01-25-2012, 07:29 PM
Join Date: Feb 2011
| | Re: the nation's middle class is at risk
Originally Posted by gonefishin
Runs like a dog
You are looking at this threw the lense of a corporation. I just think if Americans took home their gross pay vs thier net, it would change the landscape.
If Apple wants to continue to import thier finished product from China let them. The difference will be the Apple finished product will be taxed at the cash register "national sales tax"
At least at this point The United States is collecting some tax from Chinese cheap labor.
I just think a national sales tax is the way to go.
But the fact is that iPhones only have a labor component in the cost of under 10%. (Similarly cars in the US or anywhere only have an 8 or 9% labor component.) So wherever you move the labor to, in this case Chinese iPhones, even if you moved the factory to Nevada the net difference in the cost of the until is $18-$40 depending on how you calculate the value add. iPhones are HIGHLY price elastic and if you increased the consumer price $18-40 it would have almost no effect on demand. So the question is, why wouldn't China do that? Because the logistics chain costs a hell of a lot more than the labor.
And that wouldn't change no matter where the final assembly took place. An American iPhone factory would have to accommodate MUCH higher logistics chain costs on top of that elastic $18-40. If costs go up say a hundred dollars or more then you start seeing significant demand erosion.
If I were Apple I'd eat the tariff because it's probably cheaper. If the government put a 200% tax on them then that would cause lobbyists to descend on Washington like locusts.