Obama and Biden like to claim that Bain Capital had the companies it invested in make investments abroad, especially in China or Mexico. It turns out that they count heavily on the main stream leftist media to protect their glass house from stone throwers.
Thanks to Obama's insistence that the government take a big stake in the bankrupt GM after its restructuring as a government and union owned company, it is fully fair to look at its investments abroad if one is going to cast aspersions on those of Bain Capital abroad.
According to China Daily, GM is expanding its investment in China from its current $1 billion a year to $1.5 billion a year to make a total investment in China's 12th Five-Year Plan (2011-2015) of $7 billion. GM hopes to increase its sales in China from 2.35 million vehicles in 2010 to 5 million by 2015. To do this, it is designing and developing new models in China. GM production plants in China are joint ventures with the Chinese Communist Government.
GM announced in 2011 the investment of $540 million in a plant in Mexico to make engines. In July of this year, it announced the planned investment of $420 million in two factories to make the Chevrolet Trax and full-sized trucks.
How about Obama's promise to create American jobs of the future in green energy? This effort was promoted by Section 48C Advanced Energy Manufacturing Tax Credits. 41% of its awards went to foreign-based companies who were awarded an average of $20 million compared to an average of $11 million for U.S.-based companies! 17 of the 25 foreign-based companies receiving Obama awards are or have plans to set up wind or solar manufacturing facilities in low-wage countries. Those 17 foreign-based companies manufacturing in low-wage countries accounted for $406 million, so a super premium award averaging $23.9 million goes to those manufacturing in low-wage countries. Six of the U.S.-based companies with awards are also planning to manufacture their products in low-wage countries.
As almost everyone now knows, Obama only picks the loser green energy companies for awards. As these companies have gone bankrupt, their assets are often picked up on the cheap by foreign investors or companies.
Miasole, a U.S. solar energy company, received $101.8 million in tax credits. In October 2012, it was sold to China's Hanergy Holding Company for a mere $30 million.
Ener1 was approved for $118.5 million of 48C tax credits in 2009 for its batteries. Biden toured its plant in Indiana just after Obama announced his plan to have 1 million electric vehicles operating by 2015. In January 2011, the same month as the Biden tour, Ener1 entered into a joint venture with Wanxiang Electric Vehicle Co. to make lithium-ion batteries for Chinese cars. Ener1 moved some of its engineers to China along with some of its manufacturing equipment to ramp up the Chinese production. In 2010, Ener1 lost $165 million. In January 2012, Ener1 declared bankruptcy. Its remains were bought by a Russian businessman with close ties to the Russian President Dmitry Medvedev, who Obama patted on the knee and told he would be more flexible after the election. Perhaps in addition to giving the Russians what they want on missile defense, he also plans to give them more American green energy businesses nurtured on 48C tax credits.
Smith Electric Vehicles was awarded $32 million of American Recovery and Reinvestment Act money. Its losses since 2009 have been $128 million. In February 2011, it teamed with Wanxiang Electric Vehicle Co. to make school buses. Their agreement had Wanxiang make a $25 million equity investment in Smith Electric Vehicles and an investment of $75 million to develop and manufacture school buses and other electric vehicles in China.
Cardinal Fastener received $480,000 from Obama's 48C tax credit program to make fasteners for wind energy generators. Obama visited their factory in Bedford Heights, Ohio and promised American green energy jobs, as he always does. Soon afterward, Cardinal Fastener released 12% of its workforce. In June 2011, it filed for Chapter 11 bankruptcy. Germany's Wurth Group acquired it in January 2012 for a mere $3.9 million.
Remembering Obama's not so ready shovel-ready infrastructure projects, some wound up being managed and supplied by foreign companies. ABC News highlighted a $400 million bridge renovation project in New York, the new $7.2 billion Bay Bridge from San Francisco to Oakland, and a $190 million project in Alaska which were to be managed by foreign firms. Parts of the San Francisco - Oakland bridge were manufactured in China. The state of California had to reject some of the federal money so they could keep their Chinese contractor.
Finally, if you want to encourage American companies to invest in plants and facilities abroad and to train workers there rather than in the U.S., leave the developed world's highest corporate tax rate where it is as the trend in the rest of the developed world is to decrease corporation taxes. You can export even more jobs by raising the long-term capital gains tax from an already high 20.0% to 23.8% as required by ObamaUncaringTax in 2013. Add a 4.7% tax increase for Medicare to high paid managers so small and medium businesses will be discouraged from expanding operations in the U.S. Follow this up with another 80,000 pages of new business regulations and add the regulations of ObamaCare and Dodd-Frank Too-Big-to-Fail to that. Then throw in a slew of EPA rulings to take effect after the election, several of which are designed to keep us from using coal for anything, thus driving up our electricity costs and making vital electricity less dependable. Export American jobs so they can use cheap coal-fired power plants abroad.
