I am always stunned by the comments that appear relative to corporations deciding to take their businesses offshore. There are screams about it being a short-sighted decision, that the corporations are cutting their own throats, and that the businesses are evil and are doing it to spite the working class.
So, let’s take a look at some of the reasons why a corporation would move offshore:
Corporate Tax Rate:
The US corporate tax rate is the highest in the world, at 39%. That is astonishingly high. For every dollar they earn, they give 39% to the federal government. Some very large corporations have gotten extremely good at minimizing this rate, but it costs them a lot to do so (albeit less than actually paying the rate.
Adding insult to injury, there are also state corporate tax rates – the highest (Iowa) maxing out at 12%. So if you run a corporation in Iowa, your highest total corporate tax rate is 51%. If you happen to be in California, the state corporate tax rate is 8.84%. In Pennsylvania, 9.9%. So, the effective corporate tax rate total is in the neighbourhood of 50%.
There is simply no way to put this other than to say that that is absolutely appalling. If you own a corporation paying that rate, and decide to take a dividend, you pay a further 15% on what you take out. So if your corporation makes $100 profit, you lose $50 to corporate tax, and then you lose a further $7.50 to dividend tax. Your effective tax rate is then almost 58%.
And here is the further kicker – the idiot Democrats want to take the dividend tax rate up to the marginal rate – let us say 35%. In that case, out of your $100 profit, you would lose $50 to corporate tax rates, plus a further $17.50 to dividend tax, leaving the owner of the business to take home an amazing $33.50 for every $100 dollars the corporation manages to make.
If you were a corporation owner, and faced the prospect of this occurring, would you not run for the hills? Would not a low-tax nation look enticing? Be honest – would you really take the chance of funding a business, when the reward you can reap is 33.5% of profits? Really?
High Cost of Labor
Wages in the US are the world’s highest, at around $54,000 per person. That is a disadvantage if you are competing in a world market. Trust me on that. In addition to that wage, you also have the joy of payroll tax, which is currently 7.65%. Any bets that it will go up as SS runs out of money, or as Medicare falls further into the black hole? Would you bet your house on that? Business owners do.
The cost of providing medical insurance adds a further $12,000 – $15,000 per employee. Anyone want to make the same bet – that it will not keep climbing? Bet your house on it, maybe?
Unemployment taxes add about another $1000 per year to the costs. And we all know unemployment rates will surely fall, now don’t we?
So, the US has the highest wages in the world, and the additional costs per employee probably push $20,000 per year. The additional costs exceed the base wages per employee in all but about 20 countries on earth. If you were running a business, and were faced with base costs of about $75,000 per employee, do you think just maybe there would be incentive to look to offshore some of that extraordinary cost?
Compliance Cost/Miscellaneous Cost
There are huge compliance costs with doing business in the US. EPA and OSHA lead the way. Choose your own numbers for these, but even small businesses spend tens of thousands of dollars a year dealing with EPA and OSHA issues.
There are sundry miscellaneous costs as well – such as property tax, etc. If you ae unfortunate enough to have a unionized workforce, you can add further tens of thousands of dollars per year dealing with those issues.
Countries without such compliance costs certainly look attractive if you are a business owner.
Ways to Compete
There are three main ways a company can compete for business. They are via price, via service, or via quality. Some companies – Apple, for instance – have managed to carve out a niche where they compete on innovation (or perceived innovation), and there are some other niche ways to compete, but we will focus on these three.
With regard to price, I have already laid out the basis as to why the US cannot compete on price – labor costs, associated labor costs, and compliance costs are just too outrageously expensive. The only positive price/cost factor that exists is that there is a distance benefit that exists – it is expensive to ship product long distances. Small, light products are obviously cheaper to ship than big, heavy items. But, in general, the shipping costs do not overcome the labor costs.
With regard to service, the distance issue really is a benefit. A good local company can exceed the service that a foreign corporation can provide. Modern technology, local representatives, etc., are eroding that ability. And significant pricing advantages generally outweigh the service issues.
With regard to quality, there are several issues that are making the US uncompetitive. First, the ethic of quality simply does not exist in the US. Workers do not buy in to the need to produce quality product. Second, they skills of US workers are falling behind their world-wide competition. The education system is lagging, and the wrong skills are being studied, and so workers with the skills to produce high-quality products are hard to come by. And also, US consumers do not generally place a high value on quality – they want cheap. High quality comes at a cost. Make no mistake about it.
