promotion image of download ymail app

Tax credits to the automakers.?

The Us gvnmt is looking into giving tax credits to help the struggling US automakers. Foreign automakers say " Lawmakers are tailoring plans to benefit Detroit@ foreign automakers expense". Ed Cohen VP of gvnmt and industry relations for HONDA. says he thinks the credits should be offered to TOYOTA because they make the CAMRY in Kentucky, and NISSAN make its Altima in Tennessee. Do you think that the US should give foreign automakers a Tax Break? I think NOT When I see that JAPAN or CHINA buys as much of our US owned Automanufacturers cars as we buy of theirs than I might see about a tax break. Besides gas milage why do people buy foreign cars?Why did the extra Taxes we put on high dollar foreign cars not work, why are the cars still costing less than a US car? Employee pay cannot be one of them. Do you think it is really cheaper to build a car in JAPAN then ship it cross the atlantic , then ship it again by train, truck to its dealerships ?.Or is it cheaper to build a car in the US

1 Answer

  • 1 decade ago
    Favorite Answer

    Tax credits already exist at the Federal, State, and Local levels. Your mind appears made up, but here are some facts to consider:

    It is CERTAINLY cheaper to build a car overseas and ship it to the US, but the Japanese are starting to realize the same economic disadvantages that we Americans have had for decades. This reply is not Asian bashing, but rather a comparison of the real costs of doing business in the US and Asia.

    A US automaker is one who builds vehicles in the USA. The US Alliance of Automotive Manufacturers includes our big three plus Nissan, Toyota, BMW, etc. This is the most powerful lobbying group for auto manufacturers in the USA from the business end. From the labor end, the UAW and AFL/CIO lobby for union-represented manufacturing plants, which have historically been owned by GM, Ford, and Chrysler. Both of these groups will tell you the same things about doing business in the USA compared ot the rest of the world:

    In the US, labor is comparatively high and regulations are stringent. Our UAW labor is nearly $40 per hour compared to $5 a day in Asia. Non-union automotive assembly plant labor is nearly as much, about $25-$30 an hour. Again, compare this to $5 a day in some parts of the world. Our standard of living in the US drives this issue. Bash the unions all you want, but none of us wants to work for $5 a day, and we would all take $40 over $30.

    In the US, we are wealthy enough to consider the environment and enact legislation to try to make it better. Complying with environmental legislation costs nearly $4 million a year at the plant I work for, and all we do is paint & assemble the product form parts made elsewhere. Environmental law is comparatively non-existent in parts of Asia (other than in Japan).

    The USA has labor laws which prevent an employer from working a person 24/7/365 without some serious compensation to make up for it. No such laws exist anywhere else.

    To attempt to balance the uneven playing field, the US imposes tarriffs (taxes) on foreign-made vehicles so they will have costs similar to American-made products. The US does this because Congress (house & senate) enacted the very legislation that puts us at an economic disadvantage compared to Asia. Congress does not do this by itself - Labor Unions, Big Business, Environmental groups, and other special interests push this to happen. This is how we establish and maintain our standard of living in the US. And we all like our standard of living in the US compared to Asia.

    The use of the legal system in the US adds cost to American manufacturing. Most Asians don't get million-dollar settlements for asbestos exposure or loss of a limb. Most Asians don't get million dollar settlements for any product liability claims like being hit by a drunk driver whose lights were off (thus suing the manufacturer). Maybe you support these liabilities and maybe you don't -- but a car made and sold in Korea simply does not carry the same liability for its manufacturer as one made and sold in the US. Again our standard of living and our willingness to put up with huge legal settlements (some legitimate, others just plain silly) drives this issue in the US.

    Japan and China do not buy as many American-made cars as we buy of theirs. Ironically, Japan is starting to be undercut by Korea and China, like they have done to us for the past couple decades. China, Korea and India buy even less of our stuff than Japan does. The trade deficit is a measure of this, and was at $68 billion in Feb 06 -- That means we imported $68 billion more than we exported out. That number is continually update at the 4th link below.

    Maybe you don't believe the numbers on a website obvioiusly biased to American manufacturing. Fine. Travel the world and then tell us what you see. Have you been to Korea or India? Or even Mexico? You do not see the number of American-made vehicles there like you see foreign makes in the US. You don't see much American-made anything outside of the US, unless you are in Canada/Mexico. However try to buy something at WallMart that doesn't say "made in China".

    When you claim employee pay can't be a reason for the cost, consider having your lawn mowed. An illegal alien here in Texas will cut the grass, weed-eat, and trim the hedges for less than $45. Would you pay a skilled tradesman $160 (4 hours, $40 an hour) to do the same work? Maybe yes maybe no, but employee cost certainly does make a difference in the cost of the product.

    Source(s): I work for a major manufacturer, on the management side. I am not union, but I am proudly pro-American.
    • Commenter avatarLogin to reply the answers
Still have questions? Get your answers by asking now.