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Point/Counterpoint on textbook page 164, "Should the United States Outlaw Offshore Relocations for Tax Purposes?" What do you think? Which argument do you believe is the most valid? Why? Please post your answers in this forum and add valuable feedback to at least TWO of your classmates’ postings. Your posting and feedback should reflect an understanding of the chapter’s basic concept, thorough research, and logic, and critical thinking skills. The link of the book: d+the+United+States+Outlaw+Offshore+Relocations+for+Tax+Purposes?%22&source=bl&ots= Jl7Z6JSZSV&sig=ACfU3U3fD0QcujPUZrf9ftWvVojxjjzLRw&hl=en&sa=X&ved=2ahUKEwi 32LajhLv2AhUEHzQIHfMhCqQQ6AF6BAgCEAM#v=onepage&q=%22Should%20the%20Un ited%20States%20Outlaw%20Offshore%20Relocations%20for%20Tax%20Purposes%3F%22& f=false Instructions 1. The theories of Adam Smith, David Ricardo, and Heckscher-Ohlin tell us that a country's economy may gain if its citizens buy certain products from other nations that could be produced at home. What is the major benefit of trade identified in theories of international trade? Explain how it is beneficial for a country to engage in international trade even for products it is able to produce for itself using the concept of comparative advantage. 2. Do you also trade with others? How do you apply the concept of comparative advantage to your own life? Give an example for how each of us is better off because we each specialize in certain tasks and trade with others. Below is an example from my life: I can teach 5 economics classes if I do this full time. I also would like to fix my car myself so I have to give up teaching 3 class hours just for oil change. If I want to change the tires I will need to give up 5 class hours. Now suppose that I decide to fix the engine in my car. That will definitely require more skills and I will have to get some training for that. That means I will have to give up teaching more classes (let’s say 15 class hours). My opportunity cost (the hours I have to give up) will increase as I try to do more complex jobs for my car. If I’m specialized in teaching economics, I have a comparative advantage in this task. That means, I can teach economics at a lower opportunity cost than other people. If I try to fix my car, my opportunity cost will be high as I will be giving up teaching so many classes to be able to do that. That’s why I never try to fix my car! I take it to a mechanic because the mechanic can do this job at a lower opportunity cost compared to my opportunity cost. In other words, both I and the mechanic specialize in certain jobs and when we trade we are both better off! For more on comparative advantage and trade, please see the following: Comparative Advantage If you do everything better than anyone else, should you be self-sufficient and do everything yourself? Self-sufficiency is one possibility, but it turns out you can do better and make others better off in the process. By instead concentrating on the things you do the “most best” and exchanging or trading any excess of those things with someone else for the things that person does the “most best,” you can both be better off. Comparative advantage fleshes out what is meant by “most best.” It is one of the key principles of economics. Comparative advantage is a powerful tool for understanding how we choose jobs in which to specialize, as well as which goods a whole country produces for export. The following video answers these questions using the comparative advantage concept: Why Countries Trade? Link: Replies to Peers Reply to at least one other student's post. In your reply, please do one of the following: 1. Reflect on the ideas shared by your peer and provide a reply that offers helpful guidance or supportive feedback . 2. Share your thoughts about how well your peer explains the benefits of trade using his/her example. Case study Instructions Please read: The Rise of Bangladesh's Textile Trade and answer the following questions: Bangladesh, a very poor country, has been able to grow even during the most recent global recession thanks to its strong textile industry. Bangladesh, with its low wages, large investments in textile technology, and strong network of supporting industries, is now one of the world’s lowest cost producers of textiles. 1. Why was the shift to a free trade regime in the textile industry good for Bangladesh? 2. Who benefits when retailers in the United States source textiles from low wage countries such as Bangladesh? Who might lose? Do the gains outweigh the losses 3. What international trade theory, or theories, best explain the rise of Bangladesh as a textile exporting powerhouse? 4. How secure is Bangladesh’s textile industry from foreign competition? What factors could ultimately lead to a decline? Your answers should be comprehensive (one page minimum) The Rise of Bangladesh's Textile Trade Bangladesh, one of the world's poorest countries, has long depended heavily upon exports of textile products to generate income, employment, and economic growth. Most of these exports are low-cost finished garments sold to mass-market retailers in the West, such as Walmart. For decades, Bangladesh was able to take advantage of a quota system for textile exports that gave it, and other poor countries, preferential access to rich markets such as the United States and the European Union. On January 1, 2005, however, that system was scrapped in favor of one that was based on free trade principles. From then on, exporters in Bangladesh would have to compete for business against producers from other nations such as China and Indonesia. Many analysts predicted the quick collapse of Bangladesh's textile industry. They predicted a sharp jump in unemployment, a decline in the country's balance of payments accounts, and a negative impact on economic growth. The collapse didn't happen. Bangladesh's exports of textiles continued to grow, even as the rest of the world plunged into an economic crisis in 2008. Bangladesh's exports of garments rose to $10.7 billion in 2008, up from $9.3 billion in 2007 and $8.9 billion in 2006. Apparently, Bangladesh has an advantage in the production of textiles—it is one of the world's low-cost producers—and this is allowing the country to grow its share of world markets. As a deep economic recession took hold in developed nations during 2008–2009, big importers such as Walmart increased their purchases of low-cost garments from Bangladesh to better serve their customers, who were looking for low prices. Li & Fung, a Hong Kong company that handles sourcing and apparel manufacturing, stated its production in Bangladesh jumped 25 percent in 2009, while production in China, its biggest supplier, slid 5 percent. Bangladesh's advantage is based on a number of factors. First, labor costs are low, in part due to low hourly wage rates and in part due to investments by textile manufacturers in productivity-boosting technology during the past decade. Today, wage rates in the textile industry in Bangladesh are about $50 to $60 a month, less than half the minimum wage in China. While this pay rate seems dismally low by Western standards, in a country where the gross national income per capita is only $470 a year, it is a living wage and a source of employment for some 3 million people, 85 percent of whom are women with few alternative employment opportunities. Another source of advantage for Bangladesh is that it has a vibrant network of supporting industries that supply inputs to its garment manufacturers. Some three-quarters of all inputs are made locally. This saves garment manufacturers transport and storage costs, import duties, and the long lead times that come with the imported woven fabrics used to make shirts and trousers. In other words, the local supporting industries help to boost the productivity of Bangladesh's garment manufacturers, giving them a cost advantage that goes beyond low wage rates. Bangladesh also has the advantage of not being China! Many importers in the West have grown cautious about becoming too dependent upon China for imports of specific goods for fear that if there was disruption, economic or other, their supply chains would be decimated unless they had an alternative source of supply. Thus, Bangladesh has benefited from the trend by Western importers to diversify their supply sources. Although China remains the world's largest exporter of garments, with exports of $120 billion in 2008, wage rates are rising quite fast, suggesting the trend to shift textile production away from China may continue. Bangladesh, however, does have some negatives; most notable are the constant disruptions in electricity because the government has underinvested in power generation and distribution infrastructure. Roads and ports are also inferior to those found in China.
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Business and Economics Questions.