To top this all off, the gift for a 10-year veteran of the Obama Veterans Administration is a pen set made in China.
Obama's complaints about Bain Capital foreign investments are a case of incredible hypocrisy. Obama is a con man, but how he can even dream that this level of hypocrisy will go undetected by Americans is beyond me. Or maybe not. He does think we are incredibly, stone-like stupid. For that reason alone, we should vote him out of office.
Showing posts with label Mexico. Show all posts
Showing posts with label Mexico. Show all posts
24 October 2012
05 May 2010
U.S. Effective Corporate Tax Highest in OECD
A new study by Duanjie Chen and Jack Mintz, School of Public Policy, University of Calgary, shows that the U.S. effective corporate tax rate on new investments is the highest among all OECD countries. They studied the effective rate for corporations on new investments, averaging over sub-national rates, such as the U.S. has at state and local levels, and found that only Argentina, Chad, Brazil, India, and Uzbekistan have higher effective corporate tax rates. Japan, which used to be in a virtual dead heat with the U.S., has slightly reduced its effective corporate tax rate.
Our extremely high effective corporate tax rates on new investments are one of the important reasons why our recovery from the recession is painfully slow and U.S. corporations are still not hiring many people. Our tax rates are much higher than the average of the G-7 nations, which are Canada (28.0%), the United Kingdom (27.5%), France (34.4%), Germany (24.4%), Italy (27.2%), and Japan (33.5%). So, only France and Japan have rates nearly as high in the G-7 countries. The German economy exports heavily and has only a 24.4% corporate tax rate compared to our 35.0% tax rate. This gives German corporations a big advantage in competing with us for exports. Sweden used to be the most socialist of the West European countries, but it now has a corporate tax rate of only 19.5%. Switzerland has a rate of only 16.8% and the Netherlands' rate is only 16.3%. China charges its corporations only 16.0%! And why have many U.S. corporations set up companies in Mexico near the border? Well, not only is labor less expensive there, but the corporate tax rate in Mexico is 15.8%.
Israel's rate is 15.1%. Hungary is 13.6%, Poland is 13.6%, Czech Republic is 13.4%, Chile is 13.3%, Ireland is 12.3%, the Slovak Republic is 12.2%, Vietnam is 12.2%, Greece is 12.0%, Croatia is 9.8%, Iceland is 9.6%, Obama's birthplace Kenya is 9.1%, Romania is 8.9%, Singapore is 8.8%, Bulgaria is 4.1%, Latvia is 3.8%, Ukraine is 3.7%, and Belgium is -6.5%. A negative tax rate! Belgium actually subsidizes its corporations, which I do not recommend!
There should be no corporate income tax rate, except zero. Most of the rest of the world has substantially reduced their effective corporate tax rates, but not the U.S. State and local sales and asset-based taxes on capital add about 7% to the U.S. effective tax rate, but only 2% to that rate in other countries. Our federal statutory rate is 35.0%. The broad reductions in the statutory rates of other countries in recent years have not been matched in the U.S., which has responded only with a narrow 2005 tax break for "domestic production activities." In 2009, this shaved about 2% from the U.S. effective rate. Congress did enact some temporary "bonus" depreciations for certain capital investments, which were not included in the U.S. effective rate calculation due to their temporary nature.
In comparison, the average statutory rate in the European Union dropped 9.6% since 2000. Canada, our largest trading partner, cut its federal corporate tax rate from 43% to 31% since 2000. Other taxes were also reduced since then. In 2012, the average statutory corporate tax rate in Canada is going to be 26.4% and the effective rate will be 19.5%! The Canadian economy has been growing better than the U.S. economy for some time now as a result. China has similarly been reducing its corporate taxes.
During the 1980s, the U.S. had more direct investment inflow than outflow. In the 1990s and 2000s, the outflow of investment exceeded the inflow. This slows growth and job creation. As the monthly tables I have been doing on unemployment show, the failure of the U.S. economy to create new jobs, while worse during the current recession, has been going on ever since 2000. The high effective corporate tax rate is a major contribution to this problem in poor job creation.
Another problem with our taxes on corporations is that we tax the overseas operations of multinational corporations. In other countries, the multinational corporations can bring profits home from their out-of-country investments without being taxed on them. Those governments are content to tax that money when it is distributed to the people and when it is spent.
