Saturday, August 15, 2009

Falsehood Fabrication

John Torinus, tax-avoiding-CEO of Serigraph Inc. and writer for the Journal-Sentinel, asks, What will it take to lure back manufacturing?

Torinus states that, "political and business leaders have watched this trend [the loss of manufacturing] with something approaching shock." Really? We enter into trade agreements like NAFTA, which many warned would lead to outsourcing, we abandon any type of industrial policy, we bash unions - which is a large number in manufacturing, and we haven't generally discussed manufacturing since since automakers were making tanks for WWII, and they're "shocked"?

Their shock is manufactured. Otherwise, the politicians and business leaders would have to take responsibility for the exodus of these well-paying jobs. Torinus mentions the economy gravitating toward a service economy [away from actually producing things]. This is a natural progression according to business leaders and their paid think-tank and media mouthpieces. So they all run with this excuse as to be absolved from any blame for manufacturing's decline.

[This type of deflection occurs in the poverty debate also. This isn't the fault of misguided or missing public policy, it's the fault of the individual. Never mind the fact that there is not a job available for everyone whom would like one, it's still their fault. It's not political and business leaders faults that they've allowed policies that ship jobs overseas, it's just a natural economic movement. There is nothing than can do.]

This is a result of the sordid relationship between politicians and businesses. Businesses pay for politicians campaigns; businesses want their production and labor costs cheap; therefore, politicians allow businesses to deter unionization and outsource production. All alongside the lie that it's natural and they're not doing anything to foster it.

Torinus uses the example of a $35,000-a-year manufacturing job to analyze what type of taxes would be returned from an investment in a manufacturing job. But where does this $35,000 number come from? According to BLS, private non-unionized manufacturing workers earn over $18 and hour, which is roughly $38,000 per year. Unionized manufacturing workers earn $70, or so, more per week, approximately $41,000 per year. If we're going to use earnings numbers to make an example, let's use the correct numbers.

In his cursory remarks regarding development incentives, Torinus says, "...there is little gain when one state lures a plant from another. It's zero-sum game." Which it is, but he doesn't take this point any further, other than saying it's the union opinion, and therefore, in his mind I guess, not worthy of discussing.

Torinus finishes up with a classic talking-point of his own, and of business in general. He thinks maybe we should eliminate the 7.9 percent income tax on manufacturers. (It's always about not paying any taxes.) His logic: the state corporate income tax is no longer a huge revenue producer for the state, so we might as well just get rid of it. He doesn't address how this has changed over the years, how it has decreased favorably for corporations, increasingly burdening homeowners. He also fails to mention the tax breaks already provided to manufacturing.

He spouts a common falsity, that taxes are a primary factor affecting locational decisions. Business basics - inputs, suppliers, customers, labor, transportation - are much more important for a business in their site location decision.

Is there a sector (like manufacturing) or a topic (like health care) that Torinus won't exploit in an attempt to have businesses pay even less in taxes?

For Further Reading:
Corporate Tax Breaks
Failure of Economic Development Incentives
Grading Places
Industrial Incentives
Rethinking Growth Strategies
Tax and Spending Incentives and Enterprise Zones
The Great American Jobs Scam

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