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  • #31
    The real fact is that China does not have three things that incumber American and European Manufacturers.
    1) Legacy costs -
    2) Health care costs
    3) Environmental constraints

    These burdensome costs American companies are facing will come with time just as they did in Japan.

    When is the last time that any of us willing paid a 25%(+) for an 18volt battery powered drill? According the department of commerce, that would be about the premium we would pay.
    You missed one very big burden - TAXES.

    Thanks to our system of taxing producers while the rest of the world taxes consumers, American workers are not allowed to work at competitive rates. That 25% difference you quote won't come close to covering the taxes I pay for the privilege of working in America. Let me work tax-free and I'll cut my price 1/3. Do you think factory workers in China or Pakistan are paying any significant income taxes? Other countries rely more on sales and use taxes. Their burdens are not borne on the backs of producers.

    According to the OECD, the US leads the world in percent of gov't revenue derived from income. Of course we are last in sales taxes. Sadly we are also third highest in property taxes. Communist and third world countries like China and Pakistan aren't even members of OECD let alone disclose all their taxes and subsidies. If I had gov't supplied housing, food, and medical I guess I could work cheaper too. BTW, Japan's problems are in fact similar to our's. But not for the reasons you cited. Guess who they modeled their tax systems after?

    There is something we can do - join the rest of the world tax wise. Income tax should only be for the to 10% as it was when first enacted. An easy way to start is replace the 15% FICA with a 15% national sales tax. That would at least help level the playing field for American workers. Another 75 billion (15% of trade deficit) more a year into social security wouldn't hurt either. It would not be politically easy though. Democrats would have to let go of their beloved class warfare and micromanaging economic winners and losers. Republicans would have to admit that, with FICA included, the middle class really does pay the highest taxes and they need to accept that some income tax and re-distribution will still be required.

    [ 02-09-2005, 11:51 PM: Message edited by: ByteButcher ]

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    • #32
      Bytebutcher,

      While I agree that the tax system can be unfair, your concept of taxing the producer over the laborer has a flaw. Taxing commodities (ie a sales tax) simply means you would be paying the same tax in a different form. As would be a "producer's" tax, which would simply mean higher prices for the consumer. This is not to mean I would be against a national sales tax. I just think that it is not pertinent to the subject.

      Brademan was attepting the tired argument that American companies are encumbered by economic and environmental constraints. If we just freed them up we would all live in the Garden of Eden.

      If Brademan is correct, I don't understand why Ridgid doesn't move the whole operation to China. As a matter of fact, why don't they farm their management out to Chinese nationals. I'm sure they work for less money.
      the dog

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      • #33
        It is entirely pertinent to the discussion. That's what sad about the whole issue - people just don't seem to get it. Foreigners get to produce their products and sell them here free of US tax. Americans must build 30%-50% tax into the price. The 25% increase Brandman quoted can accounted for in the taxes on US labor.

        With sales tax, all parties are taxed the same. Ultimately, switching schemes would not affect our buying power for US produced goods. But, imported products would gou up 15%. Sure it's not as great a deal for consumers but I don't really care. Its no coincidence that we are the worlds biggest consumers. If we don't end the US gov't imposed "subsidy" of imported products and services we can be sure of losing every exportable job.

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        • #34
          Look, we can argue US tax law all day long, but the fact is we (American workers) are never going to compete with the labor in third world countries. How can we? They are willing to use "prision labor", child labor, and pay below poverty wages. What worries me is that a once great American company seems to feel the same way. Ridgid, which should honor the American plumber, which has made them what they are, has choosen to use their name to distribute tools that are made in China, by who?

          How much are thoes workers paid?
          the dog

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          • #35
            Mr. Butcher first off our corporate tax burden is below average when compared to other developed countries. Your statement that American corporations are paying 30-50% in taxes is simply false. And if it is true tell me where you found that information so that I can see for myself. Please don't give me the "they say" argument. Exporting jobs to China will ultimately destroy our economy. The main inequity in production costs are the slave wages paid in developing counties. If you think the playing field will ever be leveled by their wages going up, your kidding yourself, our real wages will continue to drop. Even white collar jobs are starting to move overseas as technology develops. As soon as Bush gets his way with his guest worker plan nobody's job will be safe. What makes you think that corporations are going to stop at unskilled labor when importing workers? Maybe then we will have reached Wall Street nirvana at the cost of the American middle class. This might take thirty years, but it will happen.

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            • #36
              plumbdog10 & beuford,

              Apparently you think I was trying to defend BrandMan's post. Quite the opposite - I was ridiculing him (as well as corporate America and the US gov't) for failing to account for the biggest cost factor in the "outsourcing" debate. A factor that is far bigger than BrandMan's Legacy costs (whatever that is), Health care costs, and Environmental constraints combined. A factor that, for the most part, does not apply to goods imported into the US.