So, given all of that, how does the corporation compete? It can compete on service, but on quality and price it is in trouble. And the ability to compete on service is being daily eroded.
My company competes on quality and service, and not on price. However, I am being continuously squeezed on price and service. How long I can manage to keep the foreign completion away remains to be seen.
In Sum
So business faces: the highest tax rates in the world, the prospect of significant tax increases, the highest labor costs in the world, the highest compliance costs in the world, and has a workforce whose skill base has eroded over the last few decades. Given that, is it really short-sighted that corporations are abandoning ship and are moving offshore? Really?
If you owned a business, and faced these challenges, and looked at a possible return of under 35% of profits earned, would you stay in business considering the risks? Would you try to move your business to a more favourable locale? I face that decision every day, and every day I get closer to calling it a day and closing up shop.
If the Democrats manage to get the dividend tax rate raised to the levels being discussed, mark my words – you will see an exodus of business the likes of which have never before been seen. It will be the straw that breaks the camel’s back.
75000 dollar overall wage rate? I call some bullshit on that. Granted, I could be wrong but considering most jobs added today are service jobs paying minimum wage, or perhaps a little more, that seems rather high. Does that figure include government workers? If so, its flawed. Government jobs rob from the private sector and should not be included in that number. After all, we all can’t be Chicago teachers…. I agree about taxes and everything else though.
Excellent summation of Americas economic problem, and why business’s leave, so tired of reading the only reason is pure greed.
Add to your facts that the average idiot doesn’t understand that the high cost of doing business in America translates to a higher cost of goods or services the American consumer refuses to pay for, it becomes a matter of survival. More profit is just a byproduct.
The solution is our elected fools will continue to look for more ways to tax at even higher rates, create new taxes, and find more people to tax.
After all, when revenue drops because of higher taxation, the simple answer to a politician is higher taxation and to make business the bad guy.
Loopy , I’m sure all the 69,000 workers chained to work station for 15 cents at the FoxConn plant design multi -stage rockets and work on the Fürstenberg conjecture whilst taking a shit break.
If only Americans were so brilliant .
http://www.washingtonpost.com/wp-dyn/content/article/2007/04/26/AR2007042602452.html
Illiteracy is increasing in China, despite a 50-year-old campaign to stamp it out and a declaration by the government in 2000 that it had been nearly eradicated. The reasons are complex, from the cost of a rural education to the growing appeal of migrant work that draws Chinese away from classrooms and toward far-off cities.
In many cases, as in this farming hamlet in China’s southern Guizhou province, villagers whose education ended in elementary school have simply forgotten basic skills.
From 2000 to 2005, the number of illiterate Chinese adults jumped by 33 percent, from 87 million to 116 million, the state-run China Daily reported this month. The newspaper noted that even before the increase, China’s illiterate population had accounted for 11.3 percent of the world’s total.
“The situation is worrying,” Gao Xuegui, director of the Education Ministry’s illiteracy eradication office, told China Daily, blaming the increase on changing attitudes toward knowledge in a market economy. “Illiteracy is not only a matter of education but also has a great social impact.”
“Wages in the US are the world’s highest, at around $54,000 per person.” —- llpoh
Misleading at best, inaccurate otherwise.
Misleading because I assume that number is the average (or, median?) of ALL wage earners — doctors, engineers, financial workers, etc. But, when talking about off-shoring I assume we’re talking about manufacturing. So, we should look ONLY at manufacturing salaries.
In 1985 the U.S. had the world’s highest manufacturing wage rate, but it was FOURTH behind Germany, Japan, and France by 1995. Which begs the question; “Why aren’t those countries moving massive chunks of their manufacturing off shore?”
Inaccurate if looking at wages from a minimum-wage point of view. The USA is behind many European and ME countries.
http://en.wikipedia.org/wiki/List_of_minimum_wages_by_country
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That is not to say I disagree with you. Of course wages are a reason to move offshore!
Why should Apple pay an American $17 bucks an hour …. When they can pay some Chinaman $17 bucks per WEEK. You yourself would replace your entire workforce with minimum wage Mexicans, if it were at all feasible. Whether or not that’s “greed” or “good business sense” … well, that is the $64,000 dollar question.
The median wage in the U.S. is $26,000.
