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Government contracting can be tricky. If the government pays $1m to an american company, they'll recover a significant amount of that through taxes. So the actu
by charlesdm 11y ago
Government contracting can be tricky. If the government pays $1m to an american company, they'll recover a significant amount of that through taxes. So the actual cost to the government wasn't actually $1m. If it's paid to an indian company, they won't.
- USNetizen 11y agoThis is exactly true. Not only in corporate taxes, but payroll taxes as well. So, literally, up to 35% of each contract goes back to the government in one form or another (whether directly or through overhead personnel salaries), hence the "buy American" thing in contracting with the government.
- eru 11y agoWhat's the opportunity cost? If the contractors would have been sitting on their hands, then the 35% argument rings true. If they would have had taxable earning anyway, it doesn't matter. (Of course, that's from a purely economic point of view. We are talking about politics here.)