop reading and listening to CEO's when they say they are trying to invest in THIS country, but there are too many obstacles in the way. I guess they are all liars, which is why we should take all their money and shut their plants down.
A number of people have pointed out very reasonable reasons why they do not support your position. You continue to say the same thing over and over, and do not offer any reasonable counter point to their arguments. Saying the same thing louder and with more vehemence usually doesn't do much to convince people.

Mike

[Phil Thien]

A number of people have pointed out very reasonable reasons why they do not support your position. You continue to say the same thing over and over, and do not offer any reasonable counter point to their arguments. Saying the same thing louder and with more vehemence usually doesn't do much to convince people.

Mike

At the risk of remaining silent and seeming to agree with some sort of majority opinion...

I agree w/ Scott. Cash which corporations can repatriate at favorable tax rates COULD be spent here. Money which cannot, won't.

[Greg Peterson]

I'm just a simple consumer. I know that when I go to the grocery store, or the bakery, the auto repair shop, the coffee shop, those businesses appreciate my patronage. They thank me for doing business with them. Twenty years ago I would have not given those thank you's much thought. Now, I try my best to keep my money as close to home as possible because those mom and pop shops really do appreciate me.

I've nothing against the Fortune 500 companies. They are expert, first and foremost, at making money. The goods or services they produce/provide are simply a means to an end. They sell widgets.

The owner/operator furniture maker also wants to make money, but he is also crafting something unique and personal.

[Mike Henderson]

At the risk of remaining silent and seeming to agree with some sort of majority opinion...

I agree w/ Scott. Cash which corporations can repatriate at favorable tax rates COULD be spent here. Money which cannot, won't.
You're right. It could be spent. But let's think about where that money would go. Before we give a tax break to a corporation, the country should get something for it. Let's say we made the tax zero so that corporations could bring any profits made overseas back to the US.

First of all, the corporations would shop for the lowest tax haven, and structure their business so that most of their profits would appear in that location. Actually, some corporations are doing that now. So we'd have corporations essentially paying no taxes. If your goal is to eliminate tax on corporations, that's a round about way to do it.

But let's take Scott's assertions at face value - corporations have an enormous amount of cash in foreign locations and we should do a one time tax holiday and allow them to bring the cash home. First, this would set a bad precedent because corporations would continue doing exactly what they have in the past (moving profits to low tax locations), but would be asking for another tax holiday.

Second, where would that money go and how would it benefit the country - because if the country is going to give them a tax holiday, we (the citizens) should get something back for it. Right now, corporations are flush with cash and are stashing it in bonds because there's no good place to invest it. If they had a bunch more cash, what do you suppose they would do with it? Just add it to their existing cash and continue to buy bonds. Some might increase their dividend which would put some of the money in circulation but most of the dividends would go to wealthy people (because wealthy people own most of the stocks), who are also stashing their cash in bonds.

All this bond buying might lower the interest rate a small amount EXCEPT that the corporations are probably buying US bonds through their foreign subsidiaries so the net bond purchases are likely to actually decline a small amount, and interest rates would likely stay the same.

So where's the benefit to the country that would convince lawmakers to give corporations a tax holiday?

Mike

[Phil Thien]

So where's the benefit to the country that would convince lawmakers to give corporations a tax holiday?

Mike

My grandpa was great at summing things like this up in a few words.

He'd say, "if you can't, you won't. If you can, you might."

That is, if you can bring those funds back, you might do it, and you might make investments in new production or R&D here, instead of there.

We don't need a guarantee that they will. Right now, we have a guarantee that they won't, right? A chance that they will is certainly better than a guarantee that they won't, isn't it?

We aren't going to collect that tax regardless. No matter what, we're never going to see that tax. It is an illusion. It doesn't exist, and never will.

Might as well get rid of it, as what it really is, is a brick wall that prevents investment in the U.S.

Or do you prefer we just continue this stalemate?

BTW, on your point that all corporations do is sit on their cash or park it in bonds, that is correct NOW. The global economy is in a bad funk. This won't last forever. When corporations sense growth and feel more secure, they will once again expand their means of production. They always have, they always will. It is their nature.

[Mike Henderson]

My grandpa was great at summing things like this up in a few words.

He'd say, "if you can't, you won't. If you can, you might."

That is, if you can bring those funds back, you might do it, and you might make investments in new production or R&D here, instead of there.

We don't need a guarantee that they will. Right now, we have a guarantee that they won't, right? A chance that they will is certainly better than a guarantee that they won't, isn't it?

We aren't going to collect that tax regardless. No matter what, we're never going to see that tax. It is an illusion. It doesn't exist, and never will.

Might as well get rid of it, as what it really is, is a brick wall that prevents investment in the U.S.

Or do you prefer we just continue this stalemate?

BTW, on your point that all corporations do is sit on their cash or park it in bonds, that is correct NOW. The global economy is in a bad funk. This won't last forever. When corporations sense growth and feel more secure, they will once again expand their means of production. They always have, they always will. It is their nature.
Making an investment that has all the logic against ever paying off is not a good deal. I doubt that you would do so with your own money. We should expect the same care and reasonableness of our legislators when making decisions about spending and tax policy.

If, at some time in the future, corporations need money to be able to expand and put people to work, we can revisit the idea of a tax holiday. The enabling law could try to specify that the money is only to be spent in some way that will benefit the country (such as creating jobs). Giving a tax holiday now would produce nothing but a tax windfall for corporations.

Arguments for a tax holiday now should specify some reasonable benefit to the country - not just a vague wish that some good will come out of it.

Mike

[And if that's really your philosophy, let me present you with an opportunity. I have some ideas for how to cure cancer but I need some money to do the testing. If your philosophy is as you discussed above, please send me $100,000 so I can proceed. It might work or it might not, but we'll never know without the money. So please rush your check to me.]

[Phil Thien]

Making an investment that has all the logic against ever paying off is not a good deal. I doubt that you would do so with your own money. We should expect the same care and reasonableness of our legislators when making decisions about spending and tax policy.


First, framing an argument about whether to reduce a tax rate in terms of government "making an investment" is a bit of a stretch. Akin to the mob telling you a reduction in protection fees amounts to an investment in your business, I think.

ANYWAY... Any reduction in the rate would be mostly revenue neutral. We aren't collecting substantial revenue from the tax now, as businesses off-shore their profits/working capital to avoid the tax.

The only thing the tax accomplishes is preventing investment of profits on our own soil.

Here, I'll give you an example...

Let's say we decide to tax new investments in IRA's at 30%. That is, for every $100 invested in an IRA, $30 goes to Washington.

Now, clearly, gobs of money goes into IRA's, right? This should be a big money maker for the government!

But the likely result would be that 99.99% of investments in IRA's would stop. People would do the math of how long it would take to recover that 30% initial hit, and look for other investment vehicles without the punitive tax.

So one day, Phil comes along and says "let's get rid of that 30% tax." And Mike says "wait, what are we [government] going to do to replace that money?" And Phil says, "what money, the tax generates no revenue now, it only provides a road block for people that wish to save for their retirement."

See? It is the same thing.

And by eliminating the IRA tax, we now re-energize the IRA workforce. Tens of thousands (at least) of people, all back to work, all making money by handing those investments, all paying income taxes, all contributing to society.

