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Volume 6, Issue 11 - November, 2007 • How To Increase Job Opportunities and Tax RevenuesThe news media would have you think the jobs we have lost to China, India and other countries are the result of lower cost labor. They tend to blame greedy capitalists on moving production off shore to save a few pennies on the production of products sold in our markets. Sadly, nothing could be further from the truth. Yes, there has been a movement of manufacturing to foreign countries. Yes labor costs are lower in those countries. But unless you are in a craft business with very high labor content, the lower labor costs are offset by the freight costs to get the product back to this market. If you stop for a moment to think about all the products we use, most are the result of a great deal of engineering and are produced on highly automated equipment. In my experience, most products like this have labor costs that run less than 20% of the total cost of the product and freight from off shore, combined with the prepayment and lead times tend to offset each other. The real truth of the matter is that domestic producers are moving production offshore because of overhead costs. Overhead costs that are the direct result of our government. So if you want to blame someone for the jobs that are moving off shore, blame your favorite politician. There are lots of things I can point to including OSHA, EPA, Workers Compensation, Employer Paid Pensions, Employer Paid Health Insurance, MSDS, EEOC and a raft of other government imposed programs. All of these have costs associated with them and none of them are present in India, China, Vietnam, Mexico and other low cost countries. Today, however, I want to focus on just one government cost that is killing jobs in the U.S. and point out how the situation will only get worse if we don’t do something soon. Jim Meyers in an article entitled “U.S. Leads World…In Corporate Taxes” in the September issue of “NewsMax” pointed out that the U.S. “now bears the dubious distinction of having the highest corporate tax rate in the developed world.” Why in heavens name would a manufacturer want to produce products and make a profit in this country? Instead, manufacturers make products and profits offshore while selling products at a loss in this country. It boils down to make your profits where you can keep most of them. Treasury Secretary Henry Paulson in a Wall Street Journal opinion piece wrote that, “The current tax code distorts capital flows, hurting productivity, job creation and our global competitiveness.” He suggests that countries with a 1 percentage point lower tax rate will attract 3 percent more capital. Other countries have figured this out and are lowering taxes. The Wall Street Journal reports that at least 25 developing countries have cut corporate tax rates since 2001. At approximately 39.3 percent, we are the highest and it results in receipts to the government of less than 2.5 percent of GDP. Ireland on the other hand has a corporate tax rate of 12.5 percent and collects 3.6 percent of its GDP in corporate revenues. Even the French have figured this out and are cutting taxes under President Nicolas Sarkozy. This is not a new subject for me as I reported this to you in March 2005 and September 2004. If you want to keep and grow the job market in this country, write to your Congressmen and tell them you want to see job opportunities in this country increase as well as tax revenues increase just as they have in Ireland through Corporate Tax reductions. • ThanksgivingThanksgiving is one of my favorite times of the year. I love the fall and I love having the family together to give thanks for the many blessings of the year. This year, I am giving thanks for the readers of “Taking Aim”, people who have attended my programs, people who have purchased products, consulting clients, meeting planners who have hired me to speak and meeting planners who are going to hire me. If you have a subject that you would like to see covered in future issues of “Taking Aim,” please send me an email at aim@CannonAdvantage.com.
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Robert E. Cannon "Best Practice" Sales Force Development Change Management Customer Service Assessment for ISO Requirements Smart Thoughts from Smart People "Decide that you want it more than you are afraid of it." Bill Cosby “No age or time of life, no position or circumstance has a monopoly on success. Any age is the right age to start doing!” Unknown "There are two primary choices in life: to accept conditions as they exist, or accept the responsibility for changing them." Denis Waitley "Failure is a part of success. There is no such thing as a bed of roses all your life. But failure will never stand in the way of success if you learn from it." Hank Aaron Taking Aim © 2007 Bob Cannon, The Cannon Advantage Newsletter. All Rights Reserved. The Cannon Advantage visual branding by Zarney Creative. For contact information, click “Resources.” |
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