Tag: Jack Markell

Taxes ARE a Competitive Factor for Manufacturers

Gov. Jack Markell of Delaware writes about state competitiveness and what’s needed to attract businesses in a Washington Post op-ed today, “Taxes are the wrong focus for economic growth. He raises many serious points toward which manufacturers will be sympathetic:

[Where] will the innovation come from if we don’t make necessary investments in federally funded research? Who will take innovation to market if we don’t help millions of workers retool their skills with appropriate job training? How will we get these new goods to market cost-effectively if we don’t improve our infrastructure? These are precisely the investments other nations are making. We must, too.

The NAM’s Manufacturing Strategy for Jobs and a Competitive America argues for the same priorities, among others. We’re with him.

Gov. Jack Markell of Delaware

Indeed, Gov. Markell, a Democrat, is a friend to manufacturing, and his State of the State address in January was right on the mark on how to encourage business.

Still, it seems to us that the Governor is offering a false dichotomy: tax competitiveness versus the other factors like R&D, skills and infrastructure. When Gov. Scott Walker of Wisconsin pounced on Illinois’ decision to raise income taxes by inviting companies to relocate to his state — a story Gov. Markell begins his column with — Gov. Walker was not just telling business he was going to keep taxes under control, he was sending the message that Wisconsin was going to put its entire house in order. A state that can’t balance its budget without a major tax increase is unlikely to set the other policy priorities needed to create a positive business climate.

The other consideration that Gov. Markell does not address is that competitiveness is really a global issue today. States continue to battle each other to attract business, but the real fight is on the country-to-country level.  Taxes are so critical in this competition,  and the United States is so far behind.

In the Tax Foundation’s latest Fiscal Fact, Scott Hodge reports, “Countdown to #1: 2011 Marks 20th Year That U.S. Corporate Tax Rate Is Higher than OECD Average“:

There is increasing recognition in Washington that the U.S. corporate tax rate is out of step with the lower tax rates of most industrialized and emerging nations. Indeed, 2011 marks the 20th year in which the U.S. statutory tax rate has been above the simple average of non-U.S. countries in the Organization for Economic Cooperation and Development (OECD).

It is now well known that with a combined federal and state corporate tax rate of 39.2 percent, the U.S. has the second-highest overall rate among OECD nations. Only Japan, with a combined rate of 39.5 percent, levies a higher rate.

As Gov. Markell points out, other countries’ governments are spending in critical areas like R&D, infrastructure and skills training. But here’s the point: They’re doing so even with corporate tax rates lower than in the United States.

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Manufacturing in State of the State Addresses: Delaware

Gov. Jack Markell of Delaware made more specific references to manufacturing in his State of the State address Thursday than any other of his gubernatorial peers we’ve checked on this year. (Transcript) After talking briefly about several government programs targeted at business — the Delaware Strategic Fund and a proposed Job Creation Infrastructure Investment Fund — the Democrat continued:

[To] drive home the message that Delaware is the best place to start and grow a business, we must promote job-creating capital investment. For businesses large or small that are willing to put Delawareans to work in a new or expanded manufacturing facility — whether it be for traditional manufacturing, or for clean energy — we will provide tax credits to support that job growth. We must continue to create a business climate that puts our neighbors back to work and that puts Delaware back at the forefront of making things again.

Historically, Delaware has been defined by what we make — from Dupont’s mills in the 19th Century, to the Pontiac and Chrysler plants of the 20th, to, today, Atlantis Industries in Milton, providing advanced parts design and tooling for customers all over the country, and TA Instruments in New Castle, designing and manufacturing highly sophisticated measurement devices. Manufacturing jobs have provided a ladder to economic independence for countless families and they must remain part of our economic future.

That is why our administration is joining with the Delaware Manufacturing Association, led by Chamber of Commerce President Jim Wolfe. This partnership will build on effective past outreach to local manufacturers on topics ranging from lean manufacturing techniques to energy savings programs. Together, we will work to develop and implement new ways to expand manufacturing jobs.

Excellent decision, Governor, with tremendous potential for substantive follow-up.

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State of the State: Delaware

Gov. Jack Markell of Delaware, a Democrat, delivered his State of the State address on Thursday, Jan. 21, and he used the word “manufacture” in his speech (transcript).

We’ve been search for references to “manufacturing” and “industry” in governors’ speeches this month, and Markell’s mention certainly qualifies. His reference comes as he describes a multifaceted policy and spending approach toward economic growth in Delaware, using as a starting point the announcement by Fisker Automotive that the company will manufacture a plug-in hyrid sedan at the former GM plant.

Fisker also received support from federal taxpayers via the Obama Administration, including a $528.7 million dollar loan from the Department of Energy. Vice President Biden traveled back to Wilmington to announce Fisker’s siting choice.

The governor did not discuss the federal funding, but he plugged the state’s company recruitment and regulatory reform initiatives, thanked the congressional delegation, lauded the state’s workforce and praised the UAW. He also put Fisker in a larger policy context:

Fisker’s decision to locate in Delaware will only be a success when the cars produced here get sold in showrooms across the world. Fisker has announced an extensive dealer network and their business plan calls for them to export half the cars produced here. One of the most attractive aspects of Delaware was our easy access to, and high-quality workforce at, the Port of Wilmington. Businesses like Fisker need to efficiently get products to the market. That is why I am recommending $10 million in bond bill funding for the Port of Wilmington and that we move forward with the Northeast Corridor Rail project and the Route 301 bypass project – all important infrastructure projects that will make Delaware more competitive.

To restore Delaware’s promise and prosperity, we should not only build, assemble and distribute the next generation of cars in Delaware. We should invent and manufacture the technology for the cars – as well the technology for other industries of tomorrow. …

That is why I am supporting in this year’s bond bill plans to provide a center for high-tech laboratories, health sciences, alternative energy research and development, and other emerging industries at the old Chrysler site.

Global trade, infrastructure and R&D are powerful tools to encourage economic growth.

Education is also a prerequisite. A section of Gov. Markell’s speech was entitled, “A Great Economy Demands Great Schools.” Earlier in the week, he joined Sen. Ted Kaufman and DuPont to announce  a Statewide Council to Improve  Science, Technology, Engineering and Math (STEM) Education.

All in all, Gov. Markell’s State of the State address presented the big picture of how to achieve economic growth and jobs for the state, one that embraced the important elements for a strong manufacturing sector. It’s appreciated.

For earlier posts on other governors’ state of the state addresses, go here.

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