I'm not anti-tax. But where the cost (to a society) of a tax is greater than the revenue returned, we must look intelligently at the tax and reevaluate our goals.

[Myk Rian]

I didn't read your whole post, but manufacturing is going to go where it cheaper to manufacture the goods. The only way the US could compete would be for the workers to be paid what we would consider poverty wages.
Aren't poverty wages better than no wages?

[Mike Henderson]

You're correct. But the path you recommend would incent all companies to move their profits offshore to low or no tax locations. In fact, they would have to because they couldn't compete with the other companies who did move their profits offshore. That would essentially remove the tax from any corporation who could do that - small companies probably could not do this, and would continue to pay taxes on their profits in the US. The net effect would be to reduce tax collections and harm small business. Giving a tax free gift to large corporations is a case of the cure being worse than the disease.

Mike

[Mike Henderson]

Aren't poverty wages better than no wages?
Depends on the kind of society you want to live in. When I was in Vietnam, I saw people living in shacks on the side of the road - the shacks were made from tin sheets that were to be used to make cans (such as beer cans). The shacks had no water, dirt floors, no sanitation (they just went outside), no electricity, etc. I've traveled to inland China and the homes were not much better.

Poverty wages would reduce US workers to similar straits. As a society, we believe that a working person deserves something better and that's why we have a minimum wage. Without a minimum wage, employers would bid the jobs down to levels which would reduce workers to that because as you pointed out, there will always be someone desperate enough to take a job at poverty wages. And once one company is paying those kind of wages, competitors have to pay the same or lose out in the market. People in those straits are desperate and will be more likely to commit crimes. Children will be less likely to get an education and will be unable to break out of that cycle of poverty, leading them to turn to crime as the only path open to them. Our country would be very different than it is today.

It is critical to the US to encourage the growth of a vibrant middle class. A strong middle class is the foundation of our society and way of life.

Mike

[Myk Rian]

I've seen people living in chicken coops in Appalachia.
When people realize they can't just go out and buy a "Look at me" Hummer, or house, and there is no other way to provide the family with a meal, they will take what is available.
The mentality of this country needs to change.

[Phil Thien]

You're correct. But the path you recommend would incent all companies to move their profits offshore to low or no tax locations.

No, they already do this. That is the current state of affairs. We're eliminating the incentive to continue.


In fact, they would have to because they couldn't compete with the other companies who did move their profits offshore.

To the best of my knowledge, just about every multi-national corporation headquartered in the U.S. is already sheltering their profits by distributing them to foreign subsidiaries.


That would essentially remove the tax from any corporation who could do that - small companies probably could not do this, and would continue to pay taxes on their profits in the US.

Actually, if the real tax rates were brought in line with effective rates, then companies would have less incentive to move production overseas. That is, there are many reasons to move production to China now. Among them would be lower cost of labor, less government regulation, and tax avoidance. Removing an incentive (tax avoidance) to off-shore production can only be a good thing, right?

[Joe Dowling Jr]

Poverty wages would reduce US workers to similar straits. As a society, we believe that a working person deserves something better and that's why we have a minimum wage. Without a minimum wage, employers would bid the jobs down to levels which would reduce workers to that because as you pointed out, there will always be someone desperate enough to take a job at poverty wages. And once one company is paying those kind of wages, competitors have to pay the same or lose out in the market. People in those straits are desperate and will be more likely to commit crimes. Children will be less likely to get an education and will be unable to break out of that cycle of poverty, leading them to turn to crime as the only path open to them. Our country would be very different than it is today.


Mike

Mike's thought hints at an answer, at least a little. As can be seen by this thread and many others on the net and in college lecture halls and halls of government, the answer has not been implemented, that is if there is an answer. This is an ancient problem, somewhat more relevant because of global manufacturing, but still old. Much more people are born into poverty than are born into wealth. The worlds natural resources are owned by few ( yep, where the money originates) and the rest of us work for what they are giving. My guess is that some form of SHARING would help things along.

[Mike Henderson]

No, they already do this. That is the current state of affairs. We're eliminating the incentive to continue.



To the best of my knowledge, just about every multi-national corporation headquartered in the U.S. is already sheltering their profits by distributing them to foreign subsidiaries.



Actually, if the real tax rates were brought in line with effective rates, then companies would have less incentive to move production overseas. That is, there are many reasons to move production to China now. Among them would be lower cost of labor, less government regulation, and tax avoidance. Removing an incentive (tax avoidance) to off-shore production can only be a good thing, right?
If this is your belief, you should work within the political system to get real tax rates and statutory rates equalized in some way. The problem is that any company who is receiving the tax breaks will fight tooth and nail to keep them.

Good luck on your quest. I see no linkage between your efforts in that area and the idea of giving large companies a tax holiday today.

Mike

[Mike Henderson]

I've seen people living in chicken coops in Appalachia.
When people realize they can't just go out and buy a "Look at me" Hummer, or house, and there is no other way to provide the family with a meal, they will take what is available.
The mentality of this country needs to change.
Err, what mentality is that. That "greed is good", or "them that has, gits", or "the devil take the hindmost" or what? I've been poor and I can assure you that poor people do not think of buying a Hummer. In fact, they're the most frugal people around. They know the value of a dollar much better than richer people.

Mike

[Myk Rian]

Err, what mentality is that. That "greed is good", or "them that has, gits", or "the devil take the hindmost" or what?
That's about what we have today.

I've been poor and I can assure you that poor people do not think of buying a Hummer. In fact, they're the most frugal people around. They know the value of a dollar much better than richer people.
I didn't say the poor think of buying a Hummer.
How many housewives need one to run the kids around? That's the stupid part of our society.

[Mike Henderson]

How many housewives need one to run the kids around? That's the stupid part of our society.
Ah, then you and I are in perfect agreement.

Mike

[Ben Hatcher]

The tax is not PREVENTING anything. They are free to bring that money back. They just have to pay what they owed in the first place on it before they do. These companies made the money knowing what was owed when they did so. They used workers that we all payed to educate and used infrastructure that we all paid for to get raw matierals and deliver their products. They used the police and fire departments that we pay for to protect their factories from being taken over and/or their deliveries hijacked. Should we give these things to companies for free? When I worked for a multi-national, I visited our factory in Mexico. There were armed guards at the gate. My company paid for them. There were 3 identicle vehicles with securitiy teams that took different routes when driving the plant manager home every night. Again, the company paid for that. They pay for it in the US as well in the form of taxes.

I don't see how the same people that complain about the 46% who don't pay federal income taxes because they are poor can argue in support of allowing some of the most profitable businesses in the history of the world to do exactly the same thing. These companies are like the rich uncle who's a total jerk but nobody says anything because they hope he might give them something one day. Are we really so greedily focuced on our own gain that we can ignore such glaring injustices?

A tax holiday without any sort of condition that the money do something that benefits society as a whole is akin to CORPORATE WELFARE.

[Mike Henderson]

It occurred to me that what we need to do is adopt policies that cause corporations to be indifferent as to where the profit is recognized (indifferent from a financial point of view). One way to do that would be to require the corporation to calculate their tax obligation as if all of their profit was earned in the United States. Then, they could deduct whatever taxes they paid to another country. Their tax burden would be exactly the same as if they earned all the profit in the United States so they would have no reason to "cook the books" the way they do now to move profit to a low tax country.

