October 6, 2010 - 10:08am
Today's Poll: Should companies pay an additional tax if their products are manufactured overseas?
posted by Howard B. Owens in polls.
(A reader-suggested poll question.)
October 6, 2010 - 10:30am#1
No, Instead we should not punish corporations with the huge tax burden we place on them. Adopt the Fair Tax and companies will be building here in no time and we won't have a trade deficit. We have the best pool of labor in the world and companies will pay for it if the government gets off their back. You could even leave the safety regulations in place and they would still come, though mostly to Texas and Florida because they also have no income tax. Additionally, the tax mentioned in the poll will drive businesses that are based in the US and manufacture elsewhere to move their entire company out of the country and cost us more jobs.
October 6, 2010 - 10:49am#2
Peter, my tax wouldn't tax businesses based in the United States. It would tax any item not manufactured in the U.S. So there would be no incentive to relocate a business. The only incentive would be to turn you back on the largest consumer market in the world. Further, U.S. workers will never work as cheaply as workers in many foreign countries -- so eliminate all of the taxes and regulatory burden in the U.S., and manufacturing would still move overseas, because the highest cost of any business is personnel. What we need is a tax on all import items manufactured in countries that are not free and democratic. It's an unfair competitive environment when U.S. workers are asked to compete against workers from countries that are not truly free to enjoy the fruits of their labor.
October 6, 2010 - 11:17am#3
Howard, Would your tax, or tariff, result in a tariff war? And will it raise the cost of goods on American shoppers since that tax will be passed on to us.
October 6, 2010 - 12:21pm#4
I was just thinking the same thing John. Whatever it is called it will still be passed onto the consumer. I agree that something should be done to give more incentive for companies to produce their products here in the US. However, I do not think that adding another tax will accomplish this. The tax would only generate more money that all politicians could waste. The tax might be beneficial though. If it were collected for the purpose of reinvesting it into small business instead of being dumped into the general fund. Small domestically based businesses could and do benefit from grants and small business loans.
October 6, 2010 - 12:48pm#5
It's about getting Americans back to work. Any incentive a company has to re-open manufacturing here is good right now. Tariffs don't have to last forever and our first responsibility has to be to our labor force. The counter argument to tariffs causing higher prices is that if we get even 4-5% of our unemployed citizens back to work, we're creating wealth the old fashioned way. More employed Americans means more demand for consumer products which, in turn, drives prices down. This doesn't happen overnight. I feel like one of the things we've lost in our cultural identity is patience. We want answers, solutions and results RIGHT NOW. Some things, like economic recovery for example, simply don't happen quickly.
October 6, 2010 - 1:15pm#6
As a capitalist, I believe in fair competition. Rules that make it possible for one company or class of companies to have an economic advantage over competitors are fundamentally unfair. Countries that are not governed by the rule of law, such as China, have a fundamentally unfair advantage over U.S. manufacturers. Goods from such countries should be priced on a tariff system that makes the cost of those goods at a retail level equal to what they would cost if manufactured by a U.S. company,thereby wiping out the unfair advantage China enjoys. Any country that meets western standards of free elections, free markets, the ability of workers to strike or otherwise determine their own market value, and regulations governed by the rule of law would not have a tariff.
October 6, 2010 - 1:22pm#7
One point further, I believe government interference in the market place should be as minimal as possible. Fair trade agreements that open U.S. manufacturers from competition with nations that do not fundamentally share the values of free and fair marketplaces is -- contrary to how it might seem on its face -- a gross interference by the government in the marketplace. There is nothing free market about free trade agreements with repressive governments.
October 6, 2010 - 2:30pm#8
The National Intelligence Council recently released their fourth report titled, "Global Trends 2025: A Transformed World". It touches on many issues, including economic globalization. It is a long, but interesting read. There is a PDF file link on the website. http://www.dni.gov/nic/NIC_2025_project.html
October 6, 2010 - 4:35pm#9
The comments here were pleasantly surprising. Mostly-informed people having civil discussion about economic policy. I think part of the problem with a poll on this is that 99% of Batavia has no idea of the ramifications of instituting different economic policies. I'm a former econ major and I certainly wouldn't say I have enough knowledge to know if that would be beneficial or detrimental. Sure I can draw you PPF curves and GDP curves and stuff but economics is hard.
