What are Liberal's position on higher corporate taxes causing business to move overseas?

Discussion in 'Budget & Taxes' started by kazenatsu, Feb 22, 2018.

  1. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Maybe we are just disagreeing on what exactly those particular environments are.

    That's irrelevant to the point you're trying to make.
    I don't see how amount of trade is very relevant to whether a type of trade policy will have a net gain.

    The U.S. is running a trade deficit with many other countries. Those countries are benefitting far more from the trade than the U.S. is.

    If that encompasses your definition of the optimal tariff argument, then I'd have to disagree and say there are other tariff justifications besides just that.


    My argument would be fair trade, and extraneous costs, if we are to include costly worker and environmental protections into the analysis.
     
  2. Reiver

    Reiver Well-Known Member

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    Nope! I know the economics. You have mercantilism.

    Bit obvious really: if the US market is falling in importance, the notion of an optimal tariff becomes redundant.

    This is mercantilist grunt. All benefit from trade. The trade deficit reflects a savings imbalance. It is a macroeconomic outcome independent of jonny foreigner.

    Your opinion is irrelevant. You have shown zero ability to refer to the economics of trade.

    There are tariff issues over fair trade (typically focused on the developing world). You don't refer to them. Happy to hear your worker and environmental arguments mind you. Good luck!
     
  3. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    If that was really the case then no country would be putting up retaliatory tariffs in response to a tariff put up by its trading partner. That's something for you to consider.

    Guess the EU is being a "mercantilist grunt" (as you put it) right now, in response to Trump's policies.
     
    Last edited: Mar 19, 2018
  4. Reiver

    Reiver Well-Known Member

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    A country adopting economic nationalism should be punished. The WTO recognises that.

    The problem with the EU is that, through its bilateralism, it threatens multilateralism. Of course it's very existence is evidence of the gains from free trade. Brexit, for example, will undoubtedly lead to economic losses.
     
  5. OldManOnFire

    OldManOnFire Well-Known Member

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    You might wish to think some about why other nations have lower cost labor, etc.? Very seldom is it ever about 'slave labor' whatever this can mean. All nations are at different levels of economic evolution and success and therefore all have varying costs to do business. Labor across the world will NEVER be paid the same rates!

    And how can you claim 'unfair competition'? Wake up and understand that for developing nations labor rates are going to be much lower than labor rates in the USA. It's not unfair? It is what it is based on the local economics. It's stupid for a nation like the USA to worry about what other nations labor rates might be...either we can compete or we cannot. When we cannot it's NEVER because of your so-called 'slave labor' rates.

    Yes some US corporations must seek out lower cost labor and materials, etc. but those are just a few of the costs of trying to do business outside of the USA.

    Why do you think trade deficits are a bad thing? Of the 1000's or millions of products which are imported into the USA, from subcomponents to completed products, IMO it is unlikely that even 1% of them will ever be manufactured again in the USA. Do tariffs all you wish, slash corporate taxes, and it still won't move this manufacturing back to the USA. The cost to do business in the USA has inflated so much and so quickly, and with consumers refusing to pay higher prices, has forced outsourcing. You should try to fathom what the US would look like today if we did not have the imports...
     
  6. OldManOnFire

    OldManOnFire Well-Known Member

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    Taxes are levied against profits. Taxes are not a direct cost of products and services.

    Every time above when you mention 'sell', whether to yourself or others, is a potential for profits and taxation. When you 'sell' you have income and then you deduct expenses and pay taxes on net profits/income. You're making this far more complex than necessary...
     
  7. OldManOnFire

    OldManOnFire Well-Known Member

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    You sound like you want to 'handicap' the labor rates in all nations so that the labor costs are always the same amount? Labor rates are what they are around the world because every location is in varying levels of economic evolution. If a company, or nation, wants to compete with other nations in which labor costs are 25% lower than the USA, this becomes their challenge to accomplish. And to achieve this the idea of tariffs is not a solution! You have some choices; admit the US company cannot compete, have a US company produce products in the US at double the price, or accept that trade deficits are not a problem since it gives US consumers access to more products at lower prices. Why don't you and others harp on what the US needs to do to greatly expand exports? Expanding exports is a great solution to trade deficits...
     
  8. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Maybe they can't compete and there is likely to be a prolonged trade deficit.
    As Ross Perot (former U.S. Presidential candidate) commented, the trade imbalance won't adjust back to normal until the wage difference between the two countries begins narrowing. Their wages are going to slowly go up, and yours are going to go down.

    I'm all for free trade and letting the theory of comparative advantage do its work, but only if there's not a huge trade imbalance, and only when there's enough good jobs for all the people in the higher standard of living country to be doing.

    You make workers in the higher cost of living country compete with workers earning a dollar an hour, with unsafe working conditions and no health benefits, it's going to be a race to the bottom in terms of wages.

    You might have more equality between different countries, but you'll have higher inequality within each of those countries.
     
    Last edited: Mar 20, 2018
  9. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Before the Recession, the strategy they were trying to use in the U.S. was to bring in many Mexicans (legal or illegal) for businesses to be able to lower the cost of labor so they would be able to compete with the rest of the world (where in many cases the cost of labor was lower). A similar economic policy was also being persued in the U.K. and Germany.

    Basically, if you can't compete with the rest of the world, bring in those workers from the rest of the world so your country will be able to compete.

    That's what you have to do when there are no trade barriers or protections.
     
    Last edited: Mar 20, 2018
  10. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Yes, but the first of those sales occurrs in another country where the corporate tax rate is lower.