The corporation could get the advantage of all the deductions available to corporations that operate totally within the United States so their burden would not be any more than other US corporations. And they would pay their fair share of the cost of providing services in the United States.

Mike

[Scott Shepherd]

They used workers that we all payed to educate and used infrastructure that we all paid for to get raw matierals and deliver their products. They used the police and fire departments that we pay for to protect their factories from being taken over and/or their deliveries hijacked.

I don't think they have armed guards in the Apple Stores in China, Hong Kong, Europe, Canada, and all the other countries where Apple products are sold. There is a LOT of money being made out there selling in other countries. It's not all about people taking money out of the USA and hiding it somewhere. Apple selling iPhones and IPads to Chinese, Japanese, and Europeans has nothing to do with the USA. The products weren't made here, the materials didn't come from here, and they weren't ever in this country. They were made and sold exclusively in other countries. It's the profits on those sales that they can't get back into the USA. So if we use your example, then thanks, you agree with me. They have used no US resources, no US materials, no US transportation, no US security, no US anything, and now they have a profit from their sales efforts. So why would anyone be entitled to anything they earned in another country? According to your logic, they used no services here, so they owe nothing.

It's not all about "hiding" money and corporate greed. They aren't hiding or moving money, the money is earned by legitimate businesses operating in other countries. Why should someone owe the USA tax revenue from a product that was made in China, sold in Hong Kong, and the money ended up in a bank in Hong Kong, at the companies Hong Kong office? The USA has done nothing in that transaction, so why do they deserve a single penny of it? (hint.....they don't).

I know I'm a simple person, but where I come from 1 is greater than zero. If I have zero and someone wants to give me $1, I'll say "Thank You", rather than "$1, are you kidding me, give me $1,000 right now". You did nothing to earn or deserve the $1, so why would you be entitled to $1,000 from someone that you had nothing to do with?

[Mike Henderson]

I don't think they have armed guards in the Apple Stores in China, Hong Kong, Europe, Canada, and all the other countries where Apple products are sold. There is a LOT of money being made out there selling in other countries. It's not all about people taking money out of the USA and hiding it somewhere. Apple selling iPhones and IPads to Chinese, Japanese, and Europeans has nothing to do with the USA. The products weren't made here, the materials didn't come from here, and they weren't ever in this country. They were made and sold exclusively in other countries. It's the profits on those sales that they can't get back into the USA. So if we use your example, then thanks, you agree with me. They have used no US resources, no US materials, no US transportation, no US security, no US anything, and now they have a profit from their sales efforts. So why would anyone be entitled to anything they earned in another country? According to your logic, they used no services here, so they owe nothing.

It's not all about "hiding" money and corporate greed. They aren't hiding or moving money, the money is earned by legitimate businesses operating in other countries. Why should someone owe the USA tax revenue from a product that was made in China, sold in Hong Kong, and the money ended up in a bank in Hong Kong, at the companies Hong Kong office? The USA has done nothing in that transaction, so why do they deserve a single penny of it? (hint.....they don't).

I know I'm a simple person, but where I come from 1 is greater than zero. If I have zero and someone wants to give me $1, I'll say "Thank You", rather than "$1, are you kidding me, give me $1,000 right now". You did nothing to earn or deserve the $1, so why would you be entitled to $1,000 from someone that you had nothing to do with?
The reason a repatriation tax exists is that companies have the ability to choose where to recognize the profits from their business activities. Without a repatriation tax, US companies would simply organize their business so as not to pay any US taxes. If every country levied the same tax burden, then we wouldn't be having this discussion. Profit would be reported in the county where it's made and money could simply flow from country to country with little restriction.

So the repatriation tax is a message to corporations: If you choose to make your profit in other countries and then want to bring your money home, you'll have to pay your fair share to support the country. Otherwise, you'll have to live with the consequences of your choices.

If they want the money in the US, they can arrange to make their profit in the US, pay the taxes, and they'll have the money free and clear. They just want it both ways - lower taxes but the money in the US.

Mike

[Scott Shepherd]

repatriate |rēˈpātrēˌāt, rēˈpa-| send (someone) back to their own country:


It wasn't here to begin with, so which part of that makes it repatriation? It's money made by a company fully licensed to operate in Hong Kong as a business. Do you even read what I write or just say what you want to say?

In order for it to be "repatriated" it would have had to be produced here.

The USA played no role in the sale.

I'm still utterly amazed at how someone can look at free money and say "No thanks, that's not good enough, I'll take zero, please". I've never met anyone in my life that had that outlook on life. I'm guess I'm lucky.

So we should force companies operating in all countries around the world, if they make a profit, they should send the profit to the USA, even though the design, production, sales, and after sales care were all managed in their own countries? Dumbest thing I've ever heard.

[ray hampton]

repatriate |rēˈpātrēˌāt, rēˈpa-| send (someone) back to their own country:


It wasn't here to begin with, so which part of that makes it repatriation? It's money made by a company fully licensed to operate in Hong Kong as a business. Do you even read what I write or just say what you want to say?

In order for it to be "repatriated" it would have had to be produced here.

The USA played no role in the sale.

I'm still utterly amazed at how someone can look at free money and say "No thanks, that's not good enough, I'll take zero, please". I've never met anyone in my life that had that outlook on life. I'm guess I'm lucky.

So we should force companies operating in all countries around the world, if they make a profit, they should send the profit to the USA, even though the design, production, sales, and after sales care were all managed in their own countries? Dumbest thing I've ever heard.
I will disagree with your comment about being lucky BECAUSE THE PEOPLE THAT GOT THIS ATTITUDE may be the lucky ones, I am thinking about the people that find money and refuse to take a reward when they give the money to the owners

[Mike Henderson]

repatriate |rēˈpātrēˌāt, rēˈpa-| send (someone) back to their own country:


It wasn't here to begin with, so which part of that makes it repatriation? It's money made by a company fully licensed to operate in Hong Kong as a business. Do you even read what I write or just say what you want to say?

In order for it to be "repatriated" it would have had to be produced here.

The USA played no role in the sale.

I'm still utterly amazed at how someone can look at free money and say "No thanks, that's not good enough, I'll take zero, please". I've never met anyone in my life that had that outlook on life. I'm guess I'm lucky.

So we should force companies operating in all countries around the world, if they make a profit, they should send the profit to the USA, even though the design, production, sales, and after sales care were all managed in their own countries? Dumbest thing I've ever heard.
You seem to ignore the fact that companies arrange their business to recognize the profit in a low tax country, instead of the USA, which is why it's called a repatriation tax. If companies want to have cash in the good ole USA, all they have to do is arrange their business so that they recognize the profit in the USA, pay the taxes, and they can have all that money in the US. The amount of profit that is attributable strictly to business in another country would be fairly small compared to what they'd have in the US.

IF things were done without that "cooking the books" technique, they wouldn't need a tax holiday.

Mike

[Gary Hodgin]

Many states with sales taxes try to equalize the sales tax across states with a "use tax." TN is such a state. If someone in TN buys something in another state, the buyer has to file a form and pay the equivalent of the TN sales tax rate. If the state where the purchase is made has no sales tax, the person is liable for the entire amount of the TN rate. If the state has the same rate, the person owes no tn tax. If the state has a higher rate, the person owes nothing to TN but doesn't get to deduct anything. I don't know if this principle could be applied across countries. It's a difficult tax to enforce.

