This would be wonderful to have happen but the current regime does not engender hope in tax reform that serves the country rather than the rich who own it.
It was interesting to read how much of the US drugs market relies on imports. The article deals with the high value stuff. However, by volume, 90% of drugs used in the US are cheaper generics often with no US manufacturers. The US is heavily reliant on India and ultimately China for both active pharmaceutical ingredients and key starting materials. With 80% of Indian production using starting materials from China.[0]
The US had no domestic production of penicillin between 2004[3] when its last plant shuttered until 2021 when a factory reopened.[1] (source 1 and 3 appear to contradict, the 2019 testimony states there was no manufacturer after 2004 whereas it sounds like the plant closed in 2020, regardless the domestic capability is extremely weak)
As usual for American sources this is painted as some nefarious scheme by the evil red Chinese to destroy America by making cheaper drugs available. To add my own editorialising I think US companies are easily capable of ruining US manufacturing and focusing on screwing US patients over.[2] The average citizen should probably be glad of low cost Chinese supply, but nurturing domestic capability as per Biden is sensible.
> The tax strategies these companies use are known
Links to an article from 2017 about a tax loophole that was closed in 2020 [0]. As an Economist that by his Wikipedia article [1] dedicates so much of his time talking about the Irish tax regime, he should be well aware of this fact.
Corporate taxes are blunt instruments. They preferentially hurt workers. The C-suite decides how higher corporate taxes affect the company, and it’s not by lowering the CEO’s salary. It’s by firing people, hiring less, and making less investments in the business all else being equal. Corporate taxes also distort decisions of small business owners, who will pay out profits as salary to themselves rather than reinvesting the money in the company so as to avoid paying taxes on profits twice, first as a corporate tax and the second time as an income tax.
A better solution is to slash corporate taxes and raise income taxes on high earners. This will end the practice of offshoring the story describes, and also spare workers the negative effects of corporate income taxes.
Is this 'round-tripping' thing just a fancy term for why my parents' medication costs more than a car payment? Just trying to connect the dots from their balance sheet to my wallet.
Can someone explain why the Netherlands are included in the graph of low tax juristictions? As far as I know their corporate tax rate is 25.8% which is larger than the 21% us rate.
And there we go, people actually using “trade imbalance” as a valid economical concept. If you let clown dictate your vocabulary, you’ll be spitting confettis in no time. Please be smarter than this.
There is no such thing as trade imbalance, it’s called trade, if you have more money, you buy more.
Well, more money flows in one direction in such cases, which might or might not be intended. As long as there's enough influx of money from other places, this can even be long-term sustainable (e.g. a triangle of trade).
It seems that China is currently a "sink" in the global flow of money, which will obviously change the landscape in the long run. How? Hard to tell, probably not in such a bad as many people fear.
I think it will eventually drive up prices of Chinese export goods, which will force importers to look for alternatives, which is likely better in many regards than having one country manufacturing everything for everyone in the world. But don't trust me, I'm just a random poster on the internet.
Marx theory of equivalence of exchange is the foundation with which he defines exploitation. With a universal comparison unit (value of labor), you can define unbalanced trades.
Dont ask me though, how a balanced trade would look like. Maybe we can only approximate it via outcome.
Simple ideas work to get simpletons onboard, and one needs their vote and support to do anything. You are criticizing the greatest political communicator that has existed in history and will be studied and tried to be replicated for a long time to come.
Sounds a little hyperbole, I would argue it’s more a political strategy based on very smart use of technology, some brilliant strategists that know their base (I hate Banon but the man knows his stuff) and a mummified Democratic Party. Hitler, to cite one, was so much better communicator than trump, without the brain farts
I firmly believe we need revenue apportionment of profits. By this I mean that if you have $100 billion in revenue and $80 billion in costs then you have $20 billion in profits. If half that revenue ($50 billion) comes from sales in the US then half that profit ($10 billion) is taxable US income.
You might be tempted to argue they'll use subsidiaries to shift profits but we already have ways of dealing with that. We also have earnings that get reported to financial markets so you can always use the baseline revenue and earnings numbers from that.
We have ways too of dealing with transfer pricing and profit-shifting.
How far do companies get if they can't report earnings to the markets? Or if they try and tank earnings to reduce their tax liability?
You might be tempted to ask "what about private companies?" Subject them to the same reporting standards and auditing requirements of any US-listed company or they don't get access to the US market.
This idea that companies can't be taxed because they're too clever needs to die. So does the idea that they shouldn't be taxed. Governments, particularly the US government and the EU, wield extraordinary power. You can bring companies to heel by withholding access to a market pretty quickly.
