Filed under: Capitalism, Domestic Policy, Economy, Freedom, Politics, Regulation, Taxes | Tags: Corporate Refugees, Jobs, offshoring, Onerous Taxation and Regulation, Wriston's Law
Fear of violence and mayhem has led to millions across the world to grab their stuff and run, to become refugees in another country with little in the way of resources. But what causes corporations to move to another country, to become corporate refugees domiciling their business in another country. That’s a big move!
Incentives matter. Thank the Obama administration. This is not a case of corporations offshoring jobs, but of corporations moving their headquarters elsewhere. Democrats don’t seem to understand incentives. The late Walter Wriston stated it succinctly in The Twilight of Sovereignty:
Capital will go where it is wanted and stay where it is well treated. It will flee from manipulation or onerous regulation of its value or use and no government regulation can restrain it for long.
One of the latest examples is Medtronic, famous for its high-tech cardiac and spinal devices. Medtronic’s planned acquisition of Covidien has been accompanied by the announcement that the combined company will be domiciled in Ireland. Medtronic says the move will mean at least $850 million in annual cost savings by 2018. The combined company will have more leverage to defend their prices when negotiating with consolidating hospital and physician groups. Their technology combined with Covidien’s manufacturing, research and development assets, the company says, will give it an edge in emerging markets.
Senator Carl Levin (D-MI), who chairs the Senate Permanent Subcommittee on Investigations, has been conducting show trials against companies who legally seek to minimize their tax bills. So businesses are apt to not talk a lot publicly about that particular need.
So what’s the incentive? America’s federal corporate tax rate is 35%, which when combined with state and local levies climbs to nearly 40%. Ireland, where politicians care about economic growth has a corporate tax rate of 12.5%. Almost alone among civilized nations, Washington also insists on being paid on a company’s world-wide earnings, rather than just on money earned in the US. This tax is due whenever a company’s overseas earnings are returned to this country.Medtronic has about $14 billion parked overseas, and rather than bringing it home and triggering the tax, they will use the money to fund most of the cash portion of its $42.9 billion purchase. Pretty major incentive. Somebody should explain this to Senator Levin.
The nearly 40% average tax rate in America is almost double the 21% average tax rate in the European Union, or the 22% rate in Asia. The only place outside of captive Marxist countries with a higher rate than the U.S. is the United Arab Emirates, but their top rate of 55% is mostly applied to foreign oil companies.
The business of business is to return a profit to the shareholders. People band together to make a product or deliver a service in order to get a return on their effort. People get strange ideas about what a business is supposed to do. An employee is a cost to a business. Providing someone with a desk and a computer, let alone more elaborate equipment is expensive. Why do companies pay one worker more than another? Competition. There is seldom if ever a company that does not have competitors. The one of the competitors who has better employees is apt to do better in the marketplace. Companies offer better benefits or extras like free parking or a corporate gym to lure better employees. It’s a business decision, not an obligation.
Note that I have just mentioned two words that are anathema to the left: “profit,” and “competition.” Oddly enough the left thinks that profit is a bad thing, and competition is unhealthy. They’ve even tried to eliminate kid’s games that involve competition. Everybody should get a prize — no winners. You see the problem. When you add in the inability to understand the power of incentives, you see the source of a remarkable amount of political dissension.
Filed under: Capitalism, Economy, News, Politics | Tags: Democrats, Depression, Jobs, Obama, Recession, Republicans, Texas
More than half of the new jobs created in the past 12 months were in Texas.
According to the Bureau of Labor Statistics, 214,000 net new jobs were created in the United States from August 2009 to August 2010. Texas created 119,000 jobs during the same period. If every state in the country had performed as well, we’d have created about 1.5 million jobs nationally during the past year, and maybe “stimulus” wouldn’t be such a dirty word.
What does Austin know that Washington doesn’t? At its simplest: Don’t overtax and -spend, keep regulations to a minimum, avoid letting unions and trial lawyers run riot, and display an enormous neon sign saying, “Open for Business.”
Filed under: Democrat Corruption, Economy, Humor, News the Media Doesn't Want You to Hear, Politics | Tags: Jobs, Spending, Unemployment
No Town hall meetings? Absent from office hours? Just where is your Congressman? They have a lot to answer for, and a lot to explain!
(h/t: The Foundry)
Filed under: Democrat Corruption, Health Care, Taxes, The Constitution | Tags: debt, Jobs, Spending
This image appeared with an article in the New York Times talking about the President’s drive to pass health care reform. The over-the-top artwork is by Nola Lopez from a photo by Damon Winter. The president is apparently quite comfortable with images that portray him as some kind of Messiah. I cannot imagine any other president in history who would have tolerated such excess.
Jonah Goldberg recently commented at National Review: “Since taking office, Obama has continued to see the presidency as the perfect perch from which to campaign for the job he already has.”
The President today went to Ohio to continue his permanent campaign on health care legislation. His campaign events during the 2008 presidential race attracted thousands of Ohioans. This time he managed a crowd of about 200 people. He has negative approval numbers in Ohio ( 34 percent approve of the job he is doing, 58 percent disapprove).
Ohioans care about jobs and the economy. They want the president to focus like a laser on jobs, as he promised in the State of the Union address. But ObamaCare is a job-killing program. The center of the Democrat plan is a promise to provide subsidized insurance coverage to some 35 to 40 million people. This will cost about $200 billion a year by 2019. Despite all the talk about “bending the cost curve” the CBO says the price will grow by 8 percent a year every year after that — in the same way Medicare and Medicaid have grown over the last four decades. Another runaway entitlement program is piled on top of the unaffordable ones that are already bankrupting the country. The bill is so poorly designed that its implications for the economy could be huge, and disastrous. The incentives in the bill are destructive.
Democrat party leaders honestly think enactment of ObamaCare will yield political dividends. 55 percent thought that passage would help their party a lot. They seem to live in an alternate universe. They hear every day from a far-left base, that they must support whatever Team Obama wants. They get cherry-picked poll results . They watch MSNBC, read the liberal blogs and the New York Times editorial page, and they have faith that their charismatic president won’t let them down. They probably believe firmly in President Obama’s description of what is in ObamaCare.
Republicans, on the other hand, cannot believe what Democrats are doing. They are convinced that they are committing political suicide. Obama’s descriptions of ObamaCare bear no relationship to what is actually in the bill. Nancy Pelosi’s description of the bill as a “jobs bill” that would create 400,000 jobs seems like a line from Alice in Wonderland. What can they possibly be thinking?
The president says, as he did on the campaign trail, that which he believes people want to hear. It’s far past time that he stopped campaigning, and started being president — the office that he campaigned for.