              The "producer" tax I refer to is the Federal and State income tax (including FICA). Most States also impose sales tax but that is comparatively small and applies to only the fraction of our incomes spent on taxable goods. The sum total of all the income taxes paid by the people/companies who produce a product or service is much larger.
              An exact calculation would be difficult. Almost everything that goes into designing, manufacturing and selling a product is income to someone - wages or profit. Even basic factory inputs (steel, plastic, etc.) are mostly wages. Very little is true raw material (iron ore in the ground or trees in a forest) and subject to other types of taxation.

              Thanks to the convoluted income tax there is no "national rate". When I was an engineer making 60K/yr I paid 30% federal and state taxes with my employer kicking in another 7.65% for FICA alone. With unemployment, disability, etc. I'm sure the total was over 40%. Now I make 1/3 as much as a self-employed carpenter/handyman and I still pay over 20%.

              I don't know about you, but I work for my take-home pay. If my overall tax rate is 30%, and I want to take home $10/hr, someone must be willing to pay $14.30/hr for my time. The equivalent sales tax needed to produce the same net income and taxes would be 43%. That is the basis of my statement "Americans must build 30%-50% tax into the price." I never said anything about a corporate rate. If you have a way of producing goods and services of 100% US content with less than 40% extra added for taxes please share.

              I'm not trying the debate the finer points of tax rates. Comparing overall tax rates around the world is pointless as benefits and cost of living vary greatly. I'm just trying to point out that it matters where/how the tax is collected. Sure the consumer ultimately pays the taxes but when it comes to competing with other producers in a global economy it matters greatly where the tax is collected. Therefore the subject is vital to the ongoing outsourcing debate.

              All I hear on this subject is excuses and non-solutions. Wishing everyone would buy American won't work. This is capitalism. If there's a buck to be made you can bet some companies will try it and consumers will go for it. We can't dictate wages in other countries. We can't stop the exportation of jobs. But we can make sure that the same tax rates apply to domestic and imported goods sold in this country.

              The absolute minimum we should do is insist government recognize the tax base in US content and adjust for it in competitive bidding. That's the ultimate slap in the face. Gov't takes your money and hires companies using foreign workers who pay no US taxes. It's already happening and it's incomprehensible to me that it hasn't been outlawed. This is one area where loyal US companies should be stepping up to the plate. They should be lobbying to get this into law so they can compete better against competitors who outsource.

              FYI, Just saw the trade deficit was over 600B last year. At 43% that's 260B in tax revenue that wasn't collected. Doesn't anyone in Washington care? What’s that you say? It just frees up time for Americans to engage in some other tax revenue generating activity - right . I guess you don't miss the extra $15K a year I used to pay then.

              [ 02-14-2005, 02:34 AM: Message edited by: ByteButcher ]

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              • #37
                ByteButcher,

                I dont mind paying taxes when they help make us one of the most advanced societies on the planet. Our roads, our military and yes our social programs make this a great place to live. But these things are not free. An American cannot compete with slave wages from a communist country.

                I do question your figures regarding 10 dollars an hour. If you have liability insurance, pay both sides of FICA and maintain overhead such as advertising, book keeper, vehicle expenses and everything else then you need to charge $30.00 an hour to make ten. But since a person cannot live on ten dollars an hour, not very well anyway, you need to charge more. A trained and experienced tradesman is worth between 20 to 30 dollars an hour plus benefits. In order to pay a man his worth you need to charge between 60 and 90 dollars an hour depending on your location and cost of living. Remember that the contractor needs to make a profit on the workers time as well as the worker. There will also be times when the worker is doing things on his truck or in the shop that does not bring in any income. This must also be calculated into the hourly rate. Any business man who does not figure four hours a week of non productive time for each man is making a mistake.

                As far as buying American its not just a matter of bottom dollar for each individual. Its a matter of national security and a matter of national survival. I buy American when at all possible regardless of the price, its a responsibility I have to the next generation of Americans. I have no problem competeing and trading with countries like Canada, Germany Switzerland and the like because people there enjoy a standard of living comparable to ours. Their costs are similar and its a level playing field. But open trade with communist China when there are alternatives is abject treason no matter how hard you want to crunch numbers to justify it. They murder their citizens for simply speaking their mind, tens of thousands of people are killed annually in preventable workplace accidents. They force abortions on tens of thousands of women annually, FORCE them. You cannot justify trade with China for any reason. Not to me, ever.
                Work hard, Play hard, Sleep easy.

                Comment


                • #38
                  Again, I agree with Plumber.

                  While I understand ByteButcher's argument, I still disagree. His argument seems to be "it's capitalism, what can we do?"

                  Well, we can go with Plumber, and buy American.

                  We can also confront the argument I presented: If Ridgid produces their pipe machines and their plumbing hand tools here, they must be making a profit. If they aren't why are they in business? I must therefore assume they are making a profit. The only reason they are marketing tools produced outside the US is increased profits, made from the poverty level labor they find in third world countries. Is that being a good American?

                  Why do morals not apply to economics in America?
                  the dog

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                  • #39
                    I do question your figures regarding 10 dollars an hour.
                    It was just a number to illustrate the point. An experienced tradesman may be worth between 20 to 30 dollars an hour plus benefits, but around here you'd be lucky to get 1/2 that. Guess I should move to Illinois.

