Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I don’t think it’s true that u.s tax law discourages manufacturing. There’s 100% expensing on depreciable assets, the R&D tax credit is a 6.5 cents out of each dollar recovery of investment, and there was formally the domestic production deduction, now largely replaced with the foreign derived intangible income (the carrot) and Global Low taxed intangible income (the stick). They also rolled out the base erosion anti abuse tax, which goes after companies not located domestically.
States and local governments often bend over backwards providing property tax abatement and other payroll credits for adding jobs and or jobs with certain levels of pay. It’s easy for corporations to sit right on the Line between states or counties and pit them against each other.
Many states put on an additional layer of state specific R&D tax credits and industrial machinery credits. Manufacturers also often get preferential treatment on apportionment of state income tax with favorable factoring. They also sometimes get totally left out of the formula and states will double Or triple weight sales factor or payroll so that it “punishes“ business that doesn’t have a physical presence in the state.
Many states have indirect tax credits as well where manufacturing purchases are exempt from sales and use tax.
The problem is that tax doesn’t drive 100% business decisions. It’s only one factor of many. As a tax function you can only report to senior management your report, and often the answer is...that’s great...but..
People’s fascination with producing everything here also stems from pure ignorance. The multinationals have huge sales in Europe, Latin America, and Asia pac region. They produce there because they also source there. It’s silly to think all the production will be in a high cost of living like the U.S and then be shipped back for sales in other regions. At this point, many companies have about 1/3 of their sales in the U.S, so it only makes sense the majority of the production is elsewhere. It’s not 1950, with the worlds production base in ruin and the U.S accounts for 50% of world gdp. It’s down to 20% now.
I don’t think it’s true that u.s tax law discourages manufacturing. There’s 100% expensing on depreciable assets, the R&D tax credit is a 6.5 cents out of each dollar recovery of investment, and there was formally the domestic production deduction, now largely replaced with the foreign derived intangible income (the carrot) and Global Low taxed intangible income (the stick). They also rolled out the base erosion anti abuse tax, which goes after companies not located domestically.
States and local governments often bend over backwards providing property tax abatement and other payroll credits for adding jobs and or jobs with certain levels of pay. It’s easy for corporations to sit right on the Line between states or counties and pit them against each other.
Many states put on an additional layer of state specific R&D tax credits and industrial machinery credits. Manufacturers also often get preferential treatment on apportionment of state income tax with favorable factoring. They also sometimes get totally left out of the formula and states will double Or triple weight sales factor or payroll so that it “punishes“ business that doesn’t have a physical presence in the state.
Many states have indirect tax credits as well where manufacturing purchases are exempt from sales and use tax.
The problem is that tax doesn’t drive 100% business decisions. It’s only one factor of many. As a tax function you can only report to senior management your report, and often the answer is...that’s great...but..
People’s fascination with producing everything here also stems from pure ignorance. The multinationals have huge sales in Europe, Latin America, and Asia pac region. They produce there because they also source there. It’s silly to think all the production will be in a high cost of living like the U.S and then be shipped back for sales in other regions. At this point, many companies have about 1/3 of their sales in the U.S, so it only makes sense the majority of the production is elsewhere. It’s not 1950, with the worlds production base in ruin and the U.S accounts for 50% of world gdp. It’s down to 20% now.
Have you ever started and run a company? Many parts of the U.S. have been downright anti-business for years, and it's getting worse. We hear about deals being cut, such as the Tesla Gigafactory in Nevada that got some kind of tax deal in exchange for jobs and some company contribution to local infrastructure (roads, schools). But what if I start an electronics company in Nevada. Are they going to give me a nice tax abatement deal? Highly doubtful.
What's worse, in addition to the tax and regulatory burden, there are equity and diversity rules. For example, California is now requiring that any public corporations headquartered there must have 50% female representation on their boards.
Obviously, to increase the manufacturing ecosystem, we're going to need a more level playing field versus the Asians, and that would include freedom to hire the best people regardless of race/gender/creed.
Multinationals may want to source locally, but domestic companies should be able to build most of their products domestically, don't you think? Why should a PC maker, for example, have to import motherboards? The most efficient, nimble approach is to have a local supplier, or make them in house, to maximize quality.
I don't know about you, but I've had the experience of a Malaysian factory produce thousands of devices for us and ship to the customer, only to discover some percentage of them were faulty due to a misalignment during the firmware upload. The customer had already incorporated them into their products (tens of thousands of consumer goods), and they were not pleased. Had the factory been local, we could have driven down the street and easily inspected/tested the devices prior to ship. The error might still have happened locally, but at least there's a higher percentage chance we would have caught it in time. I also believe that our testing and QC methodologies in the U.S. are more stringent than in some 3rd World countries, even if it's more costly here - sometimes you do get what you pay for.