[Phil Thien]

It occurred to me that what we need to do is adopt policies that cause corporations to be indifferent as to where the profit is recognized (indifferent from a financial point of view). One way to do that would be to require the corporation to calculate their tax obligation as if all of their profit was earned in the United States.

So what would prevent corporations from moving operations to another country?

The U.S. corporate rate goes up to 35% federal, and 12% states.

The highest rate in the U.K. is 26%. Sweden and Switzerland are about 25%. Norway? 28%. Japan, 40%. Germany, 30%. Denmark, 25%. China, 25%. Canada tops out at 33% federal+provincial.

Take your pick, where should Boeing go?

[Phil Thien]

The reason a repatriation tax exists is that companies have the ability to choose where to recognize the profits from their business activities.

There is no such thing as a repatriation tax. Corporations recognizing profits in the U.S. pay the U.S. corporate rate on those profits.

There was a one-time (I believe) repatriation tax break. The break means that they were able to repatriate profits from other countries at a lower rate. Here, from wikipedia:



Repatriation also refers to the payment of a dividend by a foreign corporation to a US corporation. This happens often where the foreign corporation is considered a "controlled foreign corporation" (CFC), which means that if more than 50% of the foreign corporation is owned by US shareholders. Generally, foreign direct investment in CFC's are not taxed until a dividend is paid to the controlling US parent, and is thus repatriated. The foreign direct investment income of the CFC is taxed only by the country where it is incorporated until repatriation. At that time, income is subject to the (typically higher) US tax rate minus the Foreign Tax Credits.(FN: See IRC 951-965) There are currently hundreds of billions of dollars of Foreign direct investment in CFC's because of the disincentive to repatriate those earnings. (See Bureau of Economic Analysis, National Economic Accounts, Integrated Macroeconomic Accounts for the United States, available at the Bureau of Economic Analysis (http://www.sawmillcreek.org/wiki/Bureau_of_Economic_Analysis).[2]
(http://www.sawmillcreek.org/#cite_note-1)




Information about the previous break here:
http://www.investopedia.com/ask/answers/06/repatriatedtaxbreak.asp#axzz1YpOnXUj7


Without a repatriation tax, US companies would simply organize their business so as not to pay any US taxes. If every country levied the same tax burden, then we wouldn't be having this discussion. Profit would be reported in the county where it's made and money could simply flow from country to country with little restriction.

Again, not sure what you are talking about. There is NO repatriation tax. There is only a corporate rate. And US companies DO organize so as not to pay US taxes. That is the current state of affairs, nothing hypothetical about it.


So the repatriation tax is a message to corporations: If you choose to make your profit in other countries and then want to bring your money home, you'll have to pay your fair share to support the country. Otherwise, you'll have to live with the consequences of your choices.

See the wikipedia article referenced above.


If they want the money in the US, they can arrange to make their profit in the US, pay the taxes, and they'll have the money free and clear. They just want it both ways - lower taxes but the money in the US.

Mike

[Kevin W Johnson]

IF things were done without that "cooking the books" technique, they wouldn't need a tax holiday.

Mike

The high corporate tax rate in the US is what causes companies to "cook the books".

At the end of it all, most people are ignorant of the fact that corporations don't REALLY pay taxes anyway. Their customers do, as the cost of the tax burden is passed down to them. As with all costs to do business, there is a break point. The point at which the costs to move business or manufacturing, or evade taxes, aren't woth the reward. The current tax rates, and costs of regulation in US, ensure that its cheaper for companies to leave our shores. Notice Japan's 40% corporate rate? See much thats "Made in Japan" anymore? Nope. It is simply too expensive to do business in the US. As a country, we can not compete globally with countries like China, etc., that have no care in the world when it comes to environmental responsibility, work place safety, little to no regualtion, lower taxes, etc.

[Leo Graywacz]

You can say that the consumers pay the tax all you want. All I know is that I get such and such and then I have to pay the gov a % of that out of the money I made.

[Kevin W Johnson]

You can say that the consumers pay the tax all you want. All I know is that I get such and such and then I have to pay the gov a % of that out of the money I made.

And most factor that in to their cost..... Corporations and most small businesses certainly do. Yes, (you, corporations, small business) pay it when the tax bill is due, but the prices you charge reflect that tax cost. So it is in essence paid by the consumer.

[Mike Henderson]

There is no such thing as a repatriation tax. Corporations recognizing profits in the U.S. pay the U.S. corporate rate on those profits.

There was a one-time (I believe) repatriation tax break. The break means that they were able to repatriate profits from other countries at a lower rate. Here, from wikipedia:
Repatriation also refers to the payment of a dividend by a foreign corporation to a US corporation. This happens often where the foreign corporation is considered a "controlled foreign corporation" (CFC), which means that if more than 50% of the foreign corporation is owned by US shareholders. Generally, foreign direct investment in CFC's are not taxed until a dividend is paid to the controlling US parent, and is thus repatriated. The foreign direct investment income of the CFC is taxed only by the country where it is incorporated until repatriation. At that time, income is subject to the (typically higher) US tax rate minus the Foreign Tax Credits.(FN: See IRC 951-965) There are currently hundreds of billions of dollars of Foreign direct investment in CFC's because of the disincentive to repatriate those earnings. (See Bureau of Economic Analysis, National Economic Accounts, Integrated Macroeconomic Accounts for the United States, available at the Bureau of Economic Analysis (http://www.sawmillcreek.org/wiki/Bureau_of_Economic_Analysis).[2]
(http://www.sawmillcreek.org/#cite_note-1)




Information about the previous break here:
http://www.investopedia.com/ask/answers/06/repatriatedtaxbreak.asp#axzz1YpOnXUj7



Again, not sure what you are talking about. There is NO repatriation tax. There is only a corporate rate. And US companies DO organize so as not to pay US taxes. That is the current state of affairs, nothing hypothetical about it.



See the wikipedia article referenced above.
The term "repatriation tax" is used to refer to the tax on corporate profits when they are brought back into the US. See here (http://finance.fortune.cnn.com/2011/06/21/schumer-adds-new-weight-to-repatriation-tax-talks/), and here (http://www.bloomberg.com/news/2011-08-25/repatriation-tax-break-study-challenges-official-cost-estimate.html)and here (http://online.wsj.com/article/SB10001424052702303339904576404183763158882.html) for articles on it. These three are just samples - there are many more articles on it. Google it, you'll get lots of hits.

Mike

[Mike Henderson]

The high corporate tax rate in the US is what causes companies to "cook the books".

At the end of it all, most people are ignorant of the fact that corporations don't REALLY pay taxes anyway. Their customers do, as the cost of the tax burden is passed down to them. As with all costs to do business, there is a break point. The point at which the costs to move business or manufacturing, or evade taxes, aren't woth the reward. The current tax rates, and costs of regulation in US, ensure that its cheaper for companies to leave our shores. Notice Japan's 40% corporate rate? See much thats "Made in Japan" anymore? Nope. It is simply too expensive to do business in the US. As a country, we can not compete globally with countries like China, etc., that have no care in the world when it comes to environmental responsibility, work place safety, little to no regualtion, lower taxes, etc.
Yep, the cost of taxes are added to the cost of a product. Is that any reason to not tax corporations? Each entity (person, and corporations are considered persons under the law) should pay their fair share of the costs of running the country. And when a company "cooks the books" in order to pay less US taxes, we should not allow them to repatriate those monies without paying tax on it.

