It’s not only high taxes that decrease economic activity - I offer this I read in a recent article.
I would like to relate my recent experience trying to start a Carbon Fibre manufacturing company in a Northeastern U.S. State.
After meeting for three weeks with the economic development offices of the State and City, it was determined that after I located and acquired a facility, at my cost and risk, even if it were properly zoned, it would have to be approved for a special use exception.
Thereafter we were told to budget in excess of $300K for pre-approval EPA, environmental, and other studies.
The studies would take about 6 months at minimum -- with no guarantee of a successful outcome.
Even if we were approved, and in spite of the fact that at opening we would be hiring approximately 25 technically competent people in a high unemployment region, we would have to go to the Union hall and negotiate a trades contract before hiring the first employee. I would be forced to unionize and hire more expensive, "senior union members."
I am not allowed to go to Craigslist and hire younger, entry level trainees. My cost of operation becomes higher before even opening my doors and I have no choice in this matter. Unbelievable!!!
Even if I am willing to take the time, spend the money, and successfully navigate the bureaucratic hurdles, what additional risks do I face? How about this: OSHA arbitrarily decides I'm not in compliance with one clause in their multi-thousand page regulatory bible. Or, an employee-union member decides he is not being treated fairly or that the benefits package is not equal to that of federal or state employees, and files a grievance How about the EPA deciding, retroactively, that in the event of a power outage there is a chance my factory might leak a "toxic" substance? I will be sued, shut down and possibly prosecuted criminally.
Now, consider my experience the last time I visited China. I was escorted by the governor of Tianjin State to one of his new cities and shown the process to open a manufacturing facility.
I was led into a room with a series of desks. You start at the first desk where you present your plan. Thereafter you proceed from one to the next obtaining approvals or agree to modifications on the spot until at the last table where you are shown what lots and buildings are available that best suit your needs and the price of each.
The total timeline for permits, from beginning to approval, takes about 3 hours.
At the end of the line you pay your fee, get your permit, and choose your construction manager if a new building is necessary.
The city designates the building team to come the following day and begin construction.
Generally you are guaranteed that you will be able to move your equipment in within 5 months.
There are no restrictions on importation of equipment, state officials help with marketing and sales inside the country and do not restrict exportation of the manufactured goods or profits.
Now, this is China so the government and the state share 30% of your business, but considering the ease of entry, increased in-country sales and helpful attitude, this is a small price to pay, especially considering America's 35% plus corporate tax rates. Also, if the price of the lot or building seems high, and they like your project, they will negotiate the price and terms.
This is why our balance of trade is so out of whack. This is why many companies move out of the United States for foreign environs. This is why the United States is losing its position as the greatest manufacturing country in the world.
The greatest threat to our American future doesn't come from other nations, it comes from within. We have become our own worst enemy.