The median household income is about $51,000.
http://www.huffingtonpost.com/2012/09/22/americas-poorest-states-2_n_1904513.html?utm_hp_ref=business
“The US corporate tax rate is the highest in the world, at 39%.” —– llpoh
What the rate is VS. what is actually paid …. well, those are two different things alltogether. RIght?
1) Loopholes. Credits. Write offs. I’m certainly not tax knowlegeable, but I believe corporations (at least the big ones) have an army of tax attorneys whose job it is to GREATLY reduce that 39% … perhaps to 0%, even.
2) Do corporations pay any taxes …. or, do they just pass the cost to the consumer?
@Stucky
“What the rate is VS. what is actually paid …. well, those are two different things alltogether. RIght?
1) Loopholes. Credits. Write offs. I’m certainly not tax knowlegeable, but I believe corporations (at least the big ones) have an army of tax attorneys whose job it is to GREATLY reduce that 39% … perhaps to 0%, even.
2) Do corporations pay any taxes …. or, do they just pass the cost to the consumer?”
Large corporations can afford to do this. Small business owners cannot, and small business owners employ the vast majority of Americans, even these days.
And the AVERAGE wage in the U.S. is $41, 673 …….. not $54,000.
http://www.ssa.gov/oact/cola/AWI.html
LLPOH, what you are missing is the fact that coloration chose to BE corporation’s in the first place. Why become a corporation and then complain about it? Does it not afford some protection as well as access to the great gambling table called wall street? Come on man.
S/B “But I am sure small business, that cant hire teams of those flea bitten cur accountants [not admin of course! =] DO!”
I ve traveled the country and most people seem to make around thirty grand a year.
Yes the tax rate is horrible and i think we should undercut the world to bring jobs here,i dont know what china and other countrys rates are?
And to make a decent living,most familys are two incomes.
If i know that a company moved overseas for cheap labor i try to avoid buying theyre products.
$30k, $40k, $50k. It doesn’t really matter what the number is regarding average wage. You take whatever that number is and safely double it and that is what it costs business to pay you that wage.
Look at GM, the “average” cost of labor to a UAW member is over $70 per labor hour to pay the wage, pay the pension, pay the benefits, pay all the payroll taxes, pay the FICA, FUDA, etc etc. etc.
That equates to $2,800 a week, or $145,600.00 per year.
That cost of paying that wage is added to the cost of every vehicle they produce. And we wonder why vehicles cost so much to produce………
This goes for everything produced in America.
Scratch the payroll tax, I meant to say business taxes.
Bottom line, every tax on business is an added cost to the consumer. Business do not pay taxes, we pay those taxes.
LLPOH
Well said. The finger needs to be pointed at the government and Federal Reserve. Government policies via excessive taxes and regulations in collaboration with the Federal Reserve artificially manipulating interest rates resulting in misallocation of capital and artificial demand/consumption for products/services are the main reasons our manufacturing sector has gone elsewhere.
Stucky
“2) Do corporations pay any taxes …. or, do they just pass the cost to the consumer?”
That’s a great question. If I had to guess, I’d say they pass on as much as they can to the customer. Businesses have a profit margin that they have to meet in order to stay in business or make it worthwhile to pursue further business and they will pass along whatever taxes/costs necessary to meet that margin. In the end, the consumer gets screwed from excessive taxes and regulations.
I’m curious to what LLPOH has to say about this question.
jmarz
He’ll probably call me a dumbass.
And …. he might be correct!
LLPOH,
What you are missing is the fact that corporations CHOOSE to be corporations. Does it not afford them protection as well as access to the great gambling table called wall street? Come on man. Why become a corporation and then complain about it? Down with corporations and support small business. Isn’t America a corporatocracy now?
I certainly understand why businesses move overseas. It’s sad that our own politicians don’t do more to make the US more business friendly. It’s also interesting that there is this giant shift to a one world economy and marketplace, yet no effort at all is made to level the field with measures to protect the envioronment and employee safety. I seem to recall boycotts in years past where the American public learned of foreign factories using child labor etc and Americans would boycott those companies and products. Now they have suicide prevention nets at the Apple factory and Americans camp out for days in line to be the first to buy their shit?
I’m not sure if the lefty pinko scum environmentalists are even aware of the industrial pollution going on in China and elsewhere. If they were, I like to believe that they would sound the alarm and call for boycotts but the only thing being boycotted in America these days is the GOP campaign store and the Ron Paul campaign.
