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Re: Outsourcing issue flares up at Stanford chip conference

From: Kamal R. Prasad
Subject: Re: Outsourcing issue flares up at Stanford chip conference
Date: 8 Sep 2004 22:08:55 -0700 (Tim Jowers) wrote in message 
> (Kamal R. Prasad) wrote in message 
> news:<>...
> > (Tim Jowers) wrote in message 
> > news:<>...
> > > ajv2003 <> wrote in message 
> > > news:<>...
> > > > threeseas wrote:
> > > > 
> > > > > ziliath wrote:
> > > > >
>  ...
> > > > > if you have a problem with that, then its clear what kind of person 
> > > > > you really are.
> > > > 
> > > > Oh, t'is so nice to make your home in Disneyland.
> > > > 
> > > > --
> > > 
> > > Tax and Withholding
> > > 
> > > USA worker: $50k
> > 
> > At 30-35% tax rate, you need an income of $150,000 p.a to pay income
> > tax totalling $50,000. Why on earth are you complaining with that kind
> > of salary?
> > 
> > > China worker: $2.5K
> > > India worker: $3K
> > > 
> > Tax is levied as a percentage of income. And it turns out that even if
> > we wearn 1/5th US incomes -we pay the same tax rate as in US (approx
> > 30-35%).
> Kamal, I replied to you on this elsewhere but here's the quickie.
> AMOUNT is meaningFUL. Rate has less usefulness. The Amount is what a
> company calculates into its decision to Offshore.
> Say you make $10k. Then you pay $5k tax. You take home $5k.
> Now say I make $50k. And I pay $30k tax. Now I take home $20k.
>   The tax and witholding load is about 60% but that's probably quite
> conservative. A business will surely go to you since you cost 1/5th.
> Of course, with $5k house property tax and $1k car property tax then I
> really have $14k to spend. With the cost of goods and services being
> much higher in the USA, probably living in India gives a better
> quality of life.

Yes - a business will find it better to send work to a country with
the same rate of taxation but lower absolute amounts of taxes paid. I
was trying to convey that there is no unfair trade practice by the
Ind. govt. If tax rates remain the same and salaries rise -taxes will
also rise. BTW -yes quality of life is better for a sw engr in India.
To enjoy life in the USA -you need to be rich.

>   The USA is caught in a trap - either cut spending and taxes or cut
> job loss and pay decreases. So far, the US people are being squeezed
> in this trap. What they are doing is foregoing health insurance (1.4M
> more this year) etc. This is why the dem.s are pushing for government
> funded health insurance. The health insurance companies see the
> writing on the wall. Increased poverty amongst Americans spells a
> slowing economy. Records profits with absolutely no jobs recovery and
> a steady fall in income for those employed may mean corporate profits
> have topped.

They have a lobby to help them out -and the fact that anyone alive
needs medical treatment at some pt means continuous demand.

>   BTW, I estimate the cost of a worker in India to be twice that of
> the international lowest rate. India has a great headstart but may
> soon find itself in the same situation as America. People in Nigeria
> can answer the phone even cheaper! At some point, the savings have to

With our cost of living and relative political stability (meaning an
ability to think in terms of retirement savings unlike war-torn
countries), we can only hang onto jobs higher up the value chain [like
sw development].

> be passed on through lower product prices and lower taxes. In the case
> of Autos and Housing, these have doubled relative to salaries in the
> last 50 years in the USA. Offshoring brings profits but not better
> product costs. Innovation has not improved the quality of life of the
> average person as much as it could.

Offshoring increases disparity of income. Companies don't have to
share their wealth with their fellow citizens. If your govt came up
with policies to make american workers competitive -then it will
affect the bottomline of the rich but also increase employment among
americans. But the way things are going, work that is trivial won't be
done in the USA -and work that is challenging may not come to
americans because they don't necessarily represent the best manpower
on earth.


> Thanks Kamal,
> TimJowers
> > 
> > regards
> > -kamal
> > 
> > > Jobs gone. Pay rates gone. Tax revenues gone.
> > > 
> > > Tax and spend government fails. Smart US citizens see the writing on the 
> > > wall. 
> > > 
> > > TimJowers

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