Taxing businesses that cut U.S. jobs not that farfetched of an idea

The Lafayette Journal and Courier ^ | Sunday, August 24, 2003 | Phillip Fiorini

[Willie Green]

For education and discussion only. Not for commercial use.

Longtime Purdue University sociology professor Robert Perrucci has stood out in his field for charging hard into areas that might seem better suited for those in the academic worlds of business or economics.

Perrucci's mission has been to spell out how decisions by major corporations -- both positive and negative -- can impact communities and the people who live there.

His latest salvo at corporate America: That Congress should tax American companies that are cutting U.S. jobs for cheaper employment in other countries.

"Then, that money should be used to help the displaced workers so the social cost -- welfare and unemployment -- is not so great," says Perrucci, who has taught at Purdue for 40 years. "American corporations have a greater incentive to seek employees overseas, so we need to call upon Congress to adopt a job-loss assessment policy.

"U.S. companies should have greater incentive to employ Americans. We cannot prevent companies from moving abroad, but we shouldn't make it so attractive."

This debate, of course, should ring true for hundreds of families in the Lafayette area who have been touched directly by corporate decisions to move manufacturing operations to Mexico or China or even India:

• Three years ago, about 300 jobs at the Siemens Power Transmission & Distribution Plant in Lafayette were lost when Siemens purchased the plant and a sister facility in Reynosa, Mexico, from Landis & Gyr a year after that company had already moved its mechanical meter-making operations to Reynosa.

• Speculation swirls around struggling Fairfield Manufacturing Co. since its $4.5 million purchase of 76 percent interest in Atlas Gears Ltd., a firm based in Belgaum, India. The longtime Lafayette company, which has had several smaller layoffs the past three years, is now seeking concessions in a new contract with its 680 union workers. Employment now stands at about 600 --down from 750 at the end of 2002 and half of what it was in October 2000.

• Former tractor-trailer maker Monon Corp. was forced to close its White County plant in 1996, had filed for federal assistance through North American Free Trade Act, claiming its 1,000 workers at the time were affected by shifts in trade and manufacturing to Mexico and Canada.

Those numbers, of course, have a family or two attached to each one, perhaps wondering why all this is happening.

And it's all about a ridiculous definition of capitalism, which puts profits ahead of everything, absolutely everything.

Harry Targ, a political scientist a Purdue University, has said NAFTA's passage in 1993 has opened the floodgates, causing "American companies to go after cheap labor," in both Mexico and Canada.

An Office of Technology Assessment study actually quantifies the cost of that pursuit for higher profits. Between 1979 and 1984, 11 million jobs were lost because of plant closings and relocations to other countries. Losses were greatest in sectors of traditional strength, such as automotive, steel, textiles and electronics.

Perrucci's proposal is not that farfetched.

At the local level, right here in Tippecanoe County, companies get tax breaks by promising to create jobs. Every year or so, major manufacturers line up at the podium before our elected officials to explain what they've done to abide by the requirements of those tax breaks.

And homeowners like you and me are paying property taxes so they don't have to. The promise is that these corporations will compensate by raising our standard of living and the quality of life for our community.

Perrucci, referring to a recent move by IBM to eliminate 600 mostly white-collar jobs in Vermont, says the American work force will take a hard hit when white-collar jobs are eliminated, just as the blue-collar sector suffered in the 1970s and 1980s. That's why he thinks creating a disincentive -- in this case, a tax -- might be necessary.

"Somebody needs to say to companies like IBM that their behavior isn't in the best interests of the country," he says. "I just think (the tax idea) needs to be on the agenda for discussion."

"The American people's confidence is declining in corporate institutions. The belief that you are going to have a better life than your parents is fading. And what is even more dangerous is the belief that your son or daughter will have a better life than you is disappearing."

Fiorini is the Local Editor. He can be reached by calling (765) 420-5231 or via e-mail pfiorini@journalandcourier.com

[RaceBannon]

I think the fines...I mean taxes, should go to both of these types.

One, to the company that outsources, and two, to the country that floods our imports with products made with slave labor.

[Guillermo]

Maybe we ought to examine what caused the companies to leave in the first place.

High taxes, harassment by the IRS, harassment by local officials, zoning boards, environmental wackos, etc ad nauseum.

There has always been cheap labor overseas. Let's fix the problem here that made them want to leave in the first place.

[MonroeDNA]

Robert Reiiiiiiiisch wants this, too.

[MonroeDNA]

http://www.yesmagazine.org/

[MonroeDNA]

Where's the aw jeeze guy when you need him...

[baltodog]

Just watch...this is going to be the major deciding factor in the next election.
Not terrorism or war or abortion or whatever.
"Outshoring" American jobs overseas WILL be the key issue.
Unless W makes a firm commitment to the American worker, he won't win.
That commitment MUST include retracting the US from NAFTA.

[visualops]

I don't know what the solution is, but cheaper global labor is a fact. Cheaper goods and manufacturing overseas are a fact.
Now, if an American company doesn't produce or manufacture overseas, some other company will.
As an example, the company I work for markets and makes money off foriegn made goods. We do better precisely because we can have stuff made cheaper overseas, which we add value to, and sell at a competitive price.
The global job landscape is changing, and what this country needs to do is see just what it is that we *can* do here that is competitive and/or cannot be done elsewhere.
I read a great article somewhere about this and they had listed several areas where we can be competitive in the future, and where the job growth is. I wish I could remember where I read that lol!

[caisson71]

"Taxing businesses.." is one of the reasons they left!! My goodness, when are we going to get a clue??

[SedVictaCatoni]

High taxes, harassment by the IRS, harassment by local officials, zoning boards, environmental wackos, etc ad nauseum.

Unions. The unions got greedy and spoiled it for everyone.

[MonroeDNA]

.

[Big Giant Head]

Don't just blame unions. Taxes, taxes and taxes are always involved, as well as stated above, excess regulations.

Wanna stop job losses? ELIMINATE taxes on business. The taxes are only added to the cost of goods sold anyway, so the consumer ultimately pays the taxes. Taxes go away, prices drop, we can compete again.

[Ben Ficklin]

You should do a google search on this sociology professor, Robert Perrucci.

[dr_who_2]

Careful, your red underwear is showing.

[xm177e2]

The problem with this is that it discourages corporations from hiring American workers in the first place. In many European countries, it's very hard to lay off workers. So the companies hire fewer workers, and don't take risks hiring people during economic upturns (because the people would have to be fired if the economy went back down and the company wasn't doing so well). This is not a good solution.

[Poohbah]

Yup. They're not content to break ONE kneecap, they gotta break BOTH.

[Jorge]

There has always been cheap labor overseas. Let's fix the problem here that made them want to leave in the first place.

Nice to hear a voice of reason in these otherwise hysterical threads.

[sam_paine]

what this country needs to do is see just what it is that we *can* do here that is competitive

Right on. I was thinking about my grandfather who used to do carpentry work to make up in between crops. When the wheat was not making money, he didn't look for a subsidy,....he looked for other work that was valuable to others.

[Salman]

The problem is that the government may become dependent on the the revenue and then proceed to encourage outsourcing.

[Maccabee]

I agree that we must lower taxes for these companies, but we MUST aslo punish those companies that ship jobs overseas. In countries such as China and Vietnam you can see American cororations enriching Communist party bosses at the expense of their own workers and ours.