You can also say that the cost of taxes on individuals are reflected back to the corporation because the worker demands a higher income to offset the tax burden.

Mike

[Leo Graywacz]

And most factor that in to their cost..... Corporations and most small businesses certainly do. Yes, (you, corporations, small business) pay it when the tax bill is due, but the prices you charge reflect that tax cost. So it is in essence paid by the consumer.

Everything is paid for by the consumer. We are in business to serve them, they pay to be served.

[Phil Thien]

The term "repatriation tax" is used to refer to the tax on corporate profits when they are brought back into the US. See here (http://finance.fortune.cnn.com/2011/06/21/schumer-adds-new-weight-to-repatriation-tax-talks/), and here (http://www.bloomberg.com/news/2011-08-25/repatriation-tax-break-study-challenges-official-cost-estimate.html)and here (http://online.wsj.com/article/SB10001424052702303339904576404183763158882.html) for articles on it. These three are just samples - there are many more articles on it. Google it, you'll get lots of hits.

Mike

Right, those articles are all discussing something that doesn't exist right now. There is currently no repatriation tax. Funds repatriated by a foreign subsidiary to the parent company are taxed at the federal and state corporate rates (to 47%). Those profits are taxed like any other profits, no distinction is made.

Businesses and some politicians are pushing for a new "repatriation tax" which would be lower than the 47% they now pay.

Far from splitting hairs, this is a vital point of definition. Sharing opinions is pointless if we can't agree on the facts.

[Mike Henderson]

Right, those articles are all discussing something that doesn't exist right now. There is currently no repatriation tax. Funds repatriated by a foreign subsidiary to the parent company are taxed at the federal and state corporate rates (to 47%). Those profits are taxed like any other profits, no distinction is made.

Businesses and some politicians are pushing for a new "repatriation tax" which would be lower than the 47% they now pay.

Far from splitting hairs, this is a vital point of definition. Sharing opinions is pointless if we can't agree on the facts.
Well, a lot of people call it a repatriation tax, enough to get several pages of hits when you google it. That's enough for me.

A lot of people call the medical insurance program passed recently "ObamaCare". That name probably doesn't exist on any legislation but people know what you're referring to when you say that. Same with repatriation tax.

Incidentally, if you'll read some of the links, you'll see that the proposals are to reduce the repatriation tax to some smaller percent. It is not some new tax, but a reduction in the present tax.

Mike

Mike

[Rich Engelhardt]

Yep, the cost of taxes are added to the cost of a product. Is that any reason to not tax corporations? Each entity (person, and corporations are considered persons under the law) should pay their fair share of the costs of running the country.
IMHO - it's as good a reason as any & better than most.

BTW - Apple doesn't produce in China simply because it's cheaper.
They do it because it's not possible to make the components here in the US.
It's illegal.

Back in the mid 1990's I took a look into why semi conductors were made outside of the US. I couldn't buy into the labor costs as being a valid reason since there's very little labor involved in the production.
What I discovered was that many of the materials used in the manufacture process are banned here in the US.

[Phil Thien]

Incidentally, if you'll read some of the links, you'll see that the proposals are to reduce the repatriation tax to some smaller percent. It is not some new tax, but a reduction in the present tax.


Interesting. I searched the entire U.S. tax code here:
http://www.fourmilab.ch/uscode/26usc/TaxSearch.html


I searched for "repatriation tax" and found nothing. I searched "repatriation" and found nothing but a non-related hit about life insurance. I searched "repatriate" and found nothing.

I checked my spelling, certainly I must be spelling the word incorrectly. Nope, I got it right.

Thinking the search engine wasn't working, I searched for "tobacco tax" and found a ton. I searched for "fuel tax" and found a ton more. So it seems to be working.

I guess the tax code doesn't mention the words "repatriation tax" in any form.

No way to look up the tax rate of the repatriation tax if the code doesn't mention the words.

Oh well.

P.S. It just hurts my ears to hear someone say "repatriation tax" or "repatriation tax rate." But I also wince when someone says "my new dining room table is made from solid wood veneer." ;)

[Mike Henderson]

Certainly if you don' like the term "repatriation tax" don't use it. I, and apparently a lot of other people, based on the Google results, find it to be a very descriptive phrase. I can't control what hurts your ears, or makes you wince.

Mike

[Greg Peterson]

The high corporate tax rate in the US is what causes companies to "cook the books".

At the end of it all, most people are ignorant of the fact that corporations don't REALLY pay taxes anyway. Their customers do, as the cost of the tax burden is passed down to them. As with all costs to do business, there is a break point. The point at which the costs to move business or manufacturing, or evade taxes, aren't woth the reward. The current tax rates, and costs of regulation in US, ensure that its cheaper for companies to leave our shores. Notice Japan's 40% corporate rate? See much thats "Made in Japan" anymore? Nope. It is simply too expensive to do business in the US. As a country, we can not compete globally with countries like China, etc., that have no care in the world when it comes to environmental responsibility, work place safety, little to no regualtion, lower taxes, etc.

Okay, I'll take a bite at this. And I'll use the now defunct Super Fund as an example.

Out here, the industrial portion of the city center is harbor front property. Back in the day, before any kind of environmental regulation, companies dumped any number of poisons directly into the harbor and/or onto their property. Were these toxins to remain solely on their property in perpetuity, that would be one thing. But, these toxins leeched into ground waters and into rivers. And many of these companies no longer exist. The lots are vacant.

Any entity that wishes to develop these properties now, must shoulder the cost of cleaning up the site. This usually involves a public/private partnership as the expense of such a process absolutely destroys any business model. Of course in some instances, the local government has declared imminent domain as they are left with little choice. Acres upon acres of blighted property surrounded by chain link fence is an eye sore and represents a drain on resources rather than generating revenue for services render to all [i]persons[/]. No developer want to touch these sites even though they would otherwise be considered AAA property.

Now I ask you, who should pay for cleaning up these sites? Everyone or the consumers that bought the products manufactured the companies that polluted the land and waters?

Why should I subsidize a product I never purchased, needed or wanted? If a tax or fee is incurred by a company, the consumer that purchases that product should be the one paying for the cost of the company to dispose of the toxins used to produce that product, not some guy or gal who never derived any benefit from the product.

China is a virtually unregulated enterprise by Western standards. At least environmentally. I think it is fair to say they do not have a laiseez-faire attitude to commerce.

Our commons, air, water, air waves, can not be left to the whims or desires of the market. They need to be protected. If China wants to destroy their commons, let them. There will come a day when all the money the made will end up being spent treating all the damage they are currently doing to their land and people.

We have become terribly short sighted. At one time we gave ourselves ten years to put a man on the moon. Now, we can't look past the next quarterly report.

[Wayne Watling]

Scott
I guess we'll have to call it a draw. It's the age old chicken-egg paradox.
However, I've never witness an employer adding a liability to the payroll account for which that liability was not justified. Never.
Perhaps this not uncommon in Fortune 500 companies, but I have never seen this done within the small business sector. When the landscape guy has more customers than he can handle by himself he hires a worker. When the quickie mart decides it would be profitable to be open 24 hours, they hire someone. When the auto repair shop gets more customers than they can handle, they have to expand and hire more technicians.


