Once again, the U.S. Congress is where it was during the 1970s with the politically driven and politically correct desire to reduce the environmental impact of U.S. industry. Instead of providing tax incentives to allow our industry to reduce atmospheric emissions, and to eliminate the impact upon our water ways and soils, Congress at that time chose to leave the tax code intact, and so began the great exodus of heavy industry to elsewhere in the world.
In his 1980 run for president against Ronald Regan and George H. Bush, John Connolly, former governor of Texas, proposed a sweeping change to the tax code. Connolly proposed to allow business to add pollution control equipment and to modernize plants when doing so with the ability to immediately write off the entire amount of the needed changes to meet EPA’s new regulations. Unfortunately, this idea failed with his candidacy.
Ronald Regan fought for tax cuts, but not the specific changes needed to allow a business to write off millions in new pollution control equipment in one fell swoop, rather than amortizing the expense out over 20 years, the life of the building under IRS code.
What happened to our heavy industry? Over the next 20 years it went to Japan, China, India, Argentina, Chile, and Thailand to name a few places benefiting from our stupidity. Our industry went to places without controls. And, our Congress watched it go bye bye in the name of “free trade”.
Instead of making it feasible for U.S. industry, including the car makers, to reduce their environmental impact, and to upgrade and to modernize production facilities that in many cases were unchanged since the end of WWII, Congress elected to leave that portion of the tax code unchanged.
Business, being profit driven was driven to looking offshore to compete with the burgeoning Japanese heavy industry.
Our steel, and other heavy industry went elsewhere along with hundreds of thousands of U.S. jobs. This exodus is continuing today in the service sector. All because Congress cannot figure out that a simple change in the tax code was necessary to allow our industry to meet pollution control laws.
Yet, by contrast, in response to the 1973 oil embargo, Congress authorized the Trans Alaska Pipeline System construction by passing the most the liberal construction tax package in the history of Congress. The oil companies comprising what became Alyeska Pipeline Company enjoyed tax breaks off of the construction cost for years beyond the pay off date for the pipeline. Which pipeline, by the way, was paid for within 3 months of the first barrel of oil flowing south to Valdez.
A good start is a rational tax policy designed to achieve the national goals of environmental protection and to achieve the strategic national defense goal of maintaining our industrial and labor base by keeping industry here.
Our industry has always had to compete with countries—not businesses, countries—who subsidize their industry. Try to compete with Mitsubishi when Mitsubishi can get a 2% forever loan from the Japanese government to improve production technology, whereas CAT must acquire financing at the going rate and terms in the U.S. financial market, as well as deal with unchanged tax code that punishes innovation. Hence, Mitsubishi owns part of CAT, Chrysler, on and on in order for our companies to get some degree of competitiveness.
On a micro economic scale, even this peon had that lesson brought home the hard way. In the 1980s when the price of gold was high, IHC Holland came to Alaska. Ever tried to sell a “home grown” mineral processing plant when the local banks would not support the local miner, but the foreign firm could offer national financing through the Dutch national bank for their project?
What would be the impact upon the U.S. steel industry, for example, of being allowed the full write off at the time of expenditure of the cost of meeting EPA regulations by reducing green house gas emissions and meeting environmental regulations, which tax write off also allowed renovating a steel mill to include robotics and other improvements to increase production efficiency?
The impact would be immediate and beneficial.
What business wants to depend upon the third world for manufactured goods?
My experience with Chinese fittings, hoses, and other materials handling equipment is not good. These items fail before they should. The accelerated replacement of that junk was a major factor in my job cost this summer.
I further believe, that such a tax policy would have the impact of attracting foreign industry to the U.S. That would not hurt the labor force.
The U.S. provides a stable, educated workforce. A workforce that would grow and provide generations of Americans opportunity. These workers would have a standard to meet and would need to educate themselves to meet the needs of industry.
I believe that such a need would have a positive impact upon education, as where would be a need for education in the workplace.
Even the common laborer has to be literate and able to read and write English.
However, Congress will not be able to figure this out. There are too many ways to split the dollar, and business is evil in the dem mind. As bad is the globalist Republican mindset that is too focused on a "one world" economy that the rest of us has to pay for with our jobs and the country's industry in order to raise the standard of living in every rat hold in the world. This in the face of the reality that the best way to nation build is for a nation to develop its business infrastructure to serve a domestic market rather than be used as a cheap labor pool for the U.S.