Dozens of Major Businesses Have Left the US

[Bob Blaylock]

Don't blame corporations for that.

Under 600 men and women run this country. It's up to them to even the playing field, make sure regulations are in place, examine those loopholes and re-justify them every "day", enforce the tax code, adjust it as and when necessary, look at the flight of American and foreign companies out of the United States, account for it, make sure it makes no difference in the cost of doing business in the United States. Contrary to what they believe, it is not their job to "get re-elected" by whoring themselves out.

We're the world economy. "When the United States catches a cold, the rest of the world gets pneumonia." You want to sell your crap in the United States? Great! We'd love to have ya'. You want to move your business headquarters to Peru to avoid our taxes? Okay. But every widget you sell here is going to cost 20% more because you have decided your company's smart move is to create jobs abroad and not support the very engine that drives your train.

I cannot help thinking of the cliché/joke about “Beatings will continue until morale improves.”

It is pure madness to punish companies for making sound financial decisions which are to the detriment of the domestic economy, by imposing measures that will simply drive them further from the domestic economy. It's a perfect example of wrong-wing thinking, that seeks to “solve” a problem by implementing policies that any rational person can see will only make the problem worse.

 

[jonny5]

They come here anyway. And we get the tax revenue.

But who wants corporations to come here if they don't want to pay taxes for the benefits they get from our society? This sounds like more conservative free-lunches for the rich.

I do. Those rich get incomes which are taxed. They pay 60% of all income tax. Hardly a free lunch. And since corproate taxes are included in consumer prices, all youre doing is taxing consumers to pay the taxes for corporations.

 

[Kushinator]

I do. Those rich get incomes which are taxed. They pay 60% of all income tax. Hardly a free lunch. And since corproate taxes are included in consumer prices, all youre doing is taxing consumers to pay the taxes for corporations.

Corporate taxes are based on profitability, which is rather difficult to build into a competitive pricing structure.

Profit = Revenue - Cost

Now it is true that firms tend to pass costs onto consumers.

 

[imagep]

I do. Those rich get incomes which are taxed. They pay 60% of all income tax. Hardly a free lunch. And since corproate taxes are included in consumer prices, all youre doing is taxing consumers to pay the taxes for corporations.

Tobacco users pay 100% of the tobacco tax.

Of course the group with the most excess income pays the most income tax.

So what?

 

[jonny5]

Corporate taxes are based on profitability, which is rather difficult to build into a competitive pricing structure.

Profit = Revenue - Cost

Now it is true that firms tend to pass costs onto consumers.

Not difficult at all. Cost of a widget is $100, sells for $105. Thats $5 profit. Tax on that profit is $1, add 1$ to the price of the widget. Businesses do that on a much grander scale. Hell, make it simple. How much tax did we pay last year? $10 million? Raise prices by $10 million this year.

 

[Karl]

When the taxes are dodged and not paid at all, nobody.
1. Less tax revenue = higher deficit or reduced spending.
2. Higher deficit or reduced spending = drag on economy.
3. Drag on economy = less jobs.
4. Less jobs = less tax revenue.
5. Return to step 1, rinse & repeat.

Don't blame corporations for that. [...]

Yeah, I can blame them. The remainder of your points are good, but at the end of the day you shouldn't have to legislate morality (really, you can't).

A corporate construct is an inhuman entity, and as such it's size and wealth should be strictly controlled-- a legislative feat that will never occur, since they -- not those 600 people -- are the ones that really run the country. Logically it should therefore be expected to conduct itself in an inhumane manner, at least with respect to its profits -- such as abandoning its mother (say, the U.S.) in search of a more viable host upon which to parisitically feed.

Many or most politicians don't sell out to get re-elected, they were either selected or bought and paid for before they even arrived. And some are probably not all that influenced by the source of the money, but rather inherently favor unregulated parasitic behavior (similar to Rand's Objectivism, all the rage with the righties these days including a vice presidential candidate).

 

[Kushinator]

Not difficult at all. Cost of a widget is $100, sells for $105. Thats $5 profit. Tax on that profit is $1, add 1$ to the price of the widget. Businesses do that on a much grander scale. Hell, make it simple. How much tax did we pay last year? $10 million? Raise prices by $10 million this year.

If you raise prices by $10 million, will the quantity demanded for your good or service rise, fall, or stay the same?

 

[jonny5]

If you raise prices by $10 million, will the quantity demanded for your good or service rise, fall, or stay the same?

It will stay the same because my competitors also have to pay taxes, so they also raised prices, and my products are in demand. This is called inflation.

 

[imagep]

Not difficult at all. Cost of a widget is $100, sells for $105. Thats $5 profit. Tax on that profit is $1, add 1$ to the price of the widget. Businesses do that on a much grander scale. Hell, make it simple. How much tax did we pay last year? $10 million? Raise prices by $10 million this year.

