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docdivakar
Perhaps the federal and state governments can strike a compromise here -why ...
tmh86
If the U.S. gives special breaks, China and others will give bigger breaks. It ...
Intel calls for U.S. manufacturing tax breaks
Peter Clarke
10/6/2010 6:38 AM EDT
LONDON – Paul Otellini, the president and CEO of Intel Corp., has called for the U.S. government to provide tax concessions for companies that build factories in the United States, according to a Reuters report.
Otellini, speaking during a presentation at a Council on Foreign Relations event in New York on Tuesday (Oct. 5), said that the concessions, either in the form of tax credits or tax holidays would help create jobs and would make the United States competitive with other countries, the report said.
Building and operating a wafer fabrication facility for semiconductors can cost up to $1 billion more in the United States than in some other countries, with 90 percent of the difference being down to tax and incentives rather than labor cost, the report referenced Otellini as saying.
"We should offer tax credits or a five to 10 years tax holiday to companies, domestic or foreign, that want to set up factories in the U.S.," Reuters quoted Otellini as saying.
The majority of Intel's wafer fabs are in the U.S. It also has fabs in Ireland and Israel. Intel's latest wafer fab is under construction in Dalian China and government incentives were part of the reason, the report quoted Otellini as saying.
Related links and articles:
Technology group opposes offshoring bill
Intel switches gears, plans 65-nm in China
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eewiz
10/6/2010 8:35 AM EDT
If the tax breaks are offered the jobs can be kept in US. But Wouldnt this be a protectionist measure? Should US adopt such measures to not lose manufacturing?
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nicolas.mokhoff
10/6/2010 9:17 AM EDT
The smells of trade wars are in the air. Country after country is devaluing their currency in order not to lose. Not sure if protectionism is needed but something needs to be done to keep manufacturing jobs in the U.S. Some are worried that the times resemble those of pre-Great Depression. And some do not see a winner in this stratetgy: http://moneymorning.com/2010/10/05/currency-war/
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Etmax
10/6/2010 9:58 PM EDT
I think most competitive economies have a floating currency where economic performance decides the exchange rate. It's mostly developing economies that manipulate it in that way. Ironically they are the ones with the biggest wage advantage. Consider my recommendation further down.
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Kaiser Silicon
10/6/2010 1:38 PM EDT
I think when one considers the pool of people out of work, from a tax standpoint, this would be a no-brainer. Even if it turns out to be revenue neutral by shifting the taxes from the employer to the employee, the fact that people will be off the dole surely make this a very attractive proposal. There's also the concept of building the factories in the US to keep the capability, the know how, and the intellectual property in the US.
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fdunn
10/6/2010 10:14 PM EDT
100% on target.
With all of the countries that are propping up their industries one way or another, I don't care if they call it protectionism.
The fact of the matter is that most of that IP was invented here and we are sending it to factories all over the world for them to steal, not to mention the Jobs.
This is a no brainer and in my teeny weey brain I don't think we should be be off-shoring anything that is that low level so as to be stolen so easily.
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jjdraw
10/6/2010 3:30 PM EDT
oh my, what they can't afford to pay tax?
this is DISGUSTING !!!!!!!!
Intel
Chairman of the Board; $6.3 mil '07
$8.3 mil '06
$11.7 mil '05
CEO; $11.5 mil '07
$9.8 mil '06
$12.2 mil '05
exec vice pres; $5.7 mil '07
$6.7 mil '06
$8.4 mil '05
cfo; $2.2 mil '07
$1.2 mil '06
$1.6 mil '05
TIRED OF BIG COMPANIES WITH OUTRAGEOUS EXECUTIVE PAY CRYING FOR TAX BREAKS !!!
TRAITORS !!!
