There was a very important piece in Peoplenomics Wednesday that I’d draw your attention to:
” Home Runs -About Them Borders: Two notables:
First is a DoJ report that says one in four in the federal iron bar hotels was born NOT HERE. ”
One of our brighter readers sent in a great comment – that in turn deserves a response:
“With the cost of incarceration at thirty to fifty thousand a year per resident of the Iron Bar Motel, shoot why just send our jobs overseas for the citizens to pay for. I suggest we use the NAFTA treaty and negotiate a stay in another country.. Like Mexico or turkey for any violent offenders with a proof of life clause for once a year checks.. then use a law similar to the ones used by Singapore (caning.) fine them first then put the repeat offenders in the middle of the mall live television for how ever many wacks it takes.. for one.. not to many would like to have their pearly whites smacked by some ninja.. and no violent offender wants to spend time in a jail in another country.”
It just so happens, as coincidences do, that my consigliere and I were talking about the pending changes to U.S. (corporate) income tax rates.
What most people don’t realize is that there are “transfer rates” that allow U.S. companies to build products overseas, then as long as they pay income taxes in a lower tax country, they can claim a much higher transfer cost when the goods come into the U.S.
Take a phone. $100 throw-down phone, then.
Make it in china or Mexico and pay the income tax there. But for transfer purposes, claim the cost of the phone is $90 on a transfer basis.
But the real cost of the phone was $30 overseas and since the tax rates are low there, maybe $4-7 dollars worth of corporate income tax would have been paid. But the difference between the “transfer pricing” and the big profits is that the big profits have to stay offshore.
This means that some companies (Apple and their $250 billion of cash or whatever they are up to now comes to mind) are making a killing.
The most frequent abusers used to be the big three automakers. They would source some components in the USA ($100 item) and then they would have other suppliers of the same thing (maquiladoras in Mexico) make the same thing for half the price. But they would claim the Mexico price was equivalent to the U.S. goods.
So I asked him “WTF? Why don’t we just end all this transfer pricing crap and charge a flat 15% and have a “tax holiday” so some of that Apple stash can come home (tax free) with the idea that it would be spent in the future in the U.S.A.?”
Sadly, the answer is that transfer payment and transfer cost rules are all wound up in Tariff and Trade Agreements that have been negotiated over years and years…so in a way, we have painted ourselves into a corner.
The cool thing about the reader idea is that it gives us a non-tariff way to charge-back countries that import goods to the US.
The problem is that the number of federal prisoners is only 189,000.
Using a more realistic price per inmate ($75,000 is probably closer to the truth) this would raise $14.175 Billion.
That sounds like a huge deal (and it’s not chump change, for sure) but it would probably make as many problems as it solves.
Next door to our south, for example, such a charge would be just another nail in the coffin of a country (Mexico) which has become a marginal narco-state. I figure it’s only a matter of time until we see a revolution in Mexico, but for now, systematic corruption is a muddle through for the country.
Point is, they would be more likely than any other country to be impacted.
But that’s only the start of “wild hare” ideas that might work..
For example, while it is against Federal law for states to charge tariffs on one-another’s goods, I’m not so sure that a “port tax” couldn’t be imposed by states. Think in terms of a “prison tax” levied on goods from another country for housing and feeding their miscreants here,
Now, we’d be looking at a much larger dollar figure ($150-billion a year roughly) but the liberalistas would never stand for it, as evidenced by their Open Border madness.
As always, an inspection of America’s tax treatment of foreign nations is a depressing pursuit. Toss in the fact ANYONE can buy property in America (many countries only allow their own citizenry to buy property) and we see how the long-term dismantling of America is almost “baked in the cake.”
Still worth thinking about how to bring some of that overseas corporate profit home, and all. But in terms of action?
Do you think that a congress – living the Label Lie that it’s a Republican outfit at all – that can’t fix healthcare will be able to think outside the box long enough to fix some of our property and tax consequences?
Too much money from “outside the district.” Until Congress limits itself to pure money raised in the home district for congressoids or State for senatoids, we will continue to have the same corrupt ménage of sell-outs as before.
Nothing will happen. But as Obama proved with remarkable clarity, you can “run” on a “Change!” platform and get away with no change in fact once the office is attained.
Marketing of politics is amazing – because there’s product delivered except chrome plated excuses and blatherspeak.
Which leaves us in Ski Slope America…waiting for the next little slide down hill as we race to the icy bottom.
Cheery stuff, huh?
We really ought to have a contest: See who can come up with 10-Ways to Save America.
A nd then send it to Washington where both houses of congressoids and even the WH have completely gone off the rails having forgotten the promises made in the heat of battle.
We could have comments, a vote on prioritizing…yeah, but who’d care, right?
Write when you get rich,