Why Do American Companies Leave America?

[Chris]

Politicians complain about companies moving offshore and overseas but it is the politicians who drive them out and their solutions only make it worse.

[resister]

Now granted, I admit I did not watch the video. I would think these transnational trade deals are a HUGE reason?

[Dr. Who]

Politicians complain about companies moving offshore and overseas but it is the politicians who drive them out and their solutions only make it worse.

Doesn't that oversimplify the situation? It's not just taxation. It's also payroll plus benefits and pension, which depending on the industry can range from 10 - 40% of gross income, if not more. Taxation is not based on gross income, but only income reduced by liabilities etc. For a manufacturer, that 10% of gross income could be a great deal more than the amount that they have to pay in taxes.

[Chris]

Now granted, I admit I did not watch the video. I would think these transnational trade deals are a HUGE reason?

It had to do with tax and regulation. Say you're a businessman and your company is in two cities. All else being equal, you would natural move to the city with less tax and regulation. Same applies for moving to another country. Politicians blame business for these common sense decisions but it's politicians who impose taxes and regulations and drive companies out.

[Chris]

Doesn't that oversimplify the situation? It's not just taxation. It's also payroll plus benefits and pension, which depending on the industry can range from 10 - 40% of gross income, if not more. Taxation is not based on gross income, but only income reduced by liabilities etc. For a manufacturer, that 10% of gross income could be a great deal more than the amount that they have to pay in taxes.

Of course it oversimplifies to make a point. A company may choose a country with higher taxes and regs because transportation costs are lower, or there's more skilled workers, or any number of reasons. The point though is with taxes and regs, while politicians blame companies, it's politicians who push them out.

[Peter1469]

Tax policies and regulation. The US has a tax provision that encourages corporate inversions. Two nations in the world have this nugget: the US and I think Zimbabwe. Instead of repealing that tax provision people complain when US corporations merge with foreign corporations.