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Kaiser Silicon
10/6/2010 5:24 PM EDT
When I worked for Intel, a friend of mine went to a County Commisioner's meeting where Intel was asking for tax breaks. His line of reasoning was, why does a company with $28 Billion in revenue and $8 Billion in profit need with an $18 million tax break. The really funny thing was that my friend was on a first name basis with the Intel representative there, and my friend was a humble wafer pusher. Intel got the tax break, but not without someone saying WTF.
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fdunn
10/6/2010 10:16 PM EDT
As his paycheck goes up it is because of the low labor costs in foreign countries.
Put that in your bong and smoke it.
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llcc
10/7/2010 2:57 PM EDT
Let's say the four executives get no pay, that adds up to 6.3+11.5+5.7+2.2=25.7mil or 2.57% of $1B tax incentive for manufacturing overseas.
No growth marxists are DISGUSTING!
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gatorfan
10/8/2010 10:54 AM EDT
It's all about Supply and Demand. You can try to turn this into class warfare to only end up hurting yourself and the country.
The Demand side is simple to understand: Intel and other high tech manufacturers have to keep investing in cutting edge manufacturing capacity.
The Supply side is simple too if you can take your head out of the ideological clouds. Supply is in the form of cheap labor and locale specific incentives. Intel is not a charity or a not-for-profit company. All decisions are made based on strategic business direction followed by a choice of what gives the best return on their investment. $1B cost savings on the life of a wafer fab is REAL money.
The question you fail to ask but is the most relevant is given China's large wage rate advantage why does China offer tax incentives at all? Simple answer once again: it's about the JOBS! Guess what the taxable income from jobs is to the US of a factory in China is? ZERO! Three laws of real estate and business: LOCATION, LOCATION, LOCATION! Isn't any amount of tax income better than NO tax income to the US with a factory located in the USA?
America has got to take the class warfare out of this discussion because it is killing America's economic engine.
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jjdraw
10/6/2010 3:45 PM EDT
they just don't have enough extra to pay any tax huh?
and us ENGINEERS NEVER seem to get a raise !!!
"
In the tech world, the rich companies are getting richer, while the rest of the pack is basically staying still.
Data from Capital IQ reveals the 10 tech companies with the most cash and equivalents listed on the S&P 500 have $210 billion, while the next 62 tech companies from the S&P have just $108 billion in total.
Further, as the WSJ notes, in the last two years the top ten companies have broken away from the pack. The top ten companies have added $68.7 billion over the last two years, while the next 62 companies have added just $9.7 billion.
"
Read more: http://www.businessinsider.com/chart-of-the-day-cash-and-equivalent-assets-for-the-top-72-tech-companies-2010-3#ixzz11br8zu6X
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llcc
10/7/2010 3:01 PM EDT
So, what are you going to do? Spread the wealth among companies? There's something called competition. If you can't beat them, join them.
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Warren
10/6/2010 3:47 PM EDT
I personally consider the forum where this was openly raised by Otellini (Council on Foreign Relations event) as quite instructive and makes charges of "protection-ism" sound a bit hollow to me. Furthermore, the suggestion that employees, even well compensated ones, should consider sending back earned dollars to offset an oppressive tax *situation* as being quite self-serving in it's own right.
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fdunn
10/6/2010 10:21 PM EDT
Maybe so, but with the high unemployment rate I think these workers would welcome sending tax back and having a job with some security.
Speaking of security, the more we off-shore foundries and design houses the less we are going to have control over supply in the case of a National distaer/war.
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JLS
10/6/2010 6:15 PM EDT
Asking for a tax break is typical. This is trickle down theory at it's most rediculous. There should be a carrot and stick approach; but the get the stick (paying EXTRA taxes for sending jobs off shore) until they prove they deserve the carrot, not the other way around. Create some jobs and we will talk about some breaks later.
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fdunn
10/6/2010 10:23 PM EDT
That would really sound the protectionist alarms.
Not that I give a ****!
