Thursday, August 9, 2012

Kenneth Thomas — U.S. Trade Deficit Largely Due to "Intra-Firm" Trade

The vast majority of the U.S. $727 billion trade deficit in goods for 2011 is due to "intra-firm" or "related party" trade, that is, trade between two units of the same corporation, according to the U.S. Census Bureau. This is significant because such trade is the most open to companies manipulating the prices between subsidiaries to minimize tax liabilities, usually known as abusive transfer pricing. Moreover, asStuart Holland argued in 1987, intra-firm trade is also less responsive to changes in exchange rates than is trade between independent businesses, since within an individual multinational corporation each subsidiary will have a specific role to play in its supply chain, which won't be quickly changed.
Angry Bear
U.S. Trade Deficit Largely Due to "Intra-Firm" Trade
Kenneth Thomas | Associate Professor of Political Science, University of Missouri-St. Louis

3 comments:

Roger Erickson said...

Mostly strategies to evade misunderstood tax & fiscal policy!

Wow. Warren Mosler's right.

1) with fiat currency, the concept of taxes as revenue are obsolete;
an issuer of fiat never "needs" revenue;
federal taxes only serve to manage aggregate consumption;

2) with fiat currency, public spending = currency creation;

3) currently, private income is grossly overtaxed given the small ratio of public-expenditure to gross GDP (our 312 potential innovators are arbitrarily constrained)

Ryan Harris said...
This comment has been removed by the author.
Roger Erickson said...

meant to say "312 million potential innovators "