But since corporate income tax is based upon profits, and not every business makes the same net profit per unit sold, it can't work like that because companies have to price compete against each other.

Are you willing to pay one company a premium price for their goods just because they make more profit?

Consumers are looking for the best deal, they could care less about how much a company pays in taxes or what it's operating costs are.

If companies can just randomly jack up prices to make more profit, without regards to competition, then everything would cost a zillion dollars. Anyone who understands the competitive free market, understands that competition is what keeps prices in check.

 

[imagep]

It will stay the same because my competitors also have to pay taxes, so they also raised prices, and my products are in demand. This is called inflation.

I compete with some major corporations selling essentially the same products. Since my business is a S-Corp, I don't pay a penny in corporate income taxes. Those companies still have to price compete against me.

 

[imagep]

It will stay the same because my competitors also have to pay taxes, so they also raised prices, and my products are in demand. This is called inflation.

So you think that if we lowered the corporate income tax we would have deflation? Companies would cut their prices because they don't want to exceed their target after-tax profit?

What you don't get is that every company seeks to make as much profit as they can, regardless of what the corporate tax rate is.

 

[Gonzo Rodeo]

So you think that if we lowered the corporate income tax we would have deflation? Companies would cut their prices because they don't want to exceed their target after-tax profit?

What you don't get is that every company seeks to make as much profit as they can, regardless of what the corporate tax rate is.

Prices go up like a rocket, and down like a feather. The push to raise prices comes from external sources like increased costs. Taxes fall under this. The push to decrease prices comes from external sources of competition that can undercut prices without sacrificing quality.

Increased costs translate immediately. Decreased costs require innovation, investment, and time.

 

[imagep]

Prices go up like a rocket, and down like a feather. The push to raise prices comes from external sources like increased costs. Taxes fall under this.

Taxes in general, yes. Corporate income taxes, nope. Doesn't work like that. The income tax is a whole different animal.

The push to decrease prices comes from external sources of competition that can undercut prices without sacrificing quality.

Yup. And the higher demand is, the more that prices can drop due to economy of scale and increases in competition.

Increased costs translate immediately. Decreased costs require innovation, investment, and time.

Not always, prices tend to be sticky. Some of the raw materials that I use are commodities and the price may vary daily. I don't change my prices daily though.

 

[Gonzo Rodeo]

Taxes in general, yes. Corporate income taxes, nope. Doesn't work like that. The income tax is a whole different animal.

Income taxes influence every business in the entire chain, from production to transportation to final product to marketing and sales to the end consumer. Taxes leave less money in the economy for people to spend on things.

Do you have many government contracts?

Yup. And the higher demand is, the more that prices can drop due to economy of scale and increases in competition.

You and I have disagreements about the nature of demand. The higher demand is... the less likely that prices will drop. If the increased demand is sustaining the current price, the price will not drop. If anything, it will increase. What you are describing is an economy of scale that only happens after an investment of time and money or is the result of a miraculous technological breakthrough (which itself was probably the result of a great deal of time and money). While it is true that nearly every factory in existence has spare capacity, it is also true that too much spare capacity will lose a business money rather than help them make it. There is a limit to what extra supply can be made on short notice to satisfy extra demand.

And it's more complicated than just turning on a switch to increase production. New employees have to be brought online, which costs money and takes time. For a smaller bump, existing employees can be utilized more but at 1.5 x the pay (so, an increased cost). Increased demand (as you are describing it) is also an industry wide phenomenon, which affects every step of the production chain, and results in increased demand at every step in the production chain, which increases prices at every step in the production chain.

When your demand gets high, do you lower your price?

Not always, prices tend to be sticky. Some of the raw materials that I use are commodities and the price may vary daily. I don't change my prices daily though.

Sure, but that's all I'm really saying here. Prices tend to stick (up high). The undercutting game takes time, as everyone takes a gamble on what the highest price the market will bear is, minus one. However, if one of your raw materials jumps in price, say, 25%, that could very well eat your entire margin, which means you either have to raise your price immediately to cover the increased cost of materials, or you will produce at a loss (for a little while, until you are out of money).

Do you often produce at a loss?

 

[Karl]

Not difficult at all. Cost of a widget is $100, sells for $105. Thats $5 profit. Tax on that profit is $1, add 1$ to the price of the widget. Businesses do that on a much grander scale. Hell, make it simple. How much tax did we pay last year? $10 million? Raise prices by $10 million this year.

Your talking point is not based in reality.