I vote every day with my wallet. I flat out refuse to buy anything from Wally World unless it is made in the USA. I refuse to buy anything from China unless I have no choice and still actually need the item. I find myself shopping more and more in second hand stores and surplus stores where tons of old American made goods can be found. Funny thing is, I save tons of money by avoiding the Made in China label. I frequent as many American owned, small businesses as I can when spending my money. If I have to buy cheap Chinese shit, I’d rather buy it from a Chinese American in his little family owned store than Wally World.
I_S
Mean wage is over $50k per year. Google is your friend. Highest mean wages in the world. Google for knowledge. The arguments that corps pay no taxes is largely bullshit – corps pay taxes, but as I said above the big ones spend lots of money to minimize tax. If a corp reports a tax return profit, they pay 39%, end of story. They manage to keep from reporting profits via legions of loopholes and deductions. But small corps/businesses get no relief. I know I do not.
What, people think other countries do not have doctors and lawyers that skew the mean?
People think only manufacturing is leaving? Hahahahaha! Seriously? Everything ima ginable is being offshored – telecom, accounting, finance, banking, education, etc are all at risk.
The Stigmation comment is crap: wage of 50 + 15 insurance + SS + osha + unemployment + etc etc etc. Maybe he cannot add.
The median Admin quotes is accurate, but not useful, in my opinion, as it includes legions of part time workers, teenagers, etc. but it is accurate. People running a proper business pay more than that.
I know it suits so many to believe that business is evil and is doing the wrong thing. The numbers above are accurate, by and large. And give massive incentive for corps to leave – those that do not go bankrupt first.
And what about the threatened 35% return of profits after tax? That will cause a mass exodus. I, for one, will not run a business for that type of return. At that rate of return, I am out.
I thought more folks would understand if I put the numbers up. Surprises me that people want to pick knits rather than see the root problem. Can’t say I did not try.
Card – as always, it takes a business owner to understand the burden. Thanks for the support.
When I talk about corporations I also mean small business. Same laws apply, but some tax rates vary. A lot of small businesses are run as corps, mine included. Small corps vastly outnumber large.
I guess I assumed people would know how businesses are set up – they are incorporated, large and small. A tiny percentage are large. Small corps struggle to minimize their taxes. Large corps can transfer price, etc.
People really do need to educate themselves about business – anonymous, that means you.
Stuck – surprised you are such a dumbass. You are missing the forest trying to see flaws in the trees.
LLPOH,
Why become a corporation?
Again – as I read through the comments – I by corporations I mean ALL corporations. You folks hear GE, when I more to the point mean “small business” as they are corporations, too. The offshoring I personallyam seeing is being done by small corps. My small suppliers and customers and competition are doing it moreso than the large corps I deal with.
It is small business that is folding or leaving that is even more problematic than big corps leaving. They are the social fiber, not the large. And they are being killed.
Stuck –
I cannot see where you are getting that high mean wage figure. I find it to be around half that. I do find plenty of headlines such as:
“U.S. Median Income Falls To $26,364 As Pessimism Reaches 10-Year High” from Reuters, etc.
Bussiness incorporates to minimize personal liability for debt, etc for the owners. Owners are not held personally liable for a number of things if they incorporate. That is why small, and large, business does it.
Llpoh –
Whoa! Meant that last post to be addressed to you, not Stucky.
Llpoh, I don’t find that high “mean wage” you’re quoting.
“Stuck – surprised you are such a dumbass. You are missing the forest trying to see flaws in the trees.” —- llpoh
I’m not as stupid as you might thing. I do see the forest. Pretty much agreed with your entire post. Found one thing (wages) which I thought was inaccurate, and one thing (taxes) for which I had a question. Sorry for asking. I was just going for accuracy.
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“Again – as I read through the comments – I by corporations I mean ALL corporations. You folks hear GE, when I more to the point mean “small business” as they are corporations” —- llpoh
Well, you should have made that clear up front. Dumbass.
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“I know it suits so many to believe that business is evil and is doing the wrong thing.”
I believe large corps are mostly evil; Monsanto, Dow Chemical, Walmart, Big Ag, Big Pharma … and so on. I do not believe small/medium Corps., like yourself, are evil. Although the Korean dry cleaning place Ms Freud takes her dresses to … well, that lady is one evil gook!!
http://en.wikipedia.org/wiki/List_of_countries_by_average_wage
This is a list of average wages = mean wages. Median is lots different.
