Nevermind the Bullocks: Outsourcing and the Great Corporate Tax Swindle

By John Rasmussen 3 Comments

It was a big part of the last presidential campaign and most assuredly will be part of the on-going debt ceiling-financial cliff-econopalyspe discussion that will be taking place over the next few FOREVER! Also, because it's the start of the New Year, our thoughts will slowly start drifting to one of our favorite seasons of the year: Tax Season.

Specifically- The Corporate Tax Season.

One of the heated arguments that was pretty constant and ongoing during the presidential election is how high America's corporate tax rate is compared to the other industrial powers in the world.  Politicians, corporate business leaders, bankers, manufacturers- everybody that has a stake in, opinion of or participates in outsourcing- point to America's burdening and suffocating corporate tax as the great push for these companies to go overseas.

That all sounds nice and it is a great way to rile the masses, especially the masses that just got the boot because their job has moved to India or China. However, aside from some deflecting teary-eyed rhetoric from CEOs or a poly-knob looking to score some brownie points (and donations) from the business community, the tax is too damn high argument is a fairly too damn weak argument.

First off, YES, America's corporate tax rate is on the high side of compared to tax rates around the world - somewhere between 34 and 39%. Not by much, though. Most industrial countries fall in that 20-40 percent range. Even among the 'BRIC' countries, only India falls below that number, with a corporate rate at 10%. Brazil has the highest at 34%.

Still, high is high and on paper, you'd look at those rates and think that it would make sense to cut them for competition sake. However, on paper, those rates are only a burden or anchor to competition if they are, you know...actually paid.

We've all heard the stories. Huge profit generating corporations; well known to you and me as companies whose products that we use every day, companies that make billions every year. Through mind-boggling complicated, sophisticated and completely legal accounting tricks, somehow they don't pay anything, or worse, get money back from the government.

Yet still there's the never ending battle cry to lower these suffocating rates! Even though they, well...you know, technically can only be suffocating if they are again, actually paid.

I used a word earlier: deflect.

Let's face it, all this tax-too-high chatter is just a deflection. A deflection from a darker yet less complicated or sophisticated reason. Sure, it's still about the money and I guess that it has something to do taxes or government regulations, stifling or not. Really though, those are the excuses.

No, the real reason that we have outsourcing is not because of taxes or regulations, but because we can get our smartphones, auto parts, TVs, refrigerators, shoes and clothing, customer service calls and a myriad of goods and services made by little people in the third world for next to nothing.

No unions to worry about; no working conditions to worry about; no threats of lawsuits for safety or harassment. If workers complain about something, the management can have them fired, beaten, jailed or heck, just close the whole plant down and move to the other side of town. They know that there are twenty or thirty or a hundred workers that would love to have that job.

This is why we have outsourcing.

I know the argument is that nobody is forcing them to take those jobs. The fact of the matter is, when you're starving, you take anything and put up with pretty much anything for a warm meal and a chance to not sleep in the rain.

On the other hand, China, India, Indonesia, Bangladesh and a host of other 'work friendly' countries are not forcing American corporations to close plants here and shift their operations overseas. THOSE countries are not making THOSE decisions.

While it's safe and defects attention away from reality and provides great hot-points during a campaign, the notion of corporate taxes is the root of outsourcing is just PR spin for a company that is about to add to their corporate travel budget or when journalists start digging a little.

Speaking of campaign rhetoric, where do you think the talk of eliminating the minimum wage, busting unions, getting rid of the EPA, "job killing regulations" all came from? The candidates?

It leaves one wondering if some of these patriotic captains of industry go to bed dreaming of a time when this country will some day become a land free of unions, workers' rights, taxes replaced by cash 'gifts', safety and environmental regulations, child labor and sexual harassment laws. A land that given the right amount of money and power, one can do what one wants. This corporate paradise filling their dreams would have its own special name... "Nigerika".