So still not input on what's going to happen to gas prices at the pump, which affect middle class and poor people, if the oil companies are taxed $1 per gallon? Do you think the prices will stay the same as they are now? If you think the prices will go up at the pump, then you agree with the actions I say will take place if it happens.
If your landscaper example hires more people because he's busy, and suddenly, he has to pay more taxes (his fair share), do you think he's going to leave the prices he charges the same? He'll have less income to pay for the same expenses. So he'll be forced to do one of two things. He'll have to raise his prices or cut the payroll. If he raises prices, who's that hit? The consumer.
In every single example you have cited, if you tax someone more, then the consumer is the one that suffers and pays the bill. I have yet to meet a small business owner, or large business owner that just "sucks it up" and says "I'll eat it".


I feel the need to dredge this up because it seems such a big part of the argument.

Scott, your thinking about this appears a little topsy-turvy. Keeping it simple, do you eat food because you are hungry? If that were the case you are likely to be a man of modest girth, you may even own a good healthy attitude toward food consumption. If you dine primarily because the factories produce food and without regard for your bodily needs, you would end up a fat man and eventually unhealthy. This weakness in our nature is a principle that businesses take full advantage of, and in the whole grand economy of things it probably needs to happen that way. But the point I think is obvious. We have become nations of gluttonus pigs, paying little attention to our real needs and existing mainly by wants, which we don't yet realize are not entirely good for us.

Life is very good at balancing out things like this. Businesses, with very little obligation to the local society that created them will continue selling to them as long as they have the money. A business doesn't care if the person is fat and unhealthy, it even serves them (the business) better up until a point.

I can almost see we are coming to that point now, fat, sweaty and hurting consumers of product for which we don't have any real need (we certainly have a want and of course its our right to have it if we can pay for it :), again we are all caught up in rights and wants.

This resolves to individual people seeing and living more from need (or having it forced on them over long cycles of pain and loss) and changing attitudes to their lives and lifestyles, and a more balanced approach by business to the responsibilities of local society because in real terms business exists for humans, as opposed to humans existing simply to feed the business. Actually its a balance which should always tip in favor of society (ideally with an emphasis on the local society), but with a top down approach, that is once businesses (people who run them, society in fact) realise their true place in society things will begin to run more in balance over the longer term. Never will it be perfect but you wont get the tremendous massive swings in world economies because supply will always be in sync with demand.


Note: For those who will bring up the argument that we as a society would like to buy cheap goods from China, we'll you know what will happen if
you continue to go down that path so why would you as a society promote that. And more than likely these things are 'wants' anyway so the real question becomes; do you really need it to live happily? Isn't this about living within our means, shouldn't it be up to governments and wiser folks in a society (fathers and mothers) to promote such lifestyles. Maybe we need to go through the mill and back a few more times.

Thanks for the read.
Wayne

[Brian Elfert]

Even if US Corporate tax was zero we still couldn't compete with China and other countries on costs to produce a lot of basic consumer goods. The wages they pay for the most part wouldn't even come close what is considered poverty level in the USA. Throw in fewer regulations on safety and environment and you can see why costs of manufacturing are less in China. It is unclear to me if companies supply any health insurance in China.

A huge burden on American companies is health insurance costs. Many other countries have national health care systems. Yes, there is still a cost, but the tax cost is pretty much spread across everyone and not just those companies that choose to offer health insurance.

[Greg Peterson]

Wayne -

The market is an amoral, objective entity. It exists to serve the consumer. Somewhere along the way we have forgotten this most basic principle of commerce and bought into the ideal of supply side economics.

It would be valuable to realize the differences between a 'free' market and a 'fair' market. I think most of us expect or want a 'fair' market. But the reality of the matter is that those with the most financial resources generally have access to the levers that can influence their operations in their favor.

We are so mired down in the details who should pay for what and how much that we have lost sight that the entire argument is a fraud and exercise in futility. We can not see the forest for all the trees. We need step back and change our focus. We need a playing field where the sole beneficiary is the consumer.

The notion that business or big business is the savior of society (i.e job creators) is a corrupting notion.

[Rich Engelhardt]

The notion that business or big business is the savior of society (i.e job creators) is a corrupting notion
Huh?
How so?

"Business" generates income, which in turn generates "society".

Take away business and all you have left is nomadic hunter gatherers/scavengers.

If you want a first hand look at what's left of "society" when "business" exits, come on over to NE Ohio. We'll take a long hard look at Massillon, Cleveland, Youngstown, Sharon (PA), Pittsburgh(PA), Detroit (Mich) and a few other choice spots that have been barren of "business" for a while.

[Greg Peterson]

Rich - what has happened across this country is the result of the 'free' market. The market's sole purpose is to deliver goods and services to consumers at the lowest price.

I don't believe America has lost any wealth. The economy as it is currently configured is generating tremendous wealth. Matter of fact, I would venture a guess that America net wealth is at an all time high.

At this juncture, without a shift to an emphasis on 'fair' markets, it is simply a race to the bottom. If we slash environmental regulations, remove the minimum wage and child labor laws we can get those jobs back from China. China is only the latest country willing to abandon any reasonable restraints in pursuit of commerce.

Who will be the next China?

[Seth Poorman]

All I can say is..................................All of my shop tools are made in the USA- England-Germany -Canada and a couple others that I cant think of off the top of my head...:D
You will not find 1 tool in my shop from china or Japan. Im not saying that I have not bought anything from china or Japan ,but I feel better whenever I purchase products that are made in USA,and it does give me a good feeling when im working in the shop..

[Todd Leback]

Regardless if the facts in the email are completely accurate, I think it is impossible to dispute the fact that American manufacturing has been declining at an alarmingly rapid pace over the past three decades. The majority of the arguements in this thread seem to be along the lines of "of course it is declining because goods can be made cheaper overseas". While this is largely the case, how does it explain a country like Germany that relies heavily on manufacturing, has a prospering economy (despite being slowed by the rest of Europe) while at the same time maintaining a higher standard of living than the US; German factory workers get between 10-15 dollars an hour on average more than American factory workers, without even considering other benefits (longer paid holidays, better health care, pensions, etc.)? I think the decline in American manufacturing directly ties in to the fall of America from the dominant power in the world. The following are factors in this:
1)Wages. Henry Ford realized that he needed to pay his workers enough to be able to afford his products. The US has the highest wage inequality in the industrialized world, meaning that the vast majority of wealth is concentrated in a small percentage of the population. If income were more evenly distributed more people would have more money to spend, and a much larger percentage of US citizens would be able to purchase items made at home. Real wages for the average US worker have remained stagnant for the past three decades.
2)Unions. Whatever you think about unions, there is a direct correlation between the decline in union influence and membership and the decline of manufacturing. Unionized workers are better paid and have better benefits. I watched with bemusement the Wisconsin fight over unionized public employees; the cry seemed to be that they are overpaid, rather than that they are making closer to what they actually should be making than non-unionized employees.
3)Training. The emphasis in the US has shifted to sending as many people as possible to college. There is a fascinating article in the new Harpers about the need to provide affordable vocational training. How many young carpenters and woodworkers do you know? What will happen to the building trades in 15-20 years whent the vast majority pf workers retire? Oh, that's right, they won't be retiring because they won't be able to afford to . . .
4)Taxation. I hear a constant refrain from (mostly) GOP candidates about the tax rate affecting small businesses and "job creators". This is pure horsepucky and is either misinformed at best or disengeous at worst. In the first place, you don't pay the higher tax rate on all your income, just that above certain thresholds. You also pay taxes on net profit, not gross income. If you're lucky enough to have 250,00 in net profit than I realy have no sympathy for you. And if you really are so worried about paying and extra ten or so percent on your gross profit over 250,00, why don't you pay your employees more (thereby reducing the profit) or invest in new machinery, or something else productive. Keep in mind that the most productive periods in American history also saw some of the highest tax rates on the wealthy.

