BPO is cool & nanotech will be in: Friedman 1653

Kamal R. Prasad

Correct. There is however a HUGE MISSCONCEPTION. The missconception is that low taxes = investor friendly. Not at all, not at all. This is a lie promoted by the same people which support RIP & RUN economics.

Let get the case of GM. They are brought down by the huge fixed expenses for pensions and health care. They have to pay this expenses regardless of sales, regardless of proffit. If a new compebreastor from Japan come on the market, since new they does not have this fixed expenses since it have no retires yet. Even if the production costs are the same, the GM cars are going to cost more since they have to cover for this expenses. Heck, the compebreastor can even be a little less productive than GM and they will still sell for cheap.

If a tax on proffit is imposed to finance universal healthcare and pension system, GM will have these fixed expenses eliminated. In a downturn, they don't have to get loans to finance these unproductive expenses and pay interest on unproductive loans.

The same will act if a sales tax is imposed on all products, and you finance education, healthcare and retirement from it. Both the domestic manufacturer and the importer have to pay that sale tax. But domestic manufacturer eliminate his fixed expenses with pension and healthcare, and gets well educated professionals. This will level the playing field, and will make investment in domestic economy MORE ATTRACTIVE, since a domestic company pay and gets something in return while an importer only pays.

That is. Tax cuts does not have nothing in common with an "investor-friendly climate". By the opposite, they encourage offshoring jobs.

Tax cuts does not have nothing in common with an "investor-friendly climate". By the opposite, they encourage offshoring jobs. By the opposite. A sale tax used to finance social expenses it is very very good for investors. Only RIP & RUN - ers take advantage of lower taxes.

That is a lie promoted by RIP & RUN ers. Taxes used to pay for social obligations stimulate the economy, create a more friendly environment and put more money into consumer pockets.

Low taxes are a huge benefit for importers not for domestic producers.