Cost Study, Improvements but Not in Tax Competition

By November 13, 2008Economy, Energy, Taxation

A news conference coming up later this morning at NAM-HQ with the release of the third “cost study” — an occasional report on the competitive disadvantages imposed by bad policies here in the United States.

Marketplace Morning, the radio program, previewed the report this a.m., “Gap narrows for manufacturing costs

Scott Jagow: It still costs more to make things in the U.S. than overseas. But a study out today says the gap is narrowing. Marketplace’s Jeff Tyler has more.

Jeff Tyler: The National Association of Manufacturers studied the cost of doing business in the U.S. compared to nine other countries. It shows that the U.S. manufacturing sector has kept a lid on employee benefits and health care costs more successfully than foreign competitors.

Emily DeRocco is president of The Manufacturing Institute, one of the reports sponsors. She says other costs continue to put U.S. manufacturers at a disadvantage.

Emily DeRocco: We are paying the second-highest corporate tax rate in the world.

That would be about 39 percent.

DeRocco: This corporate tax rate drives U.S. costs up, and limits our ability to be competitive with our products across the global marketplace.

DeRocco says the corporate tax rate in U.K. is 30 percent. And in China, it’s 25 percent.

I’m Jeff Tyler for Marketplace.

The 2006 report found that the “structural costs” — energy costs, pollution abatement regs, benefits, tort costs and corporate taxes — imposed a 31.7 percent disadvantage compared to our nine major trading partners/competitors. The latest report has the differential at 17.6 percent.

Here’s a point: There are a million different studies that come out in Washington, some credible, some not so. The fact that the numbers don’t tell a complete story of gloom and doom, that there’s some good with the bad, should tell the reader that this report is well-founded, objective report.

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