Todd

[David Cramer]

Well said Todd, in my opinion.

My only thing is that a lot of small business owners don't make anywhere near $250,000, as I know scores of them personally. I know many who were taxed so badly that they had to close the door and work for someone else who was lucky enough to be making it.

I know an older fella who sharpens blades (any kind from saw to lawnmower) and was told by his accountant to close his doors after 40 plus years. Yes, the financial meltdown in our country and Michigan specifically has hurt him for sure, but he also said he got taxed to death.

My buddy owns a decent sized shop. He has 2-3 employees depending on the current work load. Even with the write-offs, after you look at wages, fuel for a cube van and monthly payments, shop rent ($1300), heating and cooling, material, etc..he has gone many weeks without taking a pay check. How does he survive? His wife has a job that's just enough for them to keep their head above water.

It's tough, but taxes don't help, breaks would.

Honestly Todd, a lot of small business owners do ok but many are nowhere near 1/4 of million per year, gross or net.




Regardless if the facts in the email are completely accurate, I think it is impossible to dispute the fact that American manufacturing has been declining at an alarmingly rapid pace over the past three decades. The majority of the arguements in this thread seem to be along the lines of "of course it is declining because goods can be made cheaper overseas". While this is largely the case, how does it explain a country like Germany that relies heavily on manufacturing, has a prospering economy (despite being slowed by the rest of Europe) while at the same time maintaining a higher standard of living than the US; German factory workers get between 10-15 dollars an hour on average more than American factory workers, without even considering other benefits (longer paid holidays, better health care, pensions, etc.)? I think the decline in American manufacturing directly ties in to the fall of America from the dominant power in the world. The following are factors in this:
1)Wages. Henry Ford realized that he needed to pay his workers enough to be able to afford his products. The US has the highest wage inequality in the industrialized world, meaning that the vast majority of wealth is concentrated in a small percentage of the population. If income were more evenly distributed more people would have more money to spend, and a much larger percentage of US citizens would be able to purchase items made at home. Real wages for the average US worker have remained stagnant for the past three decades.
2)Unions. Whatever you think about unions, there is a direct correlation between the decline in union influence and membership and the decline of manufacturing. Unionized workers are better paid and have better benefits. I watched with bemusement the Wisconsin fight over unionized public employees; the cry seemed to be that they are overpaid, rather than that they are making closer to what they actually should be making than non-unionized employees.
3)Training. The emphasis in the US has shifted to sending as many people as possible to college. There is a fascinating article in the new Harpers about the need to provide affordable vocational training. How many young carpenters and woodworkers do you know? What will happen to the building trades in 15-20 years whent the vast majority pf workers retire? Oh, that's right, they won't be retiring because they won't be able to afford to . . .
4)Taxation. I hear a constant refrain from (mostly) GOP candidates about the tax rate affecting small businesses and "job creators". This is pure horsepucky and is either misinformed at best or disengeous at worst. In the first place, you don't pay the higher tax rate on all your income, just that above certain thresholds. You also pay taxes on net profit, not gross income. If you're lucky enough to have 250,00 in net profit than I realy have no sympathy for you. And if you really are so worried about paying and extra ten or so percent on your gross profit over 250,00, why don't you pay your employees more (thereby reducing the profit) or invest in new machinery, or something else productive. Keep in mind that the most productive periods in American history also saw some of the highest tax rates on the wealthy.

Todd

[Todd Leback]

Again, I would argue that the problem for the vast majority of Americans is not taxes but depressed wages. Those making things (for example, me) are limited in large part by what the average consumer can afford (okay, so I shoot for the higher income clientele). People have an idea of what they can afford based on their income, which if it is lower than it should be means they have less to spend, which means the people that service them (the cabinetmakers that build their kitchens, for instance) have to charge less, which means that they pay their employees less, etc. If you close the income inequality between rich and poor you greatly increase the amount of cash the vast majority of the population has to spend. It has been shown over and over again that giving the poor a dollar (per hour, let's say, in the form of a raise) is much more economically stimulating than giving the rich the same raise, simply because those well off spend that money.
I would love to be in a position where I cleared enough in profit to put me in the highest tax bracket. I would gladly pay a higher tax rate on that percentage that put me into the higher bracket. However, if I was in that bracket I can tell you that I wouldn't be a sole proprietor; I'd set up either as an S Corp or LLC, simply because, unlike what some other commenters in this thread will tell you, there are tax advantages to being a corporation.

Todd

[Myk Rian]

Know how party store owners make it?
Cash register doesn't keep a total.
Skim 25% of cash sales right off the top.
Let the Accountant take care of the rest of things.

You don't believe it? You live with your head stuck in the sand.

You have to cheat like hell to beat the system.

[David Cramer]

Sorry if I ruffled your feathers Todd as it was not my intent to argue or stir things up. I just know too many people who have not been able to make it happen and they shared their reasons. I am sure there is a lot of truth to what you said and you are obviously on the ball with this topic, but I think there's more to it, through my experience anyways. Have a good night.

David

[Kevin W Johnson]

Again, I would argue that the problem for the vast majority of Americans is not taxes but depressed wages. Those making things (for example, me) are limited in large part by what the average consumer can afford (okay, so I shoot for the higher income clientele). People have an idea of what they can afford based on their income, which if it is lower than it should be means they have less to spend, which means the people that service them (the cabinetmakers that build their kitchens, for instance) have to charge less, which means that they pay their employees less, etc. If you close the income inequality between rich and poor you greatly increase the amount of cash the vast majority of the population has to spend. It has been shown over and over again that giving the poor a dollar (per hour, let's say, in the form of a raise) is much more economically stimulating than giving the rich the same raise, simply because those well off spend that money.
I would love to be in a position where I cleared enough in profit to put me in the highest tax bracket. I would gladly pay a higher tax rate on that percentage that put me into the higher bracket. However, if I was in that bracket I can tell you that I wouldn't be a sole proprietor; I'd set up either as an S Corp or LLC, simply because, unlike what some other commenters in this thread will tell you, there are tax advantages to being a corporation.

Todd

Raising minimum wage has a purely negative effect, period. The business owners who employees make minimum wage, have to in turn raise prices, not only to cover the cost of the raise, but the increase in wage taxes as well. Then, if that business buys products and supplies that were supplied by other businesses that employ minimum wage workers, they also have to make up the increased cost for those supplies and services as well.

No big deal you say? What about the employers that pay just above minimum wage in order to increase personnel retention? Now he has to raise his wages to keep up. Again, the same negative effect as he raises his prices as well. What about the people that make enough that they didn't get a raise? Now the prices for many goods and services have increased, and these people just slid backwards, and the minimum wagers are paying higher prices too, so their raise just disappeared. Least their even, the ones that didn't get that raise are now hurting more than they were.