                    I have no problem competeing and trading with countries like Canada, Germany Switzerland and the like because people there enjoy a standard of living comparable to ours. Their costs are similar and its a level playing field.
                    No, its not level. Closer, but not level. Percent of total gov't revenue from income taxes are: Germany 47.9%, Canada 56.5%, Switzerland 60.1%, USA 62.7% (2001 OECD data). Their workers/producers have a competitive advantage. Luckily we are better to compensate. Korea on the other hand is at only 32.9%. Harder to compete against that.

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                    • #40
                      I hate to tell you ByteButcher, but your federal sales tax system will not encourage US companies.

                      This, again, is not to suggest that I disagree with a federal sales tax.

                      The problem is mathematical.

                      Let's say a particular tool costs a US company $20.00 to produce.

                      Let's say they can produce the same tool in a third world country for $1.00.

                      Let's now add a sales tax of 2%:
                      US= 20+(2%)= $20.40
                      Foreign= 1+(2%)= $1.02

                      Now you may argue that eliminating all income tax would reduce the cost of US produced goods. You are correct. But would it reduce the cost to the point of of competing with poverty level wages? I don't think it would.

                      You have to research how people live in the countries that Ridgid is now producing goods in. Do you want your family living that way?

                      I agree with Bueford, that corporations like Ridgid are getting rich off of oppressed people. I would add that they are doing it on the backs of the American workers that are their company's life-blood.
                      the dog

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                      • #41
                        American companies can make a reasonable profit producing their goods in the United States, but they can make more by going overseas. Is this short term gain worth the long term eventual degradation of our standard of living? Wealth is being concentrated at the top while the average worker is pacified with cheap goods. Look at Husky tools vs. Craftsman tools. Home Depot now imports Husky hand tools from Taiwan (they were formerly U.S. made). When this change came about the prices of the tools didn't come down, but I am sure that their profit margin went way up. Craftsman hand tools on the other hand are still made in the U.S., are no higher priced than Husky tools, and I am sure Sears makes money in the deal.

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                        • #42
                          Originally posted by beuford:
                          American companies can make a reasonable profit producing their goods in the United States, but they can make more by going overseas. Is this short term gain worth the long term eventual degradation of our standard of living? Wealth is being concentrated at the top while the average worker is pacified with cheap goods. Look at Husky tools vs. Craftsman tools. Home Depot now imports Husky hand tools from Taiwan (they were formerly U.S. made). When this change came about the prices of the tools didn't come down, but I am sure that their profit margin went way up. Craftsman hand tools on the other hand are still made in the U.S., are no higher priced than Husky tools, and I am sure Sears makes money in the deal.
                          Well said Bueford.

                          Another example is Walmart. I haven't noticed a hugh reduction in prices since they began importing damn near everything they sell. I have noticed that their profits are up.

                          I still do not understand how Ridgid can produce pipe machines in America, but not other power tools. Are we to believe that they do not make a profit on their US produced goods?

                          Does Ridgid have any moral responibility to this country?
                          the dog

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                          • #43
                            its really a business decision. i think in the near future, a lot of tools would be made in asia. china specifically. in order for them to stay competitive, and since china made products will eventually improve also..

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                            • #44
                              Originally posted by michael stephen:
                              its really a business decision. i think in the near future, a lot of tools would be made in asia. china specifically. in order for them to stay competitive, and since china made products will eventually improve also..
                              Mr. Stephen,

                              Your profile describes you as a "businessman", whatever that means. Some of us make our living producing industry in America. Our work depends on it. It is easy for short-sided morans, such as you, to simplify the debate into: "all goods will be made in Asia." Whatever it is that you sell, can only be sold to people who make money. Maybe you don't care who you sell to. But, if you want the US to continue to provide you with a great place to live, which some of believe it is, you better start taking more concern about you country, and less about your personal bank account.
                              the dog

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                              • #45
                                China is a communist country whose military leaders are on record as having said they train mostly to fight the USA in the future. Shutting our factories here and going there amounts to arming the very people who want to wage war upon us in the future. Its just not a good idea.

                                Of course today no one can see past the next quarters profits or next weekends sale prices at the smiley face store.

                                We were ready to blow up the entire planet during the Cold war so we would not lose our way of life to the communists. Now we are handing the communists our economy and our way of life on a silver platter and asking them if they would like desert to go with it. Yes Communist labor is cheaper, those poor souls have no choice because they are sent to horrible prisons if they speak their minds or refuse to do terribly dangerous jobs with no saftey precautions. 10s of thousands of Chinese working class people are killed in mining and industrial accidents every year in China because they have no value on human life, remember that next time you buy made in China.

                                Tommorrow morning look at your son and daughter across your breakfast table. Think of their future and what it holds for them after we bring our standard of living down to that of Asias working and middle class. Its a &()%@#(^ crime what we are doing to the next generation of Americas working class.
                                Work hard, Play hard, Sleep easy.

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