Give Incentives To Businesses!

Opinion submitted by Ken Herron:
The most important thing that our country can do is to work toward full employment. When everybody has a job, everybody pays taxes and our efforts to balance the budget are easier to accomplish. Our welfare responsibilities are easier to cover and our communities are easier to manage.Corporations are not the enemy of the people, they are the lifeblood of the people. They provide the jobs that pay the wages for the people to earn. Fighting them and putting them out of business or causing them to relocate a manufacturing facility is never a good thing. We do not need an adversary relationship between the workers and the management of the companies. The companies are trying to make a profit for the stockholders and this is much easier to do if they have a happy work force and they know this. In a time when employment in an area is high there will be a shortage of workers and the companies will work harder to take care of the employees so that they do not leave and go to work at another location.

Over the last fifty years our government has mistreated our corporations and have forced many of them to move their manufacturing facilities to foreign countries in order to make a profit. In America our federal government has double taxed the profits on corporations which has restricted their ability to make a profit. The corporations pay a high tax on the profits that they make and then that profit is taxed again when it is passed on to the stockholders. The high taxes cause prices to be higher than they need to be and we the consumers pay for them in the prices of the products that we buy. A tax on a corporation is included in the cost of the product so we as citizens are actually the ones that are paying the taxes. In China there is no income tax on manufacturers. At least half of the ownership in the companies is the government so they take half of the profit.

There are several proposed tax plans floating around Congress and many of the members of Congress claim to want to change from our current IRS code and change the system. Some of the proposals eliminate taxes on corporations which could make our products less expensive and open the international markets to more goods made in the United States. It could also cause some of the manufacturing that left our country to return with new more efficient manufacturing facilities. In the 1950s products made in China and Japan were not of good quality and hard to sell in our country. Our trade policies changed and we eliminated tariffs and import taxes on those products. The imported products came in like a flood and forced our companies to close their plants and lay off employees. We used to hear a lot about starving Chinese children but not anymore. China’s economy is good now with a large portion of the products that they make being shipped to the United States. Eastern China has some of the most modern cities in the world. Western China is more primitive but better than it was fifty years ago. China does not have a lot of automation in their manufacturing because of the low cost of the labor. It is cheaper to have more labor than to buy automated equipment.

Many counties and communities give corporations major tax breaks in order to get new manufacturing companies to locate in their areas. This is a very wise step to take. If a county gives a tax free opportunity that lasts for five or ten years they do not collect property taxes and possibly inventory taxes for that period. There are services that may be provided at no cost to the new manufacturer for that period but the employees will be taxed in different ways. After the initial tax free period, the companies will pay taxes to cover the expenses for the services provided. On the other hand if the corporation locates its facility in another location it will never pay taxes to the local economy and the jobs that do not come will create more unemployment and more cost to the community.

When the textile industry and the garment industry was working at full capacity, there were about one million and four hundred thousand employees working in the two related industries in the entire United States. There was a seven percent import tax on garments or textile products coming into the country. Congress eliminated the import tax and the textile and garment industry in our country went out of business. There is somewhere in the range of one hundred and ten thousand people working in the textile and garment industries of our country today.
Congress can solve all of these problems but it does not seem likely that any of them will make an effort to deal with these situations. Too many of our Congress members are looking out for themselves and not solving the problems of our country.