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Wednesday, February 23, 2011

Budget Myths

Current GOP Talking point: We must engage in some type of tax reform favorable to business, so that our cities and states can compete to keep companies here.

We can cut taxes to become competitive? Really?

No way that American labor costs are competitive with Southeast Asia or Mexico, right?

While total hourly compensation costs for manufacturing workers
increased more rapidly in China than in the United States
between 2002 and 2004, hourly compensation per employee in China 3 percent of the level in the United States

That's not a typo. (Yes, I know the situation is dynamic...).

On wage differentials that big, quibbling over the corporate tax rate is meaningless! It's a put-up. Unfortunately, I heard a liberal talking-point person parroting the myth.

And it's not just labor rate differentials. We're competing with "special financing" available to make capital costs less, even if the risks are higher:

El-Hillow [CEO Evergreen Solar] says manufacturers in China have received massive government grants and loans to inexpensively ramp up production while keeping costs down.