October 6, 2010 - 6:39pm#10
I agree with John, this would start a tariff war, it's a little too late to bitch about it now, but NAFTA, CAFTA and Free Trade with China have caused most of these problems, since these were passed most major manufacturing jobs were sent over seas because of cheap labor.
October 6, 2010 - 7:18pm#11
A tax which has a 99.99% of being PASSED ONTO THE CONSUMER.
October 6, 2010 - 7:21pm#12
careful howard, comments like that will upset china and then who will we borrow money from to give to the rest of the world? why dont we do this then give the money back to us citizens since we will be the ones paying it through higher costs.
October 7, 2010 - 12:07am#13
I seem to remember in the debates that Obama was going to look into NAFTA and China trade deals..redo them over if needed..What happened on that front..I agree with Gary all these trade deals is what caused all these jobs to be lost and until we look at all trade deals charging more taxes is not the answer..Those cost will just be added to the price of the product..It was Clinton who signed NAFTA...Perot said there would be a giant sucking sound of jobs lost in this country and he was right..
October 6, 2010 - 10:08pm#14
Yup, Perot was right. I loved Bill Clinton as President, but his greatest mistake was NAFTA. Any policy or trade agreement that sends American jobs to other countries simply doesn't make sense. Maybe someday NAFTA and other recent international trade agreements will be looked upon as visionary, but right now I see Americans out of work at staggering rates and I find it unacceptable.
October 6, 2010 - 10:12pm#15
Howard, Not that I have a stance either way, but you are promoting tariffs and free market in the same post. A true free market does not use tariffs. In a free market businesses prosper or fail based on their efficiencies. Global competition is included in the free market. Tariffs, on the other hand, are included in the economic policy of protectionism. If one truly believes in free market, there cannot be forms of protectionism included. That also goes for the global competition as well.
October 6, 2010 - 10:15pm#16
Howard, That's a good point about making the playing field level.
October 6, 2010 - 11:13pm#17
Sean, my point is, it's not a free market when one country is not competing fairly. Let's say there was a country called Xanadu that had a Constitution, protected individual rights, allowed people to keep most of what they earned, allowed them to earn as much as they could, allowed collective bargaining for unskilled trades, was free of corruption (at least on par with the U.S.), but yet still had a labor force that would work for a fraction of what labor in the U.S. costs a business, then I'd say tough for the U.S. It's a free market. If another country can be more efficient, bravo. But China, Mexico, certain other Asian countries, are not more efficient than the U.S. In fact their very inefficiency is that allows them to have an unlimited supply of cheap labor. So there's no contradiction in what I'm saying about tariff's. Tariff's can be a free market tool to ensure it is truly a free market. Free trade with China is not free. It is imbalanced because the oppression in the country ensures an endless supply of cheap labor. That hurts the interest of our communities. I'm very strongly arguing in favor of the free market. My point is that there was absolutely nothing free market about the current trade agreement with China and Mexico.
October 7, 2010 - 12:27am#18
Clinton also signed the free tared agreement with China, I believe he did more damage to America than any president in history or since (maybe until now?) Don't even get me started about how he ignored the rise of terrorism and Al-Qaeda. When terrorists attacked embassies in Kenya and Tanzania he did NOTHING when the USS Cole was attacked he did NOTHING (oh wait at one point we tossed missiles at a pharmaceutical company in the Sudan).
October 7, 2010 - 11:09am#19
"I believe he did more damage to America than any president in history" I believe you spelled Ronald Reagan wrong.
October 7, 2010 - 12:50pm#20
Howard, I agree that free market requires all governments to comply with no interference. That is why free markets do not exist. I believe when you refer to tariffs being used as a tool, you mean as a to to ensure a "fair" market. Fair markets and free markets are different. Also, not all low wages in third world countries are the result of the current government of those countries. Low wages go into what makes a company efficient. The efficiencies I am referring to are the ability for a company to produce and sell a product at a low rate and still make a profit. Or the ability for a company to convince the buyer that their product has more value and should be purchased at a higher price. These abilities are what make a company prosper in a free market. But the free market is lost when the government provides any business with an artificial advantage.