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fundamentals
10/6/2010 6:19 PM EDT
Intel is rich and powerful, but even so they don't stand a chance to get this kind of free hand-out from the US government. Free handouts are reserved for an elite group a hundred times richer and more powerful than Intel: the banks, and the Wall Street investment bankers. It is more likely that the banks will get a free handout from the government so that they can loan the handout money to Intel (and other high tech companies) at 7% interest.
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Etmax
10/6/2010 9:53 PM EDT
The real concern is that this will start tit for tat measures. I think better is an import duty on products manufactured overseas if the country has a substantially lower cost of living, say 10% lower. As a company has a duty to maximise profits, they will always (and should) go where they can maximise profit. The import duty would balance it but not penalise trading partners that have the same cost of living but are more efficient. That way you have a means of driving competitive efficiencies but put local workers on the same footing as foreign workers. If something like this isn't done, we will have a situation where the local economy doesn't have enough working individuals to support it. I'm in Australia and have friends in Europe, and this is a world wide problem amongst developed economies. There should also be a pollution tax on imported goods if they are made in a manner that destroys the environment to discourage cost cutting in that area.
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Stuart21
10/6/2010 11:11 PM EDT
DON"T GIVE INTEL A TAX BREAK - UNLESS THEY PLAY FAIR WITH INVENTORS!!
I invented a CPU cooler - 3 times better than best - better than water. Intel have major CPU cooling problems - "Intel's microprocessors were generating so much heat that they were melting" (iht.com) - try to talk to them - they send my communications to my competitor & will not talk to me.
Winners of major 'Corporate Social Responsibility' awardS!!!
Huh!!!!
When did RICO get repealed?"
INVENTORS - DO NOT TRUST INTEL!!!
BTW, I have the evidence - my competitor gave it to me.
BBTW, I am prepared to apologise to Intel if;
• They can show that the actions were those of a single individual in the company, acting outside corporate policy, and:
• They gain redress on my behalf.
Although playing a major role in it's facilitation, the power of the internet appears to have come as much a surprise to Intel as it has to the catholic church.
Inventors - help your fellow inventors - share your experiences with companies - good and bad.
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Sheetal.Pandey
10/6/2010 11:15 PM EDT
Well it would be good for US firms to get tax bennefits or other benefits if they set up facilities at home. Afterall they are doing business and in business everything is decided by money, profit and loss.
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Stuart21
10/6/2010 11:19 PM EDT
DON"T GIVE INTEL A TAX BREAK - UNLESS THEY PLAY FAIR WITH INVENTORS!!
I invented a CPU cooler - 3 times better than best - better than water. Intel have major CPU cooling problems - "Intel's microprocessors were generating so much heat that they were melting" (iht.com) - try to talk to them - they send my communications to my competitor & will not talk to me.
Winners of major 'Corporate Social Responsibility' awardS!!! Huh!!!!
When did RICO get repealed?"
INVENTORS - DO NOT TRUST INTEL!!!
BTW, I have the evidence - my competitor gave it to me.
BBTW, I am prepared to apologise to Intel if;
• They can show that the actions were those of a single individual in the company, acting outside corporate policy, and:
• They gain redress on my behalf.
Although playing a major role in it's facilitation, the power of the internet appears to have come as much a surprise to Intel as it has to the catholic church.
Inventors - help your fellow inventors - share your experiences with companies - good and bad.
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Stuart21
10/6/2010 11:23 PM EDT
eetimes - why is formatting held for spammers, but destroyed for genuine posts?
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resistion
10/7/2010 1:20 AM EDT
Wonder why Intel didn't take advantage of NY State's offer?
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resistion
10/7/2010 5:47 AM EDT
Here is an interesting read: http://www.electroiq.com/index/display/semiconductors-article-display/6866366914/articles/solid-state-technology/semiconductors/industry-news/business-news/2010/october/intel-gets_israeli.html
"The Ministers of Finance and of Industry, Trade, and Labor reportedly have approved an eight-year, up to 678M shekel ($187M) grant to help upgrade Intel's Fab 28, which opened in the southern city of Kiryat Gat two years ago, from 45nm to 22nm process technologies (plus another 63M shekels/$17M for R&D expansion or local research). The deal also stipulates that Intel must increase its Kiryat Gat workforce by about 22% (570 workers) to 3100 total, and add another 50 workers to its development center in Jerusalem."