Median is a more realistic number since the average is heavily skewed by the rich fucks.
America’s 10 Largest Corporations Paid 9 Percent Average Tax Rate Last Year
By Travis Waldron on Aug 7, 2012 at 2:30 pm
America’s 10 most profitable corporations paid an average corporate income tax rate of just 9 percent in 2011, according to a study from financial site NerdWallet reported by the Huffington Post. The 10 companies include Wall Street banks like Wells Fargo and JP Morgan Chase, oil companies like ExxonMobil and Chevron, and tech companies like Apple, IBM, and Microsoft.
The two companies with the lowest tax rates were both oil companies. ExxonMobil paid $1.5 billion in taxes on $73.3 billion in earnings, a tax rate of 2 percent. Chevron’s tax rate was just 4 percent. None of the companies paid anywhere near the 35 percent top corporate tax rate, providing more evidence to debunk claims that America’s corporate tax rate is stunting economic growth and job creation (Despite the high marginal rate, American corporations pay one of the lowest effective corporate tax rates in the world).
The study also calculated the overall amount the companies owed in both domestic and foreign taxes. This includes deferred taxes that will, theoretically, be paid in the future, once the companies bring foreign profits back to the United States. Apple, for instance, avoided $2.4 billion in American taxes last year by utilizing offshore tax havens.
If Republicans have their way, however, those deferred taxes may never be paid. Switching to a territorial tax system, a policy leading Republicans have considered, would allow corporations to repatriate foreign profits back to the United States nearly free of taxation, costing the country billions of dollars and thousands of jobs.
“I’m not as stupid as you might THING” —— me
Thing???
Fuckit. Nevermind. Maybe I am.
The Truth About Corporate Tax Rates
By David Brodwin
April 4, 2012
A furious debate rages between those wanting to cut taxes on U.S. corporations and those hoping to raise them. The two sides come armed with opposing and contradictory “facts.” Some claim U.S. corporate taxes rank highest in the developed world. Others argue the opposite. When we cut through the rhetoric, a clear but complex answer emerges: Corporate taxes should be increased for most companies—and decreased for a few. The tax structure needs to be repaired to eliminate bad incentives that threaten our economy.
Those urging lower taxes are right to argue that our economy stagnates if taxes are too high. High taxes discourage investment and risk-taking. But how high is too high? Many economists agree that when tax rates soar above 70 percent, growth suffers. Cutting taxes at this level definitely stimulates growth. However, these same economists also agree that when tax rates dip below 30 percent, further cuts don’t boost the economy. Entrepreneurs and investors simply don’t respond to an additional incentive. They are already as strongly incented as they can possibly be.
American history supports these economists’ conclusions. The economy took off dramatically in the 1960s when top marginal rates were slashed from the 90 percent level. But when taxes were cut sharply from relatively modest levels early in President George W. Bush’s term, no growth resulted.
The real issue lies in understanding the huge gap between the “nominal rate” (the list price) and the “real rate” (the tax rate that most companies actually pay.) These two rates diverge widely. The nominal federal tax rate on the largest corporations is now 35 percent. State taxes, on average, bump this to 39.2 percent. This nominal rate ranks as the highest among developed countries.
However, no major company really pays the nominal rate—just as no one walks into a car dealership expecting to pay sticker price. Big companies enjoy a huge buffet of credits, shelters, deductions, and other preferences that reduce their rate to an average of 13 percent. Many profitable companies pay no federal income tax at all. Regardless of our nominal rate, our real corporate tax rate is among the lowest. Further cuts cannot stimulate growth.
Moreover, cutting corporate tax rates would create two new problems. First, further reductions in federal budgets would directly undermine America’s competitiveness. (After 20-plus years of tax cuts, there’s little “fat” left to excise.) For example, federal belt-tightening has led states to slash support for higher education. College tuition has skyrocketed, far outpacing family income. Today’s college students struggle to get the education they need to hold well-paying technical jobs, and many must take on massive debt to pay their tuition.
[See a collection of political cartoons on the budget and deficit.]