Assignment 1.
Should the United States Outlaw Offshore Relocations for Tax Purposes?
Company tax receipts have fallen from 30% 60 years ago to 10% due to loopholes in
international tax law. Global firms should be taxed at the same rate as domestic ones. Don't just
talk the talk; walk the walk. We all suffer because wealthy corporations hide their earnings in tax
havens. To prevent a higher deficit, we may have to raise taxes or cut services. Large enterprises'
tax-dodging hurts small businesses that play by the rules. A level playing field for all is required.
Corporations believe we need a 35% tax rate to stay competitive. Many businesses underpay
their taxes, leaving the government short-changed. Several companies paid more taxes in one
year than the average American family pays in five years. A successful company's tax rate is
likely to be under 20%. It will cost more if corporations pay less. Corporations must play a role
in making a change.
They argue tax breaks help firms invest and create jobs in their native nations. It was a
flop at the time. Principal stockholders and business executives benefited from layoffs, yet they
were a minority. Companies that go above and above to avoid paying taxes get an annual tax
vacation. America's firms are evading up to $90 billion in federal income taxes. Firms can use a
tax regulatory loophole to avoid paying taxes on their international profits until they return to the
US. "Deferral" is the technical term for holding money abroad. Companies making money
outside the US can avoid paying taxes on that money (Gaspar et al., 2016). Delaying taxes
encourages accounting practices that appear as US earnings came from a tax haven. Profits are
frequently transferred to subsidiaries with few staff and little actual corporate activity. Profits
earned in the US are essentially laundered to avoid paying taxes. Stopping "deferral," as Senator
Bernie Sanders and Representative Jan Schakowsky demand, is the simplest solution. Foreign

earnings would no longer be exempt from federal income taxes for life. The best argument is
$600 billion in tax collections over a decade.
Assignment 2.
Question 1.
Bangladesh is one of the world's poorest countries. Garments are made cheaply in
Bangladesh. Bangladesh exports textiles to the United States and Europe. Because of the free
trade regime, they should reorient their business. When it comes to poverty and unemployment,
Bangladesh ranked towards the bottom. Because of the change to a trade-free environment,
Bangladesh's economy has boomed, resulting in many new job opportunities for its citizens.
2008 saw a significant increase in Bangladesh's garment exports, from $9.3 billion in 2007 to
$10.7 billion in 2008.
Question 2.
Many people benefit when a developed country imports from a low-wage country. This
includes the buyer, seller, and producer—consumers in the United States profit from low-cost
clothing purchases. On the other hand, the seller reaps the benefits of low prices and a large
profit margin because th...

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