Ok, if a business doesn't need any more employees, what would we have to lower the corporate tax rate to to get them to hire more people?

Posted by bad_luck on 6/9/2015 9:22:00 AM (view original):
Ok, if a business doesn't need any more employees, what would we have to lower the corporate tax rate to to get them to hire more people?

Nice try, but false premise.

A business "not needing more employees" is not the only reason why they stop, or put a freeze, on hiring.

Posted by tecwrg on 6/9/2015 9:36:00 AM (view original):

Posted by bad_luck on 6/9/2015 9:22:00 AM (view original):
Ok, if a business doesn't need any more employees, what would we have to lower the corporate tax rate to to get them to hire more people?

Nice try, but false premise.

A business "not needing more employees" is not the only reason why they stop, or put a freeze, on hiring.

Sure. Not making enough money is also a reason. But the corporate tax rate only applies to large business profits, money left over after payroll and other expenses. Again, demand is the problem there.

Posted by bad_luck on 6/9/2015 9:22:00 AM (view original):
Ok, if a business doesn't need any more employees, what would we have to lower the corporate tax rate to to get them to hire more people?

By incentivising foreign companies to refurbish our factories, build manufacturing plants in the US, and employ more Americans it will take jobs from abroad and bring them here. Its the same state to state concept (that you claim is unapplicable in a global labor marketplace) of taking jobs from one place and moving them to another. The # of employees a business needs is irrelevant if we are taking existing jobs from other countries and bringing them here. The jobs already exist. Its where they exist that our government can help change by making it more advantageous to do business/employ in the USA.

Posted by moy23 on 6/6/2015 6:58:00 PM (view original):
From Obama's white house - https://www.whitehouse.gov/the-press-office/2013/10/31/new-report-foreign-direct-investment-united-states



Foreign direct investment benefits the U.S. Economy:

In 2011, value-added by majority-owned U.S. affiliates of foreign companies accounted for 4.7 percent of total U.S. private output.

***These firms employed 5.6 million people in the United States, or 4.1 percent of private-sector employment. About one-third of jobs at U.S. affiliates are in the manufacturing sector.***

These affiliates account for 9.6 percent of U.S. private investment and 15.9 percent of U.S. private research and development spending.

In the 2008-09 recession and subsequent recovery, employment at U.S. affiliates was more stable than overall private-sector employment. As a result, U.S. affiliates’ share of total U.S. manufacturing employment rose from 14.8 percent in 2007 to 17.8 percent in 2011.

Compensation at U.S. affiliates has been consistently higher than the U.S. average over time, and the differential holds for both manufacturing and non-manufacturing jobs.

Read the asterisked part... How would you increase that 4.1% to say 8%?

You can see these jobs are more stable in an economic downturn, are mostly manufacturing jobs, and have higher compensations than equivelant american companies pay. That's a high quality job, not a low-pay service job.

Since Obama isn't doing anything - what are you doing to bring more of these jobs to the US?

I mean I agree that our corporate tax rate in prohibitive to some degree, but you could lower it to 0, and that isn't going to change the landscape of manufacturing jobs here in the U.S.

You can manufacture in Mexico for .50 cents on the dollar, and in Malaysia/Vietnam for .15 cents on the dollar.

Corporate tax rates don't have any bearing on that.

Posted by mchales_army on 6/9/2015 10:12:00 AM (view original):
I mean I agree that our corporate tax rate in prohibitive to some degree, but you could lower it to 0, and that isn't going to change the landscape of manufacturing jobs here in the U.S.

You can manufacture in Mexico for .50 cents on the dollar, and in Malaysia/Vietnam for .15 cents on the dollar.

Corporate tax rates don't have any bearing on that.

Bingo.

Posted by mchales_army on 6/9/2015 10:12:00 AM (view original):
I mean I agree that our corporate tax rate in prohibitive to some degree, but you could lower it to 0, and that isn't going to change the landscape of manufacturing jobs here in the U.S.

You can manufacture in Mexico for .50 cents on the dollar, and in Malaysia/Vietnam for .15 cents on the dollar.

Corporate tax rates don't have any bearing on that.

Reducing corporate taxes is not the end all be all but there's a direct correlation between low corporate taxes and increased FDI. You can research foreign direct investment and you'll see how it relates to economic development and jobs. This article is a quick easy summary.

http://www.brookings.edu/blogs/the-avenue/posts/2014/07/07-fdi-matters-capital-jobs-fikri-saha

BL has said the US has plenty of capital on the sidelines - from the link above - "FDI represents a direct infusion of capital into the U.S. economy from abroad. At a time when U.S.-based companies remain reluctant to invest in productive capacity at home, foreign firms have filled some of the gap."

Sure wages are a big part of the reason manufacturing jobs have gone overseas but the biggest culprits are an increasing trade deficit and currency manipulation by China, Japan, and others. I'm way out of my league to address the manipulation of currency but manufacturing more in the US addresses the trade deficit.

