A reader quotes me:
But the notion that under any tax code, American workers can compete with Indians and Chinese earning one tenth of the salaries is bizarre. Cain jumped his own shark here a bit.
Cain knows more about this than you do. The US has a tax of 35% of a corporation's net income, which is about the highest in the developed world. American workers not only can but do compete with Indians and Chinese every day, because productivity per workers isn't the same in all countries. In some cases American workers win, in other cases they don't. The 35% tax incentivizes multinational companies to operate from low tax countries. Do some research as to why Microsoft has such a large presence in Ireland. It isn't because labor is 1/10 as costly in Ireland than in Seattle.
One fact that should be noted: many companies do not pay anywhere near 35 percent. Another reader:
I wouldn't be so sure to discount Cain on this. I identify as a progressive and so would be generally inclined to agree with your statement, but I also work for a tech firm that outsourced most of its employees about a decade ago (currently 90% of employees are in Asia).
I wasn't with them at the time, and this is anecdotal, but I've had a number of frank discussions with one of my managers, who was instrumental in moving manufacturing overseas at that time. He said that taxes were the primary reason. Paraphrasing: sure, they could hire employees over there for maybe 1/3 the cost, but they were also hiring a bunch of people who didn't know how to do anything, and would often end up hiring three times as many people to do the same thing. It was by negotiating a tax free/tax minimal status with the Southeast Asian country that made the move highly profitable. Eliminating these taxes resulted in an additional 20% to 30% profit, which is Huge.
I myself am personally opposed to this sort of outsourcing, and don't think eliminating corporate taxes is a solution, but I think it's important to try and understand the financial pressures involved.
The Dish 