Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, March 2, 1993 TAG: 9303020335
SECTION: EDITORIAL PAGE: A-5 EDITION: METRO
SOURCE: C.A. FREDERICKSON
DATELINE: LENGTH: Medium
MOVING TO MEXICO
IN A RECENT visit to a Southern location, I noted numerous manufacturing factories in a state of suspended animation.A major manufacturer of wooden furniture was closed, its machinery dust-covered. Nearby, another factory, which employed more than 1,000 craftsmen in recent years, has lapsed into a coma, its metal working machinery quietly rusting.
At an adjacent location that employed more than 1,000, numerous employees are unwillingly departing each month. Plants are being closed down, and the production equipment is being sold off or transferred to Mexico.
The total cost of a Mexican worker in Mexico is $2.70 per hour. This compares to the total cost of an American worker at $24 per hour. Little wonder that the management of each corporation involved makes decisions to close down American operations.
Most Americans believe corporations and employees can be taxed without penalty. Nothing is farther from the truth. All corporation taxes, and all employee wages and taxes, must come out of the product costs for the company to stay in business.
The cardinal rule for corporations today is to find the location in the world that has the lowest employee cost, taxes and environmental controls. This relates directly to the total cost of government in each country. Japan has half the governmental cost per capita of the United States. Korea has one-third the governmental cost per capita of the United States. Is it any wonder that Japan and Korea are both producing many products previously manufactured in the United States?
The tax burden in the United States is rapidly destroying our manufacturing. Payroll checks have at least four if not five separate taxes: FICA1, FICA2, federal income, state income, and possibly local taxes. Telephone bills have as many as five taxes levied on them.
We have more people working in the government offices at all levels today than are working in manufacturing. Each person placed on the government payroll causes at least one person in the private sector to become unemployed. The layoff is due to the taxes that must be collected for the new employee - at least equal to twice his annual base pay. This causes a marginal company to lay off at least one worker. An additional person may be unemployed due to the shift of labor from production to nonproduction.
In a recent election in the locale where the above corporations are closing facilities, the citizens voted for millions of dollars in new bond issues and food taxes. They also increased the real-estate property assessment by 50 percent.
Can it be that unemployed citizens do not relate taxation to lost jobs?
C.A. Frederickson of Augusta County is a retired manufacturing engineer.