Tilted Forum Project Discussion Community - View Single Post - Kerry's plan to end overseas corporate tax breaks

apechild · 04-13-2004, 01:21 PM

let me keep going with this.

The alternative scenario for XYZ - domestic production of semiconductors:

XYZ co takes in $100mm in revenues from the sale of its semiconductors back to the US market.
Labor costs are $85mm
Raw materials costs are $20mm
Overhead costs (depreciation of plant and equipment , electricity, etc.) run $5mm
Administrative expenses are $1mm
Shipping expenses are $0mm
Net income before taxes are (100-85-20-5-1)= $11mm net loss

In this alternative, Kerry's ostensible "incentive" to bring jobs back home fails miserably, because the prosperous US worker simply costs much more than the global market for semiconductors will sustain.

So in either case, XYZ co is the loser and Taiwan Semiconductor is the winner.

Now, a corporate tax policy that would actually help US businesses and encourage them to hire and expand would be to reduce US corporate taxes to a level more competitive with the rest of the world - somewhere in the mid 20% area. Just look at what Ireland has accomplished in the last few years since it cut its corporate income tax rate.

04-13-2004, 01:21 PM	#24 (permalink)
apechild Crazy Location: Vermont	let me keep going with this. The alternative scenario for XYZ - domestic production of semiconductors: XYZ co takes in $100mm in revenues from the sale of its semiconductors back to the US market. Labor costs are $85mm Raw materials costs are $20mm Overhead costs (depreciation of plant and equipment , electricity, etc.) run $5mm Administrative expenses are $1mm Shipping expenses are $0mm Net income before taxes are (100-85-20-5-1)= $11mm net loss In this alternative, Kerry's ostensible "incentive" to bring jobs back home fails miserably, because the prosperous US worker simply costs much more than the global market for semiconductors will sustain. So in either case, XYZ co is the loser and Taiwan Semiconductor is the winner. Now, a corporate tax policy that would actually help US businesses and encourage them to hire and expand would be to reduce US corporate taxes to a level more competitive with the rest of the world - somewhere in the mid 20% area. Just look at what Ireland has accomplished in the last few years since it cut its corporate income tax rate. __________________ Skwerl. Its wuts fer dinner.