It's something less of a step, though, than Intel had wanted -- the company originally lobbied for a $400M grant to bolster its planned $2.7B upgrade of Kiryat Gat, with 400 new hires. (Note the Ministry's Investment Center has a 500M shekel/$151M annual budget.) Nevertheless, Intel reportedly has pledged to "make every effort to see that Intel's next investment in upgrading technology will be implemented in Israel."
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BobsUrUncle
10/7/2010 11:30 AM EDT
I say RAISE TAXES FIRST on ALL COMPANIES foreign and domestic. Then GIVE TAX BREAKS to those willing to HIRE AMERICANS.
This should destroy economic incentives for labor arbitrage.
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VincePG
10/7/2010 4:39 PM EDT
Everyone acts like we are rich or something. I personally have no problem with tax breaks for companies that create jobs in the US, but the other side of the coin must also be addressed: Tax penalties for every job shipped overseas. This would be a revenue neutral approach that could be wrapped in a Patriotic bow.
We must balance the budget. For every dollar of incentive given there must be a counterbalance revenue increase or budget cut. The US is broke. We should start acting like we are trying to fix it or there isn’t going to be a US in the future.
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llcc
10/8/2010 5:04 AM EDT
Either lower tax rate, lure investments to the US and then collect tax at a lower rate, or raise tax rate and get no new investment nor new tax revenue. That's a no-brainer.
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dkmccann
10/7/2010 5:04 PM EDT
Other countries are giving tax breaks to employers who locate manufacturing facilities in their countries. Even to the point of reimbursing them for certain labor content of the product. They get away with it, so to be competitive we (the USA) should also. If done properly this is not anticompetitive / antitrust.
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http://www.lulu.com/spotlight/poconoarmchairreview
10/7/2010 10:36 PM EDT
Aren't industries that want tax breaks supposed to make big political campaign contributions first?
As Poor Richard used to say, taxes may be high, but we are taxed twice as much by stupidity (or something like that).
Maybe Intel will get smart and just move to countries with no taxes (there's one on the moon, I heard), or, pay the taxes and make up for it by paying engineers less. Or, even better, don't pay taxes and don't pay salaries. Maybe they can train prisoners to be engineers. They are happy to work for cigarettes. I heard the next "Festival of Happy Science and Engineering" will be held at San Quentin.
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tmh86
10/8/2010 12:25 PM EDT
If the U.S. gives special breaks, China and others will give bigger breaks. It becomes a race to the bottom, and who honestly believes that a race to the bottom with China is going to solve any long-term economic issues?
Taxes are only one factor influencing the location of a new fab, or design center, or plant. Labor cost and availability, infrastructure, geographic demand distribution, and transportation costs generally are much larger factors than taxation.
The key is not to match the tax rates of developing and third-world nations. The key is to make sure our own taxes do not favor offshoring and importing over domestic production and exporting. Let's address those tax imbalances first, before deciding that the only thing we can do is to engage in a race to the bottom.
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docdivakar
10/20/2010 1:00 AM EDT
Perhaps the federal and state governments can strike a compromise here -why don't they consider a tax deferral for a few years allowing the economy to gather some steam. One would then hope that hiring and the ancillary growth in the so called ecosystem of companies like Intel would increase the tax base and the tax revenue by increased hiring. But if companies respond like they have these days (cash rich but hiring none!), then there is no cure for it.
On a longer horizon, manufacturing has to come back to the US. I hope that is what the big businesses are intending to do with the tax breaks. Otherwise, there is no merit to seeking these tax breaks!.
Dr. MP Divakar
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