Studies have clearly shown that corporate tax rates above 25% result in tax avoidance behavior that actually reduces government revenues from the taxes. The only reason for tax rates higher than 25% is the appeal to ignorance and the let's-soak-the-fat-cats mentality. It is perfectly clear that if we want to create jobs again and continue to have a rising standard of living, we must reduce the effective corporate tax rate. It is best to reduce the statutory corporate tax rate substantially. A reduction to no more than 25% is badly needed.
Israel's rate is 15.1%. Hungary is 13.6%, Poland is 13.6%, Czech Republic is 13.4%, Chile is 13.3%, Ireland is 12.3%, the Slovak Republic is 12.2%, Vietnam is 12.2%, Greece is 12.0%, Croatia is 9.8%, Iceland is 9.6%, Obama's birthplace Kenya is 9.1%, Romania is 8.9%, Singapore is 8.8%, Bulgaria is 4.1%, Latvia is 3.8%, Ukraine is 3.7%, and Belgium is -6.5%. A negative tax rate! Belgium actually subsidizes its corporations, which I do not recommend!
There should be no corporate income tax rate, except zero. Most of the rest of the world has substantially reduced their effective corporate tax rates, but not the U.S. State and local sales and asset-based taxes on capital add about 7% to the U.S. effective tax rate, but only 2% to that rate in other countries. Our federal statutory rate is 35.0%. The broad reductions in the statutory rates of other countries in recent years have not been matched in the U.S., which has responded only with a narrow 2005 tax break for "domestic production activities." In 2009, this shaved about 2% from the U.S. effective rate. Congress did enact some temporary "bonus" depreciations for certain capital investments, which were not included in the U.S. effective rate calculation due to their temporary nature.
In comparison, the average statutory rate in the European Union dropped 9.6% since 2000. Canada, our largest trading partner, cut its federal corporate tax rate from 43% to 31% since 2000. Other taxes were also reduced since then. In 2012, the average statutory corporate tax rate in Canada is going to be 26.4% and the effective rate will be 19.5%! The Canadian economy has been growing better than the U.S. economy for some time now as a result. China has similarly been reducing its corporate taxes.
During the 1980s, the U.S. had more direct investment inflow than outflow. In the 1990s and 2000s, the outflow of investment exceeded the inflow. This slows growth and job creation. As the monthly tables I have been doing on unemployment show, the failure of the U.S. economy to create new jobs, while worse during the current recession, has been going on ever since 2000. The high effective corporate tax rate is a major contribution to this problem in poor job creation.
Another problem with our taxes on corporations is that we tax the overseas operations of multinational corporations. In other countries, the multinational corporations can bring profits home from their out-of-country investments without being taxed on them. Those governments are content to tax that money when it is distributed to the people and when it is spent.
Studies have clearly shown that corporate tax rates above 25% result in tax avoidance behavior that actually reduces government revenues from the taxes. The only reason for tax rates higher than 25% is the appeal to ignorance and the let's-soak-the-fat-cats mentality. It is perfectly clear that if we want to create jobs again and continue to have a rising standard of living, we must reduce the effective corporate tax rate. It is best to reduce the statutory corporate tax rate substantially. A reduction to no more than 25% is badly needed.
07 April 2009
Mexico Retaliates with Trade Warfare
One of the first acts of the Obama administration was to pay the Teamsters Union for its support in the election. They restricted Mexican trucking access to American roads. Mexico has now retaliated by raising tariffs on $2.4 billion of our exports. The Obama action was stupid in any case, but especially so in light of the recession. All we need to make matters worse is to incite trade wars with our important trade partners. Mexico is one of our most important trade partners.
Obama is trying to enlarge the trade wars. The administration is talking about how they will raise tariffs on the goods of countries who do not restrict the use of energy as Obama plans to and whose goods will therefore be relatively cheaper than ours. Of course, Obama can raise tariffs and protect American domestic market sales of our newly expensive goods. But .... he can do little to then make other people throughout the world buy our over-priced goods. In other words, we will lose much of our export markets. This could result in about 1 in 10 Americans becoming unemployed!
On economic issues, it is very clear that few Democrats ever think. They do not seem to do any better with foreign policy or with matters of national security.
Obama is trying to enlarge the trade wars. The administration is talking about how they will raise tariffs on the goods of countries who do not restrict the use of energy as Obama plans to and whose goods will therefore be relatively cheaper than ours. Of course, Obama can raise tariffs and protect American domestic market sales of our newly expensive goods. But .... he can do little to then make other people throughout the world buy our over-priced goods. In other words, we will lose much of our export markets. This could result in about 1 in 10 Americans becoming unemployed!
On economic issues, it is very clear that few Democrats ever think. They do not seem to do any better with foreign policy or with matters of national security.
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