On 2013-04-23 00:16:56 +0000, David Arnstein said:
> Tim forgot to mention another way that taxes kill jobs.
>
> When Apple or Intel book a profit overseas, it is usually beneficial to
> keep the resultant loot overseas. This is because American tax on
> corporate profits is rather high. Over a period of years, the loot really
> piles up! The more it piles up, the more attractive it is to deploy that
> loot for something, anything. Such as (ding!) building and staffing a
> factory. Or a customer service center.
Yes, this is what I meant about the low tax rates in these countries.
(And if the foreign profits, even after taxes, are repatriated to the
U.S., U.S. taxes are then collected. No reason to, and no plausible
U.S. law can force them to repatriate their assets. There is some talk
of an "amnesty," but this is unlikely to pass muster in today's
Congress. Cutting corporate tax rates drastically would be a natural
way to get this money repatriated. But even so, companies have many
other reasons to expand in non-U.S. locations.)
(The outflow from California has been breathtaking to behold. Intel,
for example, no longer has any significant manufacturing in the state.
The last wafer fab shut down some years ago, and it was an R & D fab,
not even a large manufacturing fab. TJ Rogers of Cypress Semiconductor
has said repeatedly that every California policy and law is
efffectively telling him: "We don't want you in our state. Get out."
Except for his corporate headquarters, he essentially has done so. I'm
expecting Intel to move its corporate headquarters to either Arizona
(probably) or Oregon. Then the last remaining Santa Clara and Folsom
operations can be wound down.)
Ideally, government should be much smaller. Freely giving out
"benefits" (monthly checks, housing subsidies, free health care, and on
and on) to about 100 million working-age Americans needs to end.
http://www.activistpost.com/2013/04/more-than-101-million-working-age.html
and
http://www.zerohedge.com/news/2013-04-05/people-not-labor-force-soar-663000-90-million-labor-force-participation-rate-1979-le
(discussed in many places....this is the kind of news that _should_ be
leading our debates, not crapola about the Kardashians and what Lady
Gaga is "rocking." These trends, along with the $100 trillion unfunded
liabilities situation, are not sustainable. Indeed, we are almost
certainly beyond the point of no return. No amount of increased taxes
or belt-tightening is going to allow the U.S. to get back to a
sustainable financial footing. Indeed, Japan, most of Europe, is in
this situation. Throw in an aging population, the trends amongst the
young, and the implications are very clear.)
Corporate tax rates should be nearly zero. And if not, then the
taxation on dividends should end. (The double taxation issue.)
So, I'm happy that Intel, Apple, Oracle, Qualcomm, and my other stock
holdings and ETFs are benefitting by the trillions of dollars they are
accumulating in these low-tax nations.
And the residents of those nations are happy that so many new
factories, service call centers, and even R & D facilities (gulp, for
the future of America!) are being built in great numbers in their
backyards.
I was once somewhat dismissive of the "McJobs" arguments, but the facts
I see in the 10K reports for the companies I hold stock in just don't
lie. More and more of their profits are being booked outside the U.S.,
and for products shipped to offshore consumers.
Meanwhile, gazillions of "Women's Studies" and "Political Science"
grads are unemployable. I expect this to eventually hit STEM grads as
well, as the new factories and R & D labs are offshore. A Brain Drain
for the U.S. that almost exactly parallels the one from Britain and the
rest of Western Europe in the 1950-70s.
--
Tim May