Friday, October 9, 2015

U.S. Trade Deficit Fueled by Corporate Tax Dodgers

It's ludicrous that Congress allows American companies to manufacture products overseas, then import them to the U.S. to sell here (driving up our trade deficit) — and then not collect a tax.

All imports manufactured by an American company should be banned for sell in the U.S. --- And if the company uses "tax inversion" to escape taxation, then all their products should also be banned from being sold in the U.S. (And taxpayers shouldn't be made to subsidize the export of any American product either --- so that multi-national corporations can be "competitive in the global market".)

For example: If a company like Apple wants to sell iPhones in the U.S., they should be manufactured in the U.S. by American workers --- and if Apple wants to manufacture iPhones in China to sell iPhones in China, so be it. Apple would only be taxed by the U.S. for the iPhones sold in the U.S. --- and China can tax Apple however way they please for iPhones sold in China.

The recent jump in the U.S. trade deficit is yet another reason (besides dodging taxes) why companies like Apple are rotten to the core — not just for screwing the American middle-class, but also for human rights violations. (Now Hollywood has made another movie about Steve Jobs, which opens today.)

Via Jeffry Bartash of MarketWatch for Morningstar:

The increase in U.S. imports stemmed mainly from a 30% jump in cellphones and "other household goods." Cell phones account for more than half of all the revenue and most of the growth in that category.

It's now a ritual: Apple releases a new iPhone model and U.S. imports soar. That's precisely what happened in August. Millions of iPhones were shipped to the U.S. in August so retailers would be ready to start selling them in September after the official launch.

After more than a decade of explosive growth, cell phones have become one of the most heavily imported products into the United States. The value of cell-phone imports posted double-digit percentage gains from 1994 to 2008, with most companies eventually shifting production to Asia to take advantage of lower costs.

Huge spikes in cell-phone imports first became a phenomenon in 2004 after the release of the first truly iconic device of the modern era: the Motorola Razr ... but the Razr and other devices were eventually shunted aside by the breakthrough release of the first iPhone in 2007.

Cell-phone sales and imports hit new heights in 2010 after Apple put out the iPhone 4. And imports surged again in 2013 when Samsung made a killing with the vaunted Galaxy 4 (arguably the first true competitor to Apple).

Last year, cell-phone imports broke through the $50 billion barrier and are on track to easily surpass that level again in 2015. Last week, Apple said it sold 13 million new iPhones in the first three days after they went on sale — setting a new record.

That said, the iPhone is not built in America. Virtually all cell phones are manufactured in China or other low-cost Asian countries. Not surprisingly, the U.S. trade deficit with China, where most of Apple phones are made, climbed almost 15% in August.

Al Jazeera (October 6, 2015 by Tom Kutsch, Digital News Producer) --- According to a new study (released by Citizens for Tax Justice and the U.S. Public Interest Research Group Education Fund in October 2015): The largest 500 U.S. companies would owe an estimated $620 billion in U.S. taxes were it not for the more than $2.1 trillion in offshore cash that most of the firms hold in foreign tax havens. [By another measure, in another report, US Corporations stashed $3.8 trillion.] Apple would owe the lion's share, followed by GE and Microsoft — who are also major job outsourcers. [Study Shows 1/3 of Jobs Prone to Offshore Outsourcing]

Fiscal Times: Last June GE’s Jeff Immelt warns that US jobs depend on Export-Import Bank. He was also one of those who urged members of Congress to support giving Obama trade promotion authority [for the TPP trade deal], saying it was essential for concluding deals with Asia and Europe that would benefit small businesses and workers. [The lies don't get any bigger.] As Obama’s “Jobs Czar", Jeff Immelt had also threatened to outsource [more] jobs if the Export-Import Bank had expired.

August 2015: "Now, with Congress out of session and Ex-Im increasingly a political football, Boeing [another tax dodger mentioned on Senator Bernie Sanders' website] and pro-Ex-Im allies like GE are changing tack, lashing out vocally, pulling political donations from opponents of the credit agency, and threatening to move American jobs overseas if Ex-Im isn’t renewed."

October 2015: House GOP squabbles over reviving Export-Import Bank - "Republican leaders told their rank-and-file to hold off on such a move, and lawmakers leaving the meeting said it seems the matter might have to wait until the election of a new House speaker, scheduled for Oct. 29."

Apple CEO Tim Cook said this about the company’s Q3 results: “We had an amazing quarter, with iPhone revenue up 59 percent over last year ... and we’re looking forward to releasing iOS 9, OS X El Capitan and watchOS 2 to customers in the fall.” --- And Luca Maestri, Apple’s chief financial officer, added this: “In the third quarter our year-over-year growth rate accelerated from the first half of fiscal 2015, with revenue up 33 percent and earnings per share up 45 percent,” said Luca Maestri, Apple’s CFO. “We generated very strong operating cash flow of $15 billion, and we returned over $13 billion to shareholders through our capital return program.” [Apple will announce Q4 2015 Earnings on October 27.]

Economic Populist: Did you know we can have U.S. manufacturing without actually making any goods in the United States? That's the plan to count corporations and their products who are located in the U.S. but offshore/outsource their manufacturing abroad as part of the U.S. manufacturing base.

Factoryless manufacturers, as defined by the U.S. OMB, perform underlying entrepreneurial components of arranging the factors of production but outsource all of the actual transformation activities to other specialized units.

Right now, iPhones are counted as imports, and rightly so. Apple has offshore outsourced manufacturing and final assembly to China. Most parts are not manufactured in the United States and components come from China, Japan, South Korea and Germany. Very obviously an iPhone is no more American than that cheap plastic good marked Made in China.

Yet if the government statistical agencies have their way, that iPhone will be an American manufactured good, despite the fact that 1 million Chinese made the thing while Apple does not provide Americans jobs of scale and maintains their strong profit margins.

Bernie Sanders, May 26, 2015: "Today we begin a political revolution to transform our country economically, politically, socially and environmentally."

1 comment:

  1. Stephen Hawking Says We Should Really Be Scared Of Capitalism, Not Robots:

    Machines won't bring about the economic robot apocalypse -- but greedy humans will, according to physicist Stephen Hawking.

    "If machines produce everything we need, the outcome will depend on how things are distributed."