Originally Posted by
Stucky
Could the price difference be because America has the 2nd highest corporate income tax in the world; and litigious work force; and 29 different regulatory agencies (OSHA; EPA; EOE; CIPSA....); high property taxes; high energy costs; very high labor costs, which, ironically, all make China seem like an oasis of economic freedom? (My cousin recently moved his financial services business there)
Actually, for 2014 the U.S. (39.1%) was third in corporate tax rate, behind Chad (50%) and the United Arab Emirates (40%). China's tax rate was 30%.
You can make a
rough estimate of how much the U.S. tax burden affects the price of the bars. Let's make up a couple of corporations: US Bars, Inc. and China Bars, Ltd., both with annual sales of $1M. Healthy corporations typically have net profits in the 10% range, so let's say they both have a net profit of about $100k. The U.S. corporation would therefore pay $39k in taxes, while the Chinese company would pay $30k in taxes. The $9k difference, when spread across $1M in sales, represents a 0.9% increase in cost for the U.S. corporation. In other words, the additional tax burden on the U.S. corporation is $2.70 on every $300 bar it sells. So, it doesn't look like the U.S. tax rate is fully responsible for the price difference.