The second problem: The corporate income tax does not affect all businesses equally. Large corporations pay much lower tax rates than small businesses, because they can exploit loopholes and establish offshore operations. However, small businesses provide more new private sector jobs, and function as the main employers in many parts of the country. Further, the tax code shields old industries at the expense of new more innovative sectors, and it protects industries that burden the rest of society. Why should we subsidize oil rather than renewable energy? Why should we subsidize corn syrup that promotes obesity and drives up healthcare costs?
The problem with the corporate tax code is not what many think. Frankly, we can change the nominal tax rate to practically anything. It doesn’t matter since hardly any corporations pay the nominal rate. What matters is this: Bring up the real tax rate (what companies actually pay) to support needed investments in productivity and competitiveness. Stop penalizing small business. And, end the gimmicks and loopholes that encourage investment in damaging business practices and obsolete industries.
Well, well, well ….. Admin posts an article, immediately above, showing Corps don’t really pay 39%.
Trees. Forests. Where is llpoh?
Llpoh –
Thanks for the link.
Admin – I already pointed most of that out re large corps. The small corps are the issue.
I disagree entirely with median being better. It skews it because of part- timers and kids, etc.
Median household income is over $60k, And somewhere around Fifty to sixty percent of households have dual earners. Those numbers cleatly indicate that the median numbers are heavily skewed by part time numbers.
The point is the cost per hour for labor. Private sector wages plus mandatory costs overall is now around $30 per hour – average. That is the number driving businesses overseas, not the median wage of $30k per year, but the average wage and benefits etc of $30 per hour.
The average wage is skewed by white collar bankers and corporate executives. That is why the average is so much higher than the median. The median wage of $26,000 means that 50% of workers even make less than that. Most blue collar workers are in the median range.
The median household income is $50,500. It has fallen four years in a row.
I agree with you completely that the training costs, healthcare, and payroll taxes drive the overall cost to the employer sky high.
I am completely in agreement that small corporations like your own take it up the ass versus the conglomerates. That is the point. Small corporations aren’t capable of going off-shore. They either survive in the U.S. or go under. The mega corps want more regulation. They want complicated tax laws. They want government involvement because they can buy influence.
I don’t know how a small corp can make it today in this country.
@Llpoh – I’ll come work for you off the books if you promise to pay 25% more per hour than I would have made otherwise.
We both win!
TPC – I do not do that! I follow the law re my company. Nice offer, tho.
There are some 5,000,000 corporations in the US. Under ten thousand of those employ more than 1000 people. The rest – 4,990,000 – would pay full tax on their earnings, as they would not have the resources or the influence to do otherwise. About 120,000 of the firms employ 100+ persons. These entities will be struggling mightily, and will be looking to offshore wherever possible.
The 4,880,000 others do not no whther to shit or go blind. They would all be “corporation” that employ folks. They all would be paying full marginal tax on their corporate earnings.
I suspect that a lot of them – the 4.9 million – would be making sure they have no earnings to be taxed, by offloading earnings by calling them wages to mom, pop, son, daughter, grandma and grandpa, etc. That in itself is a disaster, as it robs the business of capital and the hope of expansion, and puts it at risk of bankruptcy in the event of a downturn. That is what the ridiculously high corporate tax rates do to business – it fucks them at the growth stage, by giving them incentive to not retain any profits.
Seriously, you folks that keep screaming about the big corps paying no tax are missing the point – the tax rate is screwing the growth businesses – the start-ups, the mom and pops wanting to grow a business, etc. Fuck the big corps. It is the small ones that are being killed by the high tax rates.
A corporation making the magnificaent amount of $100k pays the highest corporate rate of 39%. Plus a further 15% when it is taken out of the corporation. At that level, the small business would say fuck that – I will pay my wife $50k, my son $25 K, and my Dad $25k, show no profit, and I will be $25k in front. Makes sense, doesn’t it? But then the business cannot grow.
Stucky – I am here, you dumbass. He is pointing out that the handful of megacorps do not pay tax. Not entirely true, but relatively true. Are you following what I am saying, or is the air so thin where your head is that you are missing the point?
There are 4,990,000 corps that are getting screwed up the ass by the corporate tax rates (not to mention the wages and associated costs and legislation). These firms employ a significant number of people, and they are getting fucked, and I assure you they do not escape the corporate tax rates.
“Seriously, you folks that keep screaming about the big corps paying no tax are missing the point – the tax rate is screwing the growth businesses – the start-ups, the mom and pops wanting to grow a business, etc. Fuck the big corps. It is the small ones that are being killed by the high tax rates.”