October 7, 2010 - 12:56pm#21
Remove the minimum wage and beat them at their own game.... Let people earn what they are worth not what the government demands.
October 7, 2010 - 7:27pm#22
Yikes. Do we really want to live like the citizens of China or Mexico Peter?
October 7, 2010 - 8:14pm#23
Remove the minimum wage and more factory workers (generally union anyway) would join unions, thereby earning more than minimum wage. Not that I'm defending minimum wage, but I don't see how that fixes the problem of trade imbalance and U.S. jobs being shipped overseas.
October 7, 2010 - 8:57pm#24
I agree that it doesn't. There's a cost/benefit to everything. I certainly don't have the answer.
October 7, 2010 - 11:50pm#25
Maybe the largest consumer market in the world should start flexing its muscles, pick a company who took jobs overseas and boycott their products for a month or so. And keep this cycle going, oh ,thats right, that would require all of us to work together for a common goal, we don't do that well.
October 7, 2010 - 11:54pm#26
How about boycott the retailers that forced U.S. manufactures to ship jobs overseas?
October 8, 2010 - 1:58am#27
Frank, are you going to stop buying heat transfer equipment from Graham Mfg.? Not all US companies that ship jobs overseas do so at the detriment to American workers. In many cases, for every 1 job shipped overseas, 3-4 jobs are created here at home to handle increased sales, production, accounting etc. The notion that China has an inexhaustible supply of cheap labor is outdated and just plain incorrect. Due to their 1979 "one child per couple policy", they are, in fact, experiencing a tremendous labor shortage. This has resulted in substantial wage increases and labor reforms for Chinese workers as multinational companies compete to meet their workforce needs. It has also created a growing consumer class in China that has multinational companies tripping over themselves to target. It's only a matter of time before the eroding cheap labor advantage starts eating into their profits and they will be forced to pass the cost onto US consumers. Some experts are calling this trend the "democratization" of China. It sounds to me as though China is experiencing their version of America's Roaring 20's.
October 8, 2010 - 3:47am#28
I have never been fond of the stick approach; I favor the carrot. My approach to re-establishing American presence in American markets is to reward retailers for putting American made products and produce on their shelves. Coupled with educating the American public about the benefits of purchasing American-made and grown produce/products, we should see a resurgence of both opportunities to buy domestic produce/products and the reciprocal upswing in domestic employment. Recoveries relative to employment and new business starts will not come overnight, but through informed purchasing and adjustments to markets, recovery is possible. We have to understand that the sensitive relationship between suppliers, manufacturers, distributors and retailers cannot be dealt with heavy-handedly. We have to be gentle in our tinkering with markets, regulation and subsidizing. Fundamentally we need to protect our existing industries while nurturing upstarts, being equitable in our approach to both. At the same time we need to review our regulations- employing regulation in a targeted, termed and market-sensitive fashion. We need to assure leeway for non-traditional, niche markets that hold the greatest promise for our small businesses and family farms. Safe guards intended to protect public health, our water supply and air quality and the environment must be retained, but keyed to the scale of detrimental impact. For example: the FDA plans to require irradiation and/or pasteurization of eggs in light of the recent salmonella event, an event directly attributable to two mega-poultry farms. The preventative measures proposed by the FDA would destroy the free-range egg and poultry market- a niche market upon which thousands of small farmers who had nothing to do with the salmonella outbreak are dependent. This is a perfect example of over-reaction and over-regulation. We need to approach economic recovery as communities- maximizing our resources and ingenuity. I had the opportunity to visit a great Genesee region community resource on Thursday morning: the Gillam Grant Center in Bergen. This grant-supported, volunteer driven organization is eager to Grow Gillam Grant. With all of the community spirit and eagerness to springboard beyond successful pre-school, summer recreation, community physician and adult education/social programs- these community members are an under-utilized resource begging for positive exploitation. The potential is limitless: adult literacy, GED classes, career development, satellite labor dept office, computer literacy, job board, local currency, teen mentoring, tutoring, labor co-op... The Gillam Grant Center is just one doorway to community recovery- a resource begging to pool talent and energy toward empowering local growth and development.