Thers much more to the equation that just a raise in minimum wage. Theres a huge, hidden cost increase that many people just don't see.

[Todd Leback]

Sorry if I ruffled your feathers Todd as it was not my intent to argue or stir things up. I just know too many people who have not been able to make it happen and they shared their reasons. I am sure there is a lot of truth to what you said and you are obviously on the ball with this topic, but I think there's more to it, through my experience anyways. Have a good night.

David
You didn't ruffle my feathers at all, and I'm sorry if it came across that way. Your comment just made me realize that I needed to clarify a couple of things I said.

Todd

[Doug Morgan]

Just a quick note. I found who wrote the original 19 facts.
Michael SnyderMichael T. Snyder is a graduate of the McIntire School of Commerce at the University of Virginia and has two law degrees from the University of Florida. He is an attorney that has worked for some of the largest and most prominent law firms in Washington D.C. and who now resides outside of Seattle, Washington. He is a very active blogger and is also a respected researcher, writer, speaker and activist.

He has written several different articles:
50 Things Every American Should Know About The Collapse Of The Economy Celebrating Independence Yet Enslaved To Debt50 U.S. Health Care Statistics That Will Absolutely Astonish You

and much more

http://www.dailymarkets.com/author/michaelsnyder/

[Joel Goodman]

I have skimmed this interesting thread. There are a few points that I didn't see -- please excuse me if I'm repeating what was already said.
1) China is holding their currency at an artificially low level to boost their economy. This is contrary to various agreements they have with us and other nations. (Paul Krugman, the economist at Princeton often writes about this in the NY Times.) This exacerbates our trade disadvantage with them.
2) The "free trade" concept with low or no import tariffs is a very new concept. It has become enshrined in our thinking as if it was in our Constitution -- it's not. It makes it harder to produce goods here. As we import more than we export, a little protection for domestic production would leave us a net winner. China still needs us as a market more than we need them as a market.
3) The granting of all the rights of personhood to corporations happened in 1886 in a Supreme Court decision. Prior to that the Supreme Court held the opposing view. Recently these rights were extended in the Citizens United case on political contributions. Perhaps the Court in 1886 made a bad decision. I'm pretty sure the Citizens United decision will be viewed by history a low water mark for democracy.
4) Jack Welch, former CEO of GE wrote that the ideal factory would be on a barge so that it could dock in the country with the lowest labor costs. Ideal for GE, but perhaps not ideal for our country. And maybe not for GE in the long run?

[Michael Moscicki]

1. The consumer votes with their wallet. Go ahead and buy your nike shoes or adidas, or reebok. Do know that every pair you purchase is a pair that could have been a US made New Balance shoe. Keep this in mind. US made New Balance shoes cost over a $100. Nike shoes are also expensive. New Balance, pays US workers a good wage. Nike gives $100,000,000's of dollars to Tiger Woods, Michael Jordan, etc. in endorsment deals. Consumers have the wallet. Consumers have the power.


Solution: Buy the US made shoe. In turn Americans get to keep their jobs. In turn those Americans can spend money in your industry allowing you to keep your job. Remember. People without a job cannot spend money and cannot help the economy. People with a job can spend money and help the economy.




2a. The governemnt can do something. Non-coated paperclips are made in the US. Rubber coated and what not are made in China. Why? The government put a tariff on foreign made no-coated paperclips. As a result it is more economical to make paperclips in the US as opposed to China. Same thing with tires. That's why we have US made tires and not Chineese tires.


Solution: Tariffs. Just to be fair(wouldn't be fair to tax foreign companies who make goods in their home country), only put them on US companies who make goods outside the US. How many CEO's would move their entire corporate headquarters and live in China just to save a few bucks.


2b. Taxes, taxes, taxes. A double edge sword. Example Abc. Co. does not want to open a factory in the US because it will pay huge taxes among other things. John Doe has no job and cannot find one. Rather than give Abc. Co. a tax break so they can open a factory in the US and hire Johm Doe and people like him, they'd rather pay John Doe by sending him welfare checks. Lose for the government. It has to pay John Doe from taxpayer money. It collects $0 in tax money from Abc. Co. If everybody has a decent paying job, then the government does not have to spend billions and billions of dollars on welfare, food stamps, medicare, etc.


Solution: Give Abc. Co. a tax break, hell even $0. Thereby allowing them to open a factory in the US and hire John Doe. It still collects the same amount of taxes as it did before Abc. Co. had a factory in the US, but now it no longer needs to pay John Doe welfare.




3. Corporate greed. Yes corporations are in the money making business. If they don't make money, they go out of business. GM and Ford outsource their manufacturing jobs to Mexico, Turkey, etc. Honda and Toyota outsource their manufacturing jobs to the US(if you're in Japan, you'll still buy a Japanese made Honda or Toyota, so no harm there). Who makes more money? Honda and Toyota. But wait wages and taxes are higher in the US than in Mexico or Turkey. Plain and simple. People will buy the better car, and that one happens to a US made Honda or Toyota. Does that make sense? Doesn't to me.


Solution: Stop outsourcing manufacturing to Mexico and build a quality car in the US. See how many more people will buy the car. In turn you will make more money and be profitable. Remember that it's cheaper for the consumer to buy the $35,000 US made car and have it last for 15 years than to buy the $15,000 Mexican made car and have to replace it in 5 years.

[Sam Joyce]

Theres one other thing that hasnt been mentioned and that is that we live in a system with finite resources. Retraining and automating to boost productivity seems like it could help the economy surge out of a slump but with China and other places rapidly becoming and even surpassing what the US used to be in terms of manufacturing, something has to give. Dont get me wrong, obviously job creation and maintenance is vital but if we are looking at the larger picture we have to come up with sustainable solutions that take into account global circumstances and remember that growth cannot be limitless.

[Kevin W Johnson]

3. Corporate greed. Yes corporations are in the money making business. If they don't make money, they go out of business. GM and Ford outsource their manufacturing jobs to Mexico, Turkey, etc. Honda and Toyota outsource their manufacturing jobs to the US(if you're in Japan, you'll still buy a Japanese made Honda or Toyota, so no harm there). Who makes more money? Honda and Toyota. But wait wages and taxes are higher in the US than in Mexico or Turkey. Plain and simple. People will buy the better car, and that one happens to a US made Honda or Toyota. Does that make sense? Doesn't to me.


Solution: Stop outsourcing manufacturing to Mexico and build a quality car in the US. See how many more people will buy the car. In turn you will make more money and be profitable. Remember that it's cheaper for the consumer to buy the $35,000 US made car and have it last for 15 years than to buy the $15,000 Mexican made car and have to replace it in 5 years.

I'll argue that there is NO real difference in quality among GM, Ford, Toyota, and Honda. If you believe that reviewers don't let their own biases skew their results and opinions...

The difference in cost, as far as Toyota making cars here, and GM outsourcing, has to do purely with the difference in labor and benefit costs, and costs to pay its massive retirement obligations. Toyota, for one, being very new to the US manufacturing scene has much lower costs in these areas. Simply put, they don't have near the baggage that Ford, GM, and other long time (domestic) auto makers have.