It's why I always laugh when companies threaten to abandon a market. As long as there is profit to be made, a company will never leave. Non-IP assets can't generally be picked and moved so you always hold sway over a significant portion of their assets. And the US has the additional power to withhold access essentially to the global financial system.
And of course governments always have the option of nationalizing industries.
Governments should serve the interests of their citizens and corporations should serve the interests of those governments. Governments should not be subservient to corporate interests. Unfortunately, the US government at this point is basically just six companies in a trenchcoat.
I've said repeatedly, that medications and medical equipment should have a requirement of at least 50% domestic production (end to end) and dual sourcing in the US. Just from a security standpoint. That should have been the lesson of the COVID pandemic.
I feel similarly for infrastructure and communications as well.
19 comments
[ 4.7 ms ] story [ 53.2 ms ] threadThe US had no domestic production of penicillin between 2004[3] when its last plant shuttered until 2021 when a factory reopened.[1] (source 1 and 3 appear to contradict, the 2019 testimony states there was no manufacturer after 2004 whereas it sounds like the plant closed in 2020, regardless the domestic capability is extremely weak)
As usual for American sources this is painted as some nefarious scheme by the evil red Chinese to destroy America by making cheaper drugs available. To add my own editorialising I think US companies are easily capable of ruining US manufacturing and focusing on screwing US patients over.[2] The average citizen should probably be glad of low cost Chinese supply, but nurturing domestic capability as per Biden is sensible.
[0]: https://prosperousamerica.org/skyrocketing-pharmaceutical-im...
[1]: https://www.fiercepharma.com/manufacturing/reopening-penicil...
[2]: https://www.rand.org/news/press/2024/02/01/index1.html
[3]: https://www.uscc.gov/sites/default/files/RosemaryGibsonTesti...
[4]: sources per https://youtu.be/hS0-ugYA-ko?si=xCNzctCGr9f2M7ct
Links to an article from 2017 about a tax loophole that was closed in 2020 [0]. As an Economist that by his Wikipedia article [1] dedicates so much of his time talking about the Irish tax regime, he should be well aware of this fact.
[0] https://budgetmodel.wharton.upenn.edu/issues/2024/10/14/the-... [1] https://en.wikipedia.org/wiki/Brad_W._Setser
A better solution is to slash corporate taxes and raise income taxes on high earners. This will end the practice of offshoring the story describes, and also spare workers the negative effects of corporate income taxes.
Americans will truly use anything but the metric system.
There is no such thing as trade imbalance, it’s called trade, if you have more money, you buy more.
It seems that China is currently a "sink" in the global flow of money, which will obviously change the landscape in the long run. How? Hard to tell, probably not in such a bad as many people fear. I think it will eventually drive up prices of Chinese export goods, which will force importers to look for alternatives, which is likely better in many regards than having one country manufacturing everything for everyone in the world. But don't trust me, I'm just a random poster on the internet.
Well, hope i can educate you with some marx here ;)
https://en.m.wikipedia.org/wiki/Unequal_exchange
Marx theory of equivalence of exchange is the foundation with which he defines exploitation. With a universal comparison unit (value of labor), you can define unbalanced trades.
Dont ask me though, how a balanced trade would look like. Maybe we can only approximate it via outcome.
You might be tempted to argue they'll use subsidiaries to shift profits but we already have ways of dealing with that. We also have earnings that get reported to financial markets so you can always use the baseline revenue and earnings numbers from that.
We have ways too of dealing with transfer pricing and profit-shifting.
How far do companies get if they can't report earnings to the markets? Or if they try and tank earnings to reduce their tax liability?
You might be tempted to ask "what about private companies?" Subject them to the same reporting standards and auditing requirements of any US-listed company or they don't get access to the US market.
This idea that companies can't be taxed because they're too clever needs to die. So does the idea that they shouldn't be taxed. Governments, particularly the US government and the EU, wield extraordinary power. You can bring companies to heel by withholding access to a market pretty quickly.
It's why I always laugh when companies threaten to abandon a market. As long as there is profit to be made, a company will never leave. Non-IP assets can't generally be picked and moved so you always hold sway over a significant portion of their assets. And the US has the additional power to withhold access essentially to the global financial system.
And of course governments always have the option of nationalizing industries.
Governments should serve the interests of their citizens and corporations should serve the interests of those governments. Governments should not be subservient to corporate interests. Unfortunately, the US government at this point is basically just six companies in a trenchcoat.
I feel similarly for infrastructure and communications as well.