    That's how I can sell to myself, and then sell to you, and not have to pay as much taxes in your country.

    Sorry if I'm making this complicated. I'm just trying to think up a way to explain it so you will be able to understand.
     
    Last edited: Mar 20, 2018
  11. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Reiver, doesn't any taxes lead to economic losses?

    Why should it then matter to you if it happens to be in the form of a tariff ?
     
  12. Reiver

    Reiver Well-Known Member

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    Depends how they are used. They certainly provide gains if they're used to finance public and merit goods.

    Tariffs stop comparative advantage from maximising the positive effects from trade. Of course its even worse once we factor in Krugman and co, with New Trade Theory demonstrating that losses are both inter-industry and intra-industry.
     
  13. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    But taxes stop the economic exchange within a country too, so there basically shouldn't be much economic difference. Why so opposed to tariffs?
     
  14. Reiver

    Reiver Well-Known Member

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    Wrong. Tariffs, with certainty, destroy economic activity. We don't have that with other taxes. While they create distortions, the overall impact can be positive.
     
  15. Mr_Truth

    Mr_Truth Well-Known Member

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    decades ago, corporate taxes were FAR higher but most manufacturing was done in the USA - we did not export jobs because our unions were stronger

    easy solution to all this: change laws so that no one can send capital overseas, strengthen unions, and end all foreign tax shelters
     
  16. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    The US also had higher tariff barriers and didn't have all these trade agreements back then.

    NAFTA came into effect in 1993.
    Normalized trade relations with China came into effect 7 years later.
     
    Last edited: Mar 20, 2018
  17. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Just what makes you think taxing trade between two different countries would have more of a negative impact than taxing the exchange between two individuals within the same country?

    I'll give you a chance to answer that before I accuse you of being blatantly inconsistent and dumb.
     
    Last edited: Mar 20, 2018
  18. Reiver

    Reiver Well-Known Member

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    Already said: comparative advantage. Fire up your Heckscher-Ohlin model to show the negative wellbeing impact of tariffs.

    There is a reason for preferring tariffs in developing countries with informal sector and security problems. Tariffs revenues are relatively easy to acquire and can fund public goods. However, we don't have that here. We simply have destructive tariffs mentioned because you haven't had the good grace to teach yourself about comparative advantage.

    Happy for you to refer to an economic source in support of tariffs over taxes. Good luck!
     
  19. OldManOnFire

    OldManOnFire Well-Known Member

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    Either US companies can compete or not? If they can't, it's pretty stupid to go into business anyway then expect government to place tariffs or lower taxes or whatever? In all cases in which there are different economies the labor in those economies is not going to be the same cost. You don't need to go back that far in US history to find $1/hour wages and few unions and no OSHA, etc...maybe 60 years. But greedy Americans have forced tremendous inflation over the decades and now we complain that we can't compete with others. It's not 'others' fault for having lower cost of living and it's not business's fault for seeking out lower cost labor. I suggest others who are early in their development, with lower cost labor, etc. today are going to inflate much faster than we did in the US because they have more information.

    So you only want free trade but only when US companies are doing great?

    There's no race to the bottom? Everything is always going up...at varying rates...but always up.

    All this crying about Americans companies not being able to compete and whining to daddy is a waste of time. Americans need to design and innovate and produce stuff that creates demand around the world. If all we want to do is place tariffs, and bring back pencil manufacturing, I suggest this simply will lead to failure...
     
  20. OldManOnFire

    OldManOnFire Well-Known Member

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    During my career, I worked in a few large multinational corporations, in significant positions, and never in any of these companies was there a conspiracy to bring in Mexican workers for lower labor costs. So when you say 'they' who the hell are you talking about?

    I can remember exactly when we sought lower cost labor, lower cost materials, and even higher quality by outsourcing around the world. Since in all cases we were dealing with state-of-the-art products, all outsourcing was done with critical review. And in all cases we controlled the final units, the software, and the sales/service. We had NO choice but to seek these other options because our competitors were doing the same. Sadly, in many instances, we outsourced to achieve higher quality.

    Now for other industries, like farming and construction and hospitality, etc. IMO legal and illegal immigrants in the workplace was not because of cheap labor but because the manpower was required in areas in which Americans refuse to work.

    What does a business do? It creates a product or service to fill a perceived demand. Nothing in a business, from income to expenses, is static! Therefore, all business must constantly understand the trends, the options, the pitfalls, and the opportunities, and do so IMO without expecting government to solve their problems for them...
     
  21. OldManOnFire

    OldManOnFire Well-Known Member

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    You don't know if the corporate tax rate is lower?? And you don't know the extra costs associated with doing work outside of the US? But when you do business in other nations, and in the US, you full know what the tax policies are so don't cry to government.
     
  22. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    I'm sorry Reiver and OldManOnFire, I don't find your rebuttals to my argument very convincing. Maybe others could comment on this?
     
    Last edited: Mar 20, 2018
  23. Mr_Truth

    Mr_Truth Well-Known Member

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    tax shelters have existed since at least the 1970s when imported cars were virtually unknown except for VW Bugs
     
  24. Reiver

    Reiver Well-Known Member

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    Don't hide now. It was a simple request: "Happy for you to refer to an economic source in support of tariffs over taxes"
     
  25. Junkieturtle

    Junkieturtle Well-Known Member Donor

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    Lower taxes still won't compete with the unregulated and dirt cheap wage environment these companies can find overseas or across the border.

    The only thing that levels the playing field without starting a massive international trade war is if Americans all agree to lower their standards of living by several notches.

    And I don't see that happening.
     

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