Much has been said in recent years about American jobs going overseas but does anyone realize the reason why we are loosing good jobs to other countries? For a long time, it was thought that besides the lower wages, the reason for the success of overseas' markets was the belief that the products made outside the United States, particularly in Europe and Asia, had a higher quality standard than those products made in the USA.
The perfect example for this kind of belief system was and still remains, the car manufacturers. Japanese cars and other imports would never have had the success that they currently have in the United States had not been for producing a car far better and more reliable than American made cars.
I personally vouch for this kind of mindset because driving American-made cars became for me, a total nightmare. For more than 50 years, I drove American made automobiles and except for my first car that I purchased in 1966 (Chevy Nova) every American-made car that I owned (Cadillac, Buick, Ford Country Squire, Jeep etc.) broke down continually resulting in time and financial losses.
Fifteen year ago, I purchase a Nissan and for the 15 years that I owned the car, the only expense that I had were brakes and oil changes. I finally sold the car in great condition for $1500. You and I would have had a hard time getting the same return with a GM or a Ford automobile in the 1970’s or in the 1980’s. The same is true with appliances and other products. After the warranty is over, everything breaks down. Sometimes, appliances break down even before the warranty expires.
But, fifty years ago this was not true in this country when America-made cars and other products were made to last for the long term. I remember my mother’s refrigerator that she purchased in 1959. That Frigidaire lasted for 20 years in my mother’s house and another 15 years in my own home when it was left to me when my parents retired to Italy. The same cannot be said for today’s appliances when in the past 15 years, I have replaced my refrigerator twice, my dishwasher 3 times and my washing machine twice.
No, today’s products do not equal the excellent quality of years past. Recently, though, I learned that in addition to poor quality, the reason our jobs are going overseas in droves is the rate of corporate taxes applied to corporations here in the United States. American businesses have to pay 35% of their profits in taxes while the same businesses abroad are only paying 16-20%. This is an enormous amount of money that the financial officer of a company cannot ignore. Because, let us face it, the main purpose of a business is to increase profits for their shareholders not to employ workers. In the final analysis, a company executive’s responsibility and loyalty is to the corporation, not to the men and women who work. This is why many American corporations are busy moving their operations overseas, away from the 35% tax nightmare.
Many pharmaceutical companies have moved to Ireland where corporate taxes are only 20%. This is also true in Switzerland where in some places; their business tax structure is around 16% much less than the 35% rate in the US. Today, even Canada is attracting American companies to do business there. So while our deficits keep increasing, foreign countries are reaping the benefits of taxation--payments that should be collected here in this country. According to the latest statistics, it is estimated that the United States is losing more than 40 billions of dollars each and every year that American companies do business outside the United States.
More damaging is the fact that some of these companies (technology in particular) i.e. Cisco and others sincerely want to bring their businesses back to this country but the current tax structure is prohibiting them to do so. Currently, the US has the highest corporate tax in the world. So while people scream about their jobs going overseas, the government does nothing to lower the corporate tax rate of American corporations.
Our government would rather lose the money from these businesses that operate away from the United States and increase the deficit, rather then lowering the tax rate. It does not make sense. If we truly want the jobs to come back to this country, first, we have to start making better quality products and second, we have to pressure our government officials in Washington to lower the corporate tax rate of American businesses.
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