Nope, I’m well on board with that. I’ve seen a lot of very promising start-ups drown the moment they start enjoying the first bit of success.
They can’t expand to meet demand thanks to the massive cost increase, but they can’t continue on as small potatoes or some big fish will swallow their customers up (or make a competing product).
Jmarz – passing the cost of taxes on is nearly impossible – the more you pass on, the more tax you pay, and you have competition out there ready to pounce.
My fix for the off-shoring of American business and/or jobs is rather simple:
Want to move your business to foreign shores in order to reduce employee costs, lax environmental rules, friendly tort law, etc.? Fine. No problem. See ya!
Now that you’ve moved, you say you still want to sell your product here in the USA? Fine. You can certainly do that.
However, be aware that we are going to tax your imported goods/services at a rate that will take into consideration the benefit you have derived from paying slave-labor wages, your new ability to pollute the environment at will, avoid lawsuits, etc. This consideration will be calculated to cause your profit to be a little less than had you simply stayed in the United States. Simple as that.
Won’t work?
Import taxes are how this nation funded the government until 1913.
PS: You sure you don’t want to hire me off the books? You can claim I’m mexican that way its still legit somewhat.
I’ll work on my tan while you think it over.
Admin – thanks. You are not a dumbass (unlike Stuck, that shit-stirring Great Ape), because to a greater or lesser extent we are arguing the same points. I disagree with your interpretation of the numbers re wagse, but by and large it is insignificant in the scope of the argument, and we have on ocassion pounded shit out of each other re dotting the i and crossing the t – fun but sometimes brutal!
I can say that my business – a legitimate business – has costs per employee approaching $80k, and my workers earn $50k+. I compete on service and quality, not cost. I am at risk vis a vis cost pressure every day. Customers place a nmonetary value on everything, and at some point they will not pay the increment I demand. The government adds to my pack. If they make my return 35% on profits earned, I am outta here.
Interestingly, one of the benefits of incorparation s that I can walk away at any time, pulling my capital. Unincorporated business owners are often liable for any debts associated wih the business, and so walking away can be very difficult.
Terry – it will not work. The business will go under. Simple as that. They are leaving so as to survive. Forcing them to stay will simple force them under. They are not leaving to make more profit – they are leaving to make some profit. Your solution would deny them that.
Also, the time of trade barrier is over. Maybe if things had been done differently 50 years ago, it may have been possible to keep barriers in place. But today, a trade war would simply make the the US irrelevant – countries would bypass the US, and the US is dependent on too many imported products. The cost of goods would skyrocket, exports would decline, etc etc etc.
TPC – I vet all employees for legal work status. Skin color does not concern me. You got big tits? That is always a plus!
I do not, however my wife says I have a great ass.
Are you an ass man?
This is a recent photo of me. What do you think? Am I hired?
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Llpoh –
One thing you say is certain: “…the US is dependent on too many imported products.”
Starting with oil.
LLPOH,
What are the statistics for small corporation failure? Or small corporation going overseas? As far as being responsible for business debt, what is it for LLC vs. corporations?
This pinko environmentalist scum pretty much agrees with llpoh. It was a real eye opener when I went overseas to work and saw how much opportunity there was. Like I imagine California was in the 1950s.
So I offshored myself. Was supposed to be temporary, ’til I could get back to the Rockies in comfort. But the more I learn, and the worse the US gets, well, that plan is on hold indefinitely.
There’s a world of opportunity out here still, for the adventurous.
The way I see it, the US’ dilemma is that it is late in a long-term credit cycle (eyeball deep in debt, all the low-hanging fruit picked), and also in late imperial terminal decline. We can bitch all we want, but until things get rebalanced, I just don’t see much opportunity in the states. Meanwhile the world is changing dramatically.
Anonymous – I am not esp. familiar with LLC – but a quick google suggests it is similar in the debt protections it offers. It seems to be an individual state classification as opposed to a federal one.
All that said, there are some things seriously F’d up with corps.
The 14th amendment applies to corps? Corporate donations = free speech?
I don’t know how the limitation of personal liability works, but I am sick as hell of seeing these corporate assholes commit heinous crimes and get off scott free.
But yeah, obviously there is a big diff. between most corps and the mega-corps.
The mega-corps are destroying us.
Dopple’d again!