Long before that profit figure was arrived at the corporate coffers were raided for all sorts of corporate excesses at the taxpayers expense (lavish resort get-aways, under-utiilized corporate jets, obscene billion-dollar corporate benefit packages, hundreds of millions spent to influence politicians (some of it on personal issues), etc). If the large corporations were run on a fiscally sound and prudent basis they could probably pay their tax bill from the monies saved, show a greater return on investment, therefore be more profitable and increase their share price as well as their market share. Alas, greed would be eliminated from the picture in that scenario, and we certainly can't have that . . . . .

 

[MaggieD]

So Maggie, when did you become a Marxist?

I don't know nothin' about no labels.

Okay, how 'bout this: I'm a Common Sense-ist.

 

[MaggieD]

I cannot help thinking of the cliché/joke about “Beatings will continue until morale improves.”

It is pure madness to punish companies for making sound financial decisions which are to the detriment of the domestic economy, by imposing measures that will simply drive them further from the domestic economy. It's a perfect example of wrong-wing thinking, that seeks to “solve” a problem by implementing policies that any rational person can see will only make the problem worse.

I think our definitions off "rational" differ.

Let them sell their Nikes in Peru.

 

[MaggieD]

Don't blame corporations for that. [...]

Yeah, I can blame them. The remainder of your points are good, but at the end of the day you shouldn't have to legislate morality (really, you can't).

A corporate construct is an inhuman entity, and as such it's size and wealth should be strictly controlled-- a legislative feat that will never occur, since they -- not those 600 people -- are the ones that really run the country. Logically it should therefore be expected to conduct itself in an inhumane manner, at least with respect to its profits -- such as abandoning its mother (say, the U.S.) in search of a more viable host upon which to parisitically feed.

Many or most politicians don't sell out to get re-elected, they were either selected or bought and paid for before they even arrived. And some are probably not all that influenced by the source of the money, but rather inherently favor unregulated parasitic behavior (similar to Rand's Objectivism, all the rage with the righties these days including a vice presidential candidate).

They don't run the country. Consumers run the country. We just don't understand how much power we have. Without consumer support? Our economy is flat on it's ass in a New York Minute.

 

[Karl]

It will stay the same because my competitors also have to pay taxes, so they also raised prices, and my products are in demand. This is called inflation.

No, not hardly :lamo

Inflation is generally the result of an increase in the money supply.

 

[Karl]

They don't run the country. Consumers run the country. We just don't understand how much power we have. Without consumer support? Our economy is flat on it's ass in a New York Minute.

Consumers, like voters, tend to be brainwashed, selfish, short sighted, and disorganized (the latter is key). That is why our system of government relies on a representative system rather than direct participation. Unfortunately, the entities with the money (corporations) are not disorganized and they therefore tend to control the system (and run the country).

 

[Bob Blaylock]

I don't know nothin' about no labels.

Okay, how 'bout this: I'm a Common Sense-ist.

It is not common sense sense to propose a “solution” to a problem that can obviously only make that problem worse.

 

[Fearandloathing]

No, it's not. It ends up being, ultimately, a consumption tax. Quite fair in my opinion.

It is considered to be the fairest tax as it applies to what people consume not what they earn or own.

The value added tax, like Canada's GST, generates huge revenues for government, in this case they miscalculated by about 200%.

It is though initially an unpopular tax, as consumers see it many times a day in everything they buy. Here in BC, they attempted to harmonize the federal GST with the Provincial PST and the result was a miniature revolution, where a binding referendum had to be held and passed.

 

[imagep]

No, not hardly :lamo

Inflation is generally the result of an increase in the money supply.

No, not hardly

Inflation is caused by an inadequate supply to meet demand. Doesn't matter how much money is in the money supply, it matters how many goods and services are being produced.

When we had a high rate of inflation during the late '70s and early '80s, was that because we had rapidly expanded the money supply? Nope, it's because OPEC cut back on how much oil they were shipping. Inflation is 95% a production issue.

Find me an example of hyper inflation existing without some sort of decrease in supply. I'll save you some time, there are none.

 

[Kushinator]

It will stay the same because my competitors also have to pay taxes, so they also raised prices, and my products are in demand. This is called inflation.

Nope! Your competitors have no requirement to raise prices; in fact they might have an even greater incentive to keep prices the same as a means of obtaining (from your business) market share. You see, it is competition that drives market efficiency.

Inflation results when output grows faster than productivity.

I guess now is as good a time as any to learn some basic economic principles.

 

[imagep]

It is considered to be the fairest tax as it applies to what people consume not what they earn or own. ...

What is "more fair" about that? Sounds random to me.

Any time we tax something, we get less of it. So we want retailers to sell less stuff? We want businesses do close? We want to end trade?

Of course the same can be said for income.

If we want a government, then taxes are necessary, but we should be raising money from taxes that tax people for doing things that we DON'T want them to do, not taxing them for working or engaging in trade. Sin taxes work for me.