Archive for October 16th, 2008
October 16th, 2008
Last night we heard comments about corporate taxes and who would raise them. While taxes are one element of a companies costs, it does have some bearing on what a company does regarding the location of manufacturing. I posted this a while ago and I thought it deserves repeating.
So what’s the story about corporate taxes? Are they too high or too low? Compared to what? How about compared to our our international competitors? So I did a little investigation from internet sources and here’s what I found:
A corporation will pay anywhere from 25% to 39% income tax depending on their taxable income. For example, if the income is $50-75,000 then the rate is 25%; if income is between $100-335,000, then the rate is 39% and drops to 35% if income is $18 million or more.
Then there is state taxes on corporations and in Illinois it’s a flat rate of 7.3%.
So for example, a small-medium manufacturer in the Rockford region making between $110-335,000 net income will pay 39% plus 7.3% or 46.3% of it’s income.
Don’t forget the Federal FICA rate on payrolls of 15.3% and State Unemployment Insurance of 3.4% of payroll. This amounts to 18.7% taxes on your payroll in our region.
Of course, many corporations own their own buildings and property and guess what, they pay taxes on that as well, I won’t even hazard a guess on that one….
I won’t include sales taxes that individuals pay for goods they purchase; in Europe they call this VAT.
So for our example, the corporation pays 46.3% tax on its income and 18.7% tax on it’s payroll.
I looked at the data from Wikipedia and here are a few examples of countries that are competitors to us:
China: Corporate: 25%; Payroll: 0%
India: Corporate: 30-40%; Payroll: 0%
Germany: 29.8% (ave.); 0% Payroll
Mexico: Corporate: 29%: Payroll: 0%
Ireland: Corporate: 12.5%; Payroll: 16.75%
UK: Corporate: 21-28%; Payroll: 23.8% (National Insurance).
As Wikipedia advises, these are guidelines, but it does make you think:Â should we raise taxes on corporations?
October 16th, 2008
My earlier blog “Tax the Rich, Maggie Changed this 25 Years Ago” brought to mind another experience while working in England; that of health care.
We had a choice of taking the Government controlled health care insurance or paying a little extra for Private Health Insurance. After listening to several people, including neighbors, we decided to pay the few extra dollars to get the private health insurance. Why?
The biggest advantage was that the private health system drew the best doctors; the government system drew the less qualified doctors plus the waiting times to get appointments were much longer. Poorer service and less qualified doctors lost to the better doctors and less waiting time to get appointments.
We were also told that because of the government system, these doctors received lower pay and many of the good ones left the country to pursure better paying careers and avoid being controlled by the government.
Is this what one of the candidates wants for us?
I think my experience would tell me which I would prefer.
October 16th, 2008
The Workforce Connection had their official opening yesterday with a ribbon cutting ceremony at 5:00 p.m. Although they have been in their new facility since July, this event capped a major move to the Supply Core building on North Main St. in downtown Rockford.
To say the least, the facilities on the 3 floors are very impressive and gives this organization a classy look. Compared to their past location in the shopping mall on south 11th Street, this indeed is a major improvement. Parking was easy in the next door building and easy access to the facilities entrance on the 3rd floor.
The Workforce Connection accomplishes a great deal in providing for training our workforce: Job Fairs (this past January, they hosted 75 exhibitors and over 800 people), Incumbent Worker Training (15 different manufacturers and $58,377 provided), provided classes and graduates from TechWorks to work for Rockford Products, and many more accomplishments just in this past year.
Take a look at their web site for further information. www.theworkforceconnection.orgThis organization is a valuable asset to our community and their new location will allow it to improve their services even further.
October 16th, 2008
On October 10, the Chamber’s Manufactures Education Outreach Committee hosted a meeting at ACE High School for District 205 counselors and vo-tech teachers. Teachers interacted with local industry representatives to hear first hand what traits are ideal for entering the local workforce.
A panel from local industry included:
Tom McDunn, EIGERlab
Jeff Sherman, Woodward and GEM Student
Bob Strenstrom, Stenstrom General Contractors
Terry Egan, FMA
Kurt Broski, Entre Computers
Beverly Long, Rockford Health System
Sandy Anderson, CNA program, Rock Valley College
The panelists presented informative glimpses into what employers are looking for and the skills needed for today’s workforce. Healthcare, construction, manufacturing, and IT careers were highlighted by the diverse panel. Common threads included the need for interpersonal skills both oral and written. Email and texting are tools but employers were seeking the interpersonal skills required for work teams. All panelists relayed that good paying entry level jobs exist in the Rockford market.
Terry Egan presented a unique scholarship, Go Brennan”, from FMA that solicits entries via YouTube. You can see it at http://www.youtube.com/watch?v=O-lQPm7gf6I .
Pam Labunski, one of the attendees best described it, “The most valuable message that we teachers will impart to our students is the fact that, no matter what the industry, essential skills, such as interpersonal communication, problem-solving abilities, and the desire for life-long learning, are at the heart of career success.”
October 16th, 2008
Listening to Obama’s “tax the rich” scheme reminds me of 25 years ago. At that time, I had taken a job in England and Margaret Thatcher had recently become Prime Minister. She had come into office following a lengthy tour by the Labor Party who among other things had raised taxes on individuals. The more they made, the more they were taxed. Sounds good huh?
Well, I got to know many British businessmen and they were getting complacent. “Why should we work harder and make more money only to have the government take a bigger share of our earnings away from us”? The malaise that I saw in the early 1980’s was real. Until she changed all those tax handcuffs. She also made it easier for companies to become more competitive and then England began to pull out of it’s malaise and once again became more competitive in the world markets.
Reminds me of the Joe the Plumber comments…”spread it around”!
So is this the smart strategy?
October 16th, 2008
The only man who might change anybody’s mind on who to vote for in this presidential race is Joe Wurzelbacher. He was the star of last night’s final debate: the only one who managed to bring something genuinely new to an otherwise pretty predictable to-and-fro from Barack Obama and John McCain.  Joe the Plumber as he has come to be known is the man who wants to buy the small business in which he works, and to expand it so that he can employ more staff (which is to say ”create more American jobs” in political speak). A few days ago, in what has now become a legendary confrontation, he accused Obama of planning to raise his taxes, thus making it very much more difficult for him to do his bit to expand the economy. In the course of that exchange, Obama made the revelatory comment that he believed that  ”spreading the wealth around” would help everyone. And there it was: the crucial distinction between those (Democrats) who believe that the wealth created by individuals should be compulsorily redistributed, even if that means limiting the possibilities of creating more of it, and those (Republicans) who feel that it would be better left to the small businesses which will use it to grow and proffer more employment.
Source: Telegraph; U.K.