The American semiconductor industry is gearing up for a lobbying push to obtain billions of dollars in federal funding for factory building and research to keep the U.S. ahead of China and other countries that heavily subsidize their chip industries.
The $37 billion in proposals from the Semiconductor Industry Association, a trade group, includes subsidies for the construction of a new chip factory, aid for states seeking to attract semiconductor investment and an increase in research funding, according to a draft of the proposals viewed by The Wall Street Journal.
A goal is to keep America ahead of China and other countries that heavily subsidize chip industries
All economic issues aside — and I maintain that for most industries, dead and buried as well — there are national security and other issues to be considered in maintaining certain kinds of manufacture.
It is if price exceeds the manufacturing cost, which needs to be somewhere below a 50% retail wholesale cost, with enough margin for both maker and wholesaler to profit. Disc players settled at about $100 in each generation, meaning manufacturing had to be profitable at $25-30.
NOT going to happen from a US manufacturer.
Assuming all things are equal, if say, electronics manufacturing or manufacturing overall never left the states, there be more jobs, and quite possibly higher wages due to higher labor demands. More money will be kept in the states. This should lead to more people having more disposable income. If consumers want a more expensive items is up to them to scrounge up the money.
Or at least, the blue ray or certain other items stays a luxury item only affordable to a few, while everyone has DVDs. What does it matter though? There was a time when cellular service was a luxury item only afforded to a few. Everyone else just used LAN line phones. Life went on. It was not considered a massive detriment to society.
Assuming all things are equal, if say, electronics manufacturing or manufacturing overall never left the states, there be more jobs, and quite possibly higher wages due to higher labor demands. More money will be kept in the states. This should lead to more people having more disposable income. If consumers want a more expensive items is up to them to scrounge up the money.
Or at least, the blue ray or certain other items stays a luxury item only affordable to a few, while everyone has DVDs. What does it matter though? There was a time when cellular service was a luxury item only afforded to a few. Everyone else just used LAN line phones. Life went on. It was not considered a massive detriment to society.
Well, I have no idea where to begin on this without committing a mircea.
Let's just say I agree that we have been generationally indoctrinated/conditioned to believe that we need and are entitled to everything that exists... and cheaply, and with as little consideration of personal and national economics as possible.
If anyone watched 60 minutes on the Tijuana river you can see the problems mentioned on thread or touched on in places. River got super polluted by US companies moving across the border for cheap labor. A small portion of that river comes back into US apparently, and why covered on 60 minutes.
US company moves overseas, they have no enforcement of super weak rules on pollution since there is zero infrastructure to handle that overseas. US company thinks it is fine, their profits are high, they turn a blind eye on issue of labor abuse and environmental damages. One way or another this has to stop for electronics to be made in US again. There is a huge cost in doing work without environmental damage, and without labor abuse. Only reason 60 minutes had it on was because part of the river comes back to US, they didn't cover the companies involved or much in detail but this goes on all over the world so we get cheap products like cheap electronic products. There is no pride in US being the largest exporter of environmental damage and labor abuse in my mind, history will not look kindly on it I am certain.
Just one link of discussion of what companies moved to Tijuana in recent years just the first that came up on a search, I am sure there are many more not just these mentioned:
If anyone watched 60 minutes on the Tijuana river you can see the problems mentioned on thread or touched on in places. River got super polluted by US companies moving across the border for cheap labor. A small portion of that river comes back into US apparently, and why covered on 60 minutes.
US company moves overseas, they have no enforcement of super weak rules on pollution since there is zero infrastructure to handle that overseas. US company thinks it is fine, their profits are high, they turn a blind eye on issue of labor abuse and environmental damages. One way or another this has to stop for electronics to be made in US again. There is a huge cost in doing work without environmental damage, and without labor abuse. Only reason 60 minutes had it on was because part of the river comes back to US, they didn't cover the companies involved or much in detail but this goes on all over the world so we get cheap products like cheap electronic products. There is no pride in US being the largest exporter of environmental damage and labor abuse in my mind, history will not look kindly on it I am certain.
Just one link of discussion of what companies moved to Tijuana in recent years just the first that came up on a search, I am sure there are many more not just these mentioned:
That's a nice attempt at - at least partial revisionist history by 60-Mins. Stipulation I have not seen the piece.
The Tijuana River has carried millions of daily gallons of sewage, including blackwater sewage and trash from dumps, from MX since the late '40s early '50s.
High levels of lead and mercury have been in that water for many decades. US companies making all that worse is bad but let's not pretend this is a new issue.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
