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Offshore profits are why it's nearly useless to lower taxes and expect the wealthiest US companies with international holdings to pay more than they already do.

Offshore profits are why it's nearly useless to lower taxes and expect the wealthiest US companies with international holdings to pay more than they already do. Comparing nominal corporate tax rates between the US and other companies is nearly useless. As things stand now, for every dollar in corporate tax collected the US people pay about $18. Nominal corporate tax rates have pretty much zero to do with manufacturing moving overseas. That was always about lowering labor and other operating costs.

nickff 5y ago
Tax rates have a lot to do with the location of manufacturing; highly automated manufacturing can really minimize the impact of labor rates, and operating costs are frequently lower in the USA. One of the best recent changes made to the tax code was to allow for 100% depreciation of some capital expenditures within one year; reducing corporate tax rates would have the impact of extending this effect.
- imglorp 5y ago
  A global would also reduce the incentive. If it's the same all over, might as well stay home. https://www.washingtonpost.com/us-policy/2021/06/05/g7-tax-us-yellen/ https://www.washingtonpost.com/us-policy/2021/06/05/g7-tax-u...
- deleted 5y ago
  [deleted]
- an_opabinia 5y ago
  A few products, like GPUs, already have a 25% tariff added to them. Consumers bore 100% of the costs. Nothing changed. They are still being made in China for the foreseeable future.
- ineedasername 5y ago
  Are costs like rent & utilities and construction of facilities really much more expensive elsewhere? I can't imagine that a lot of automobile manufacturing would move to Mexico if it cost more to operate. Unless you mean the labor savings more than offset other cost increases? I completely agree on capex, but changes there mean literally nothing for large multinationals that already pay close to zero taxes already. For me though, running a (very small) business on the side, I took advantage of that myself to make a few big ticket purchases (relative to the scale of the business)
syshum 5y ago
while labor rates do play role, they are not the primary reason and are often over stated as the reason for off shoring Other governmental regulations including environmental regulations are far more impactful then raw labor rates, or taxation Even some of the manufacturing that is not directly impacted by these regulation will move as they want shorter supply chains, so if key core components move, often times the final consumer goods those components go into will move as well. The inverse is also true, if something causes finished goods to off source the manufacturing of the components in the item move with it

nickff 5y ago

Tax rates have a lot to do with the location of manufacturing; highly automated manufacturing can really minimize the impact of labor rates, and operating costs are frequently lower in the USA. One of the best recent changes made to the tax code was to allow for 100% depreciation of some capital expenditures within one year; reducing corporate tax rates would have the impact of extending this effect.

imglorp 5y ago
A global would also reduce the incentive. If it's the same all over, might as well stay home. https://www.washingtonpost.com/us-policy/2021/06/05/g7-tax-us-yellen/ https://www.washingtonpost.com/us-policy/2021/06/05/g7-tax-u...
deleted 5y ago
[deleted]
an_opabinia 5y ago
A few products, like GPUs, already have a 25% tariff added to them. Consumers bore 100% of the costs. Nothing changed. They are still being made in China for the foreseeable future.
ineedasername 5y ago
Are costs like rent & utilities and construction of facilities really much more expensive elsewhere? I can't imagine that a lot of automobile manufacturing would move to Mexico if it cost more to operate. Unless you mean the labor savings more than offset other cost increases? I completely agree on capex, but changes there mean literally nothing for large multinationals that already pay close to zero taxes already. For me though, running a (very small) business on the side, I took advantage of that myself to make a few big ticket purchases (relative to the scale of the business)

syshum 5y ago

while labor rates do play role, they are not the primary reason and are often over stated as the reason for off shoring Other governmental regulations including environmental regulations are far more impactful then raw labor rates, or taxation Even some of the manufacturing that is not directly impacted by these regulation will move as they want shorter supply chains, so if key core components move, often times the final consumer goods those components go into will move as well. The inverse is also true, if something causes finished goods to off source the manufacturing of the components in the item move with it