You're still missing the fact that where a company pays taxes on profits and where a company manufactures its products do not have to be the same place. Caterpillar has over 50 plants in the US but runs its profits through Switzerland.

Posted by bad_luck on 6/9/2015 11:57:00 AM (view original):
You're still missing the fact that where a company pays taxes on profits and where a company manufactures its products do not have to be the same place. Caterpillar has over 50 plants in the US but runs its profits through Switzerland.

I agree....

2 thoughts....

If their money is not in the US how will they ever reinvest it to grow their business in the US?

More importantly since I've been discussing FOREIGN investment in the US.... Do you disagree that lower corporate taxes and increased foreign direct investment are correlated? And if you do believe they are then how do you think foreign companies are spending that money?

Posted by moy23 on 6/9/2015 12:59:00 PM (view original):

Posted by bad_luck on 6/9/2015 11:57:00 AM (view original):
You're still missing the fact that where a company pays taxes on profits and where a company manufactures its products do not have to be the same place. Caterpillar has over 50 plants in the US but runs its profits through Switzerland.

I agree....

2 thoughts....

If their money is not in the US how will they ever reinvest it to grow their business in the US?

More importantly since I've been discussing FOREIGN investment in the US.... Do you disagree that lower corporate taxes and increased foreign direct investment are correlated? And if you do believe they are then how do you think foreign companies are spending that money?

Let's clear this up a little.

Your original argument contained several pieces. One of which was, we should lower corporate income tax rates so that companies, specifically Toyota and Honda, will reinvest profits and hire more people.

We know that Toyota and Honda already have US operations and revenue, so they already pay US corporate income tax.

We also know that payroll reduces the amount subject to corporate income tax because corporate income tax is applied only to profits, not gross income.

Lastly, we know that, if Toyota and Honda choose to take current revenue and reinvest it in the company through new facilities, new equipment, and new employees, that revenue won't be subject to corporate income tax.

Knowing all those things, we know that the corporate income tax rate has no impact whatsoever on the hiring decisions of Toyota and Honda.

If you're changing your argument to: "we should allow companies to repatriate revenue that they stashed offshore to avoid taxes in the hope that they reinvest it," I'd say sure, with one caveat: that companies be required to reinvest the repatriated income in job growth activity. Any money repatriated that doesn't go directly into job growth activity is still subject to the normal corporate income tax rules.

If as you claim corporate taxes have no impact on jobs then the US could realistically tax corporate profits at 100% since the workforce would not be impacted, right?


And I'm curious - you would say 'sure' to lowering corporate taxes to repatriate money back to the US as long as its used for job growth. But at the same time you claim that 'only demand' can effect job growth.... So if I'm following your logic, and demand is not increasing by repatriation, then why would these companies bring that money back at all?

Posted by moy23 on 6/9/2015 3:07:00 PM (view original):
If as you claim corporate taxes have no impact on jobs then the US could realistically tax corporate profits at 100% since the workforce would not be impacted, right?


And I'm curious - you would say 'sure' to lowering corporate taxes to repatriate money back to the US as long as its used for job growth. But at the same time you claim that 'only demand' can effect job growth.... So if I'm following your logic, and demand is not increasing by repatriation, then why would these companies bring that money back at all?

1) I think tax policy is determined by many factors, not just the impact it has on jobs. Taxing corporate profits at 100% doesn't seem like a good idea to anyone.

2) Demand is what creates jobs. But if companies want to repatriate the money and reinvest it in job growth activities, I have no problem cutting them a break on the taxes. Especially since the reinvestment would have been tax free anyway had they done it prior to sending the money offshore. But the reinvestment has to be required, it can't be optional.

Posted by bad_luck on 6/9/2015 3:29:00 PM (view original):

Posted by moy23 on 6/9/2015 3:07:00 PM (view original):
If as you claim corporate taxes have no impact on jobs then the US could realistically tax corporate profits at 100% since the workforce would not be impacted, right?


And I'm curious - you would say 'sure' to lowering corporate taxes to repatriate money back to the US as long as its used for job growth. But at the same time you claim that 'only demand' can effect job growth.... So if I'm following your logic, and demand is not increasing by repatriation, then why would these companies bring that money back at all?

1) I think tax policy is determined by many factors, not just the impact it has on jobs. Taxing corporate profits at 100% doesn't seem like a good idea to anyone.

2) Demand is what creates jobs. But if companies want to repatriate the money and reinvest it in job growth activities, I have no problem cutting them a break on the taxes. Especially since the reinvestment would have been tax free anyway had they done it prior to sending the money offshore. But the reinvestment has to be required, it can't be optional.

I take that as "yes, I agree corporate taxes can and do influence jobs"

Why would you take that as a "yes" to anything?