Corporate Tax cuts, Globalization, and Capital investment

[AcesFull]

To the first part. The problem still remains that ACME holds the decision on whether to to expand domestically or not. Also the cheaper price doesn't really help those that lost their job or had to take a less paying job.

 

To the second part. You are right this wouldn't go on in perpetuity. The problem that I see is that there is a LONG road to equality between here and there. As much as there standard of living will go up over there, over here will go down.

ACME will expand domestically if the business climate promises the best returns for its shareholders. Low corporate tax rates attract businesses and high rates repel them. Google "Ireland corporate tax rate economy" if you want to study an example of what low tax rates can do for a country's economy.

 

Here is a good place to start.

[Hatz]

ACME will expand domestically if the business climate promises the best returns for its shareholders. Low corporate tax rates attract businesses and high rates repel them. Google "Ireland corporate tax rate economy" if you want to study an example of what low tax rates can do for a country's economy.

 

Here is a good place to start.

 

Not meaning to but in Aces but what does that reply have to do with the issue that Ram was stating?

 

He was responding to the statement that cheaper goods, produced abroad, help us at home. Ram pointed out that if you don't have a job anymore, it's hard to have income for any goods (cheaper or otherwise).

 

As to expanding a business here, rather than there; we can provide tons of incentives but will the cheap labor there be outweighed by the tax breaks here? I've seen a company come into our area about 7 years ago. They were give tons of concessions and tax breaks for the first 5 years to get the physical plant up and running. When the "breaks ran out," they closed the doors and went elsewhere. Tax breaks are fine but how do they benefit a locality that needs those tax dollars to (regardless of how small or large) to build their infrastructure?

[AcesFull]

Not meaning to but in Aces but what does that reply have to do with the issue that Ram was stating?

 

He was responding to the statement that cheaper goods, produced abroad, help us at home. Ram pointed out that if you don't have a job anymore, it's hard to have income for any goods (cheaper or otherwise).

 

As to expanding a business here, rather than there; we can provide tons of incentives but will the cheap labor there be outweighed by the tax breaks here? I've seen a company come into our area about 7 years ago. They were give tons of concessions and tax breaks for the first 5 years to get the physical plant up and running. When the "breaks ran out," they closed the doors and went elsewhere. Tax breaks are fine but how do they benefit a locality that needs those tax dollars to (regardless of how small or large) to build their infrastructure?

Ireland's economy boomed and has continued to boom since it slashed corporate tax rates. The unemployment rate is consistently at or near the lowest in the EU. Ireland is not bleeding jobs - it has been attracting many high paying jobs from the US and elsewhere because of its low tax rates.

 

It is not just our manufacturing jobs that are at risk because of high tax rates, industries such as pharmaceuticals have been fleeing to Ireland. If we lose low paying jobs to China, India, etc. and lose high paying R & D jobs to countries like Ireland, that will not leave much to fight over.

[Hatz]

Ireland's economy boomed and has continued to boom since it slashed corporate tax rates. The unemployment rate is consistently at or near the lowest in the EU. Ireland is not bleeding jobs - it has been attracting many high paying jobs from the US and elsewhere because of its low tax rates.

 

It is not just our manufacturing jobs that are at risk because of high tax rates, industries such as pharmaceuticals have been fleeing to Ireland. If we lose low paying jobs to China, India, etc. and lose high paying R & D jobs to countries like Ireland, that will not leave much to fight over.

 

It does sound like a big help in Ireland than it's a worthwhile read.

 

What factor does population play in this equation? The population of the US is far greater than Ireland. Is it not easier to turn around an economy and lower jobless rates when there is not as large a population base and diverse regions to provide job opportunities to?

 

You raise excellent ideas here but does the diversity and size of America mean that a "same approach" attitude will work in every scenario?

[Habib]

To the first part. The problem still remains that ACME holds the decision on whether to to expand domestically or not. Also the cheaper price doesn't really help those that lost their job or had to take a less paying job.

 

To the second part. You are right this wouldn't go on in perpetuity. The problem that I see is that there is a LONG road to equality between here and there. As much as there standard of living will go up over there, over here will go down.

 

The cheaper prices may not directly help a person who has lost their job, but cheaper prices do indirectly through a broader market and increased competition. When expensive items become more affordable, more firms will jump into the market as more consumers are created. The end result being more jobs. And as ACME expands it will be increasing employment in other areas within the company (marketing, logistics, management, etc.).

 

I also reject the idea that globalization is a race to the bottom. As a workforce increases its demand (whether that be unskilled laborers in Vietnam or engineers from India), their value will increase making them less competitive against Americans. Throwing up tarriffs and barriers won't stop globalization, it will only ensure we are left behind.

 

As our economy, and the global economy, moves through time, we have no choice but to press forward. Nostalgia for some point in the past cannot stop us from forward progress. Many often reflect back to times when manufacturing jobs were ample and the economy seemed more stable. However, no policy will ever result in a return to a previous time; the current time is simply too different. In essence, there is no reverse. As more countries develop, achieve, and nip at our heels, America must change accordingly.

Edited June 19, 2008 by Habib

[PepRock01]

The cheaper prices may not directly help a person who has lost their job, but cheaper prices do indirectly through a broader market and increased competition. When expensive items become more affordable, more firms will jump into the market as more consumers are created. The end result being more jobs. And as ACME expands it will be increasing employment in other areas within the company (marketing, logistics, management, etc.).

 

I also reject the idea that globalization is a race to the bottom. As a workforce increases its demand (whether that be unskilled laborers in Vietnam or engineers from India), their value will increase making them less competitive against Americans. Throwing up tarriffs and barriers won't stop globalization, it will only ensure we are left behind.

 

As our economy, and the global economy, moves through time, we have no choice but to press forward. Nostalgia for some point in the past cannot stop us from this forward progress. Many often reflect back to times when manufacturing jobs were ample and the economy seemed more stable. However, no policy will ever result in a return to a previous time; the current time is simply too different. In essence, there is no reverse. As more countries develop, achieve, and nip out our heels, America must change accordingly.

 

 

And this isn't to say that at some point in time manufacturing jobs etc. won't be viable again in the United States, it just will take a long time for the scales to start tipping towards a greater balance where the cosot of labor in the U. S. isn't prohibitive.