But we also have to consider the differences in pre-tax prices. To carry on your example:
The foreign TV sells for $100, or an ‘after-tax’ cost of $109. If the US TV sells for $150, the ‘after-tax’ cost just went to $163.50.
Assuming the US maker had a $25 profit (17%) in that $150 TV, that company could lower its price to $141.50 and get the same after-tax benefit as the pre-999 plan of $150. (assuming 40% of the $25 profit less the new 9% rate). The ‘after-tax’ cost of that US TV is now $154.24 —still considerably higher than the foreign TV’s after tax price of $109.
Sorry, please see handle. Some say it’s a 12-step process, but I cannot help myself at times. :-)
Well obviously it depends on just how big the present cost difference is between the domestic and the foreign manufacturer compared to the benefit of the tax plan.
I was going to make a comment on your handle when you seemed to deny that there was any benefit at all in favor of domestic manufacturers by changing over to the Cain tax plan but didn’t.
Anything that improves the environment for domestic manufacturing helps. Companies and industries will be at different points on the cost curve relative to foreign competitors. For some it might make the difference, for others, not enough.
And of course we shouldn’t only be fixing the tax code. We need to also lower regulations and weaken the power of unions and fix trade abuses among other things to help US industry.