Las Vegas Sun

March 28, 2024

GUEST COLUMN:

It’s time for companies to bring jobs home

The enactment of the 2017 Tax Cuts and Jobs Act that went into effect Jan. 1 is bound to kindle a renaissance of the U.S. manufacturing base.

Under the act, the corporate tax rate has been lowered to 21 percent from 35 percent. One-time repatriation of profits earned by multinational U.S. companies by their overseas subsidiaries is taxed at 13.5 percent for cash and 8 percent on other assets.

U.S. multinational corporations had accumulated nearly $2.6 trillion offshore as of the end of 2017, much of it in tax-haven countries. The act encourages companies to bring money back to the U.S. at these lower rates.

Many U.S. companies have already committed to significant repatriation amounts. Apple has $252 billion in cash alone on its balance sheet stashed overseas, and it pledged to pay $38 billion in tax on repatriated income over the next eight years. Other big businesses like Microsoft, Alphabet, Cisco and Oracle have a significant chunk of their profit in cash parked overseas.

The Bureau of Economic Analysis reported that over $305 billion has returned to the U.S. from overseas accounts. The repatriated stash is now available in the U.S. for companies to invest, pay out dividends, bonuses, stock buybacks, establish new development and manufacturing centers, and hire new workers.

With growth of 4.2 percent in the third fiscal quarter and 3.5 percent this quarter, our economy is firing on all cylinders.

In other words, a renaissance of manufacturing is in the offing. The recent announcement to levy trade tariffs on goods imported into the U.S. is also motivating U.S. and foreign companies to establish their manufacturing plants in the U.S. to avoid payment of such tariffs. The Taiwanese Foxconn Technology Group’s decision to invest $10 billion to establish a manufacturing campus in Wisconsin to create 13,000 jobs is an example to revitalize the semiconductor manufacturing base on our shores.

Likewise, foreign automobile companies are investing more money into their previously established U.S. plants to expand capacity or to start new plants.

Labor costs in foreign countries are rising, which is another reason why U.S. manufacturers are returning jobs to the United States. Yet another reason is that regulation has been dramatically reduced. All of these factors have contributed to rising optimism among American manufacturers.

It is time for U.S. corporations to demonstrate not just their fiduciary duty but also social, ethical, moral and patriotic duties and bring back the jobs they are harboring overseas.

It is incumbent upon them to establish hardware and software development and manufacturing campuses in our country and, where needed, retrain the U.S. workforce for the jobs that the economy calls for as part of the quid pro quo for the lower corporate tax rate, the tax holiday on the repatriated profits, and deregulation. With the U.S. jobless rate at 3.7 percent in September, businesses have no choice but to spend to upgrade existing and new employee skills to meet their specific needs. Such investment would promote loyalty.

U.S. companies should revitalize not only the high technology industries, but also the basic industries that have been outsourced to other countries. For example, nuts, bolts and fasteners are critical components upon which higher-level products such as aircraft, space vehicles, automobiles, railroads, computers, smartphones and household appliances depend upon. The nuts and bolts are the weakest link in the chain and must be produced within our country to ensure their quality, integrity, dependability and ready availability. We have for too long depended on such nuts and bolts components coming from China, India, Taiwan and other countries. With 3D printing using nanoparticles in rapid development for critical components, it is imperative that we regain our footing in this manufacturing.

Likewise, automobile products are critical to our economy, particularly as the production of the automobiles continues to increase. The ready availability of such parts is critical for repairing used cars.

U.S. oil companies should enhance their capital expenditure and improve efficiency of operations with high technology in fracking to generate more oil and wean out our dependence on OPEC.

In other words, the expected renaissance should address every aspect of our manufacturing needs and avoid dependence on any foreign country, no matter how friendly they are now. Self-reliance is the key for U.S. manufacturing. We should restore our manufacturing economy to the 1965 level, when it accounted for 53 percent of the economy.

All U.S. companies, as well as foreign companies that wish to do business in this country and profit from it, should participate in this renaissance and revitalize the U.S. manufacturing base. Revitalization of our GDP beyond the current levels should be their goal.

T. Rao Coca is a former senior executive of IBM, NVIDIA and IGT, and now is a intellectual property law consultant. He lives in Henderson.