Is The Retail Ballgame Played on a Level Field?

As a resident of Indiana, over the past few months the airwaves have been inundated with commercials for political candidates; national, state and local, stating their case that this election is about, “jobs, jobs, jobs.” This week is our primary. In an economic period where we are beginning to experience reductions in workforce, and companies halting expansion plans, this might be one of the most popular of all the campaign puffery.

But what is particularly attention-getting is the expanding calls to end “tax breaks to corporations who are shipping jobs overseas.” At the same time, in "The World Is Flat," author Thomas L. Friedman suggests that the world is "flat" in the sense that globalization has leveled the competitive playing fields between industrial and emerging market countries. Are these candidates advocating a new era of protectionism just to get votes, or are there really advantages for corporations to expand operations outside of the United States? In a global trade war, the players each seem to have their own vested interest in mind: blue-collar job holders, company officers, stockholders, customers and politicians who use the issue to win supporters.

This is an intriguing question for the store designer and retailers. Many products sitting on retail shelves and hanging on racks today are sourced overseas. North American design firms are searching and winning creative opportunities offshore, as many retailers here are becoming increasingly conservative and companies are successfully joining up with international partners for the budgetary and talent pool advantages they offer. It appears that along with technology, retailing--and its supportive community--is one of the most global of all business activities.

So what is politically, ethically and economically the right thing to do?

Before answering, you should know that there is some truth about tax breaks for companies who have overseas operations. The U.S. tax code states that profits earned in the United States are subject to the 35 percent corporate tax. But multinational corporations can defer paying U.S. taxes on their overseas profits until they return them to the USA--transfers that often don't happen for years. USA Today says, “General Electric has $62 billion in ‘undistributed earnings’ parked offshore, according to recent Securities and Exchange Commission filings. Drug giant Pfizer boasts $60 billion. ExxonMobil has $56 billion.” It is surmised that those funds can be used to expand operations in those countries rather than bring the profit, or jobs, back to the United States.

--JerryGelsomino, Guest Blogger