Economics II - International Econ.

[FarRight]

O.K. Here goes:
Let's pretend you own a company, say, a gun manufacturing and wholesale business. (Thought you libs would like that.) You sell guns in Mexico and in the U.S. to the degree of $1 million in each country (maybe even at WalMart). So, your annual sales are $2 million. Now, you only own one plant and its in the states and it makes all your killing devices. You are a good employer so your annaul labor costs are $0.5 million dollars and you spend another $0.3 million on domestic shipping and, of course, your very high salary, etc. This means that the company will only pay taxes on $0.2 million, resulting in $0.14 million in U.S. Profits.
Now, it takes a little money to get those guns down to Mexico, say $0.5 million. The rest is profit. So, in all you profit $0.64 million after domestic taxes.
Now, under Kerry's plan to screw America, your company would have to pay taxes on the Mexican profits leading to $0.49 million in profits rather than $0.64 million. (A 23% decrease in profits) So, what do you do...
Well, you dissolve the company. Start a new Mexican company. Buy you old machinery from your American stockholders at pennies on the dollar. Move the plant to Mexico and provide jobs there. You still sell guns in the U.S. but you only pay taxes on U.S. revenues. This means you go back to the original profits, but add to them because you are now hiring Mexicans at $2/day to man your plant. Of course your sales in the U.S. will drop a little. All those unemployed people will stop buying your high priced guns.
So, all those folks that want to screw the rich and make them pay higher taxes:
Who in the hell do you work for?
a. The Rich
b. The Very Rich
c. Paris Hilton
d. The government - paid for mostly, by the taxes of the rich.
See, its simple if you try.
Here comes the same ol' libs.....

 

[Pachydermatous]

FarRight ---

Very good example of the Kerry plan's innate stupidity. Lefties never seem to grasp the simple incentives which make businesses flee to foreign shores. They've just seen it live-action in color with California but it doesn't seem to have made the smallest dent on their tiny brains.

By the by, do you have any late news on Schwartzenegger's efforts to re-float Titanic West????

 

[fundytide]

I was about to question whether it made sense to declare insolvency and try to start up the same multimillion dollar business in another country for the sake of $150,000 in annual profit, when I realized you actually manufacture guns without any input costs for parts! That's positively ingenious! Maybe the parts are an index finger and a thumb.

Personally, I'd move the factory to Brownsville Texas where I could take advantage of low-cost illegal Mexican labour and signficantly reduce my transportation costs for product sold in Mexico- which is important when you're selling as many guns in Mexico (population 100 million) as you are in the US (pop. 280 million). Then I would set up a shell distribution company just across the Mexican border and declare all my profits from the Mexican distribution business rather than the US manufacturing business so that I didn't pay the new US tax on US profits.

Then I would invest the profits in a kevlar vest manufacturing business and sell the vests to Texas law enforcement agencies to protect them from all of those guns coming across the border from Mexico.

I love economics.

 

[CrimsonChuck]

When I hear an argument for a tax cut, I always hear the Republicans say that the more money that we get to keep, the more money we spend. This boosts the economy. Well, the outsourcing of jobs runs counter to that theory. If my job goes to Mexico, then I don't spend any money here in the U.S. That has a domino effect. I wouldn't buy a new car, for example. If enough people don't buy a new car, then sooner or later the auto workers will get laid off. Then the auto workers couldn't buy anything, and so on. Yes, maybe a company could set up in Mexico like you said. However, we won't have to worry about that if we combine Kerry's tax with the repeal of NAFTA.

 

[FarRight]

Chuck:

So if you are for higher taxes, why don't you send the government an extra grand a month? No, you are for higher taxes for the rich. When that happens, and you are unemployed, I'm sure you will still be simple enough to blame someone else for your trouble. Hopefully, you'll find another 'rich' guy to go work for.

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-FarRight

 

[CrimsonChuck]

Actually, I never supported Bush's tax cut to begin with across the board for the rich, the poor and the middle class. I thought that if we had a surplus, it should go to paying down the debt. In the long run, that will help the economy more that tax cuts ever will. In the short run, that wouldn't necessarily be the case. But when was a politician (on either side) concerned about the long run over getting elected? Not ever. Well, other than McCain having a plan like that in 2000, but you see what happened to him.

However, all that is a different issue than the orginal topic of this thread. Kerry's plan eliminates the tax loopholes that companies use when they send jobs out of this country. In other words, we are paying companies to do something that hurts the American worker. And guess what? You are an American worker just like me. Sooner or later it will be your job that they send to China.