The 'R' word haunts Detroit 3

[NickF1011]

BMW underpriced

 

Just interested how much would you pay for a bog standard basic BMW 335i with not a single added extra?

In the UK they retail at $72,250 with not a single added extra fitted.

 

BMW 335i with no added extras

http://www.whatcar.co.uk/car-review-equipm...10&ED=52647

 

So what's your point again?

 

You start off claiming BMW has an unfair advantage and can underprice their cars, then you go on to complain about how expensive they are.

 

Which is it?

[Michael Reynolds]

BMW underpriced

 

Just interested how much would you pay for a bog standard basic BMW 335i with not a single added extra?

In the UK they retail at $72,250 with not a single added extra fitted.

 

BMW 335i with no added extras

http://www.whatcar.co.uk/car-review-equipm...10&ED=52647

 

:huh:

 

A bare bones 335i is a hair shy of $40K in the states.

[silvrsvt]

:huh:

 

A bare bones 335i is a hair shy of $40K in the states.

 

 

Not to mention the UK Pound to USD is about a 2:1 exchange ratio in favor of the pound...

[TStag]

Ford & GM don't get a tax rebate for every car it sells in Germany, but the German government will give BMW a 19% tax rebate for every BMW it sells in the USA. So BMW can afford to under price it and still make a wopping great profit.

 

U.S. financial generosity to our allies after World War II included giving them special trade advantages to help them speed up their post-war recovery. We agreed that they could rebate to their producers any indirect taxes they paid on goods they exported to us, and they could also impose an equal charge on any U.S. products they imported.

 

Those nations recovered from World War II many years ago, but they still cling to what started out as a little advantage but has steadily increased to become a massively unfair advantage. The cost to U.S. producers increased to a whopping $327 billion in 2006.

 

In practical terms, this means that the German manufacturer of a car exported to the United States gets a rebate from the German government equal to the indirect taxes paid in Germany, a type of tax called the Value Added Tax (VAT). Since the VAT rate in Germany is 19 percent, the German carmaker gets a 19 percent tax rebate on every vehicle exported to the United States.

 

That's a significant subsidy to German auto manufacturers which enables them to sell cars in America for much less than they sell for in Germany. But what about American cars exported to Germany?

 

A U.S. manufacturer exporting an auto to Germany must pay the German government a VAT equivalent tax of 19 percent of the price of the car plus 19 percent of all the costs of transportation, insurance, docking and duties involved in getting the car to Germany. The U.S. company gets no credit for corporate taxes it pays in the United States.

 

$327 billion trading disadvantage with foreigners.......

http://www.eagleforum.org/column/2007/apr07/07-04-25.html

 

Not being funny mate but you clearly don't understand VAT (neither do a number of US sentators btw). The tax rebate is only given because if it wasn't BMW would pay sales tax twice. Once at home and once in the USA. This is called double taxation. It's perfectly fair. BMW should still pay tax in the USA. Everything would work better if the USA adopted VAT instead of GST which is used in nearly every single other country in the world.

[Edstock]

A U.S. manufacturer exporting an auto to Germany must pay the German government a VAT equivalent tax of 19 percent of the price of the car plus 19 percent of all the costs of transportation, insurance, docking and duties involved in getting the car to Germany.

 

Not quite right. A company in Germany (regardless of ownership) IMPORTING an auto to Germany must pay the German government a VAT equivalent tax of 19 percent of the price of the car plus 19 percent of all the costs of transportation, insurance, docking and duties involved in getting the car to Germany.

 

Say the import cost is $10,000, all in. The importer pays the federal German government $1,900 (in Deutschmarks).

 

Now, the importer sells the car to a dealer, for, say, $20,000. The dealer pays $3,800 in tax to the importer, who, when he pays his taxes, subtracts the VAT already paid, and remits the difference. The consumer buys it for, say, $30,000 and pays $5,700 in tax to the dealer who subtracts the $3,800 paid when the car was bought from the importer, remitting $1,900 to the Feds.

[TStag]

Not quite right. A company in Germany (regardless of ownership) IMPORTING an auto to Germany must pay the German government a VAT equivalent tax of 19 percent of the price of the car plus 19 percent of all the costs of transportation, insurance, docking and duties involved in getting the car to Germany.

 

Say the import cost is $10,000, all in. The importer pays the federal German government $1,900 (in Deutschmarks).

 

Now, the importer sells the car to a dealer, for, say, $20,000. The dealer pays $3,800 in tax to the importer, who, when he pays his taxes, subtracts the VAT already paid, and remits the difference. The consumer buys it for, say, $30,000 and pays $5,700 in tax to the dealer who subtracts the $3,800 paid when the car was bought from the importer, remitting $1,900 to the Feds.

 

Well done you clearly understand VAT! What get's me about this arguement in the USA is that I can't see where the artificial subisdy is. If you sell a US car in Germany you pay what is effectively a local sales tax. If you export a car from Europe to the USA then any local sales tax (VAT) you have paid get's refunded because the final sale will not be made in Europe, so it would be unfair to the manufacturer.

 

The problem I think is in the USA. If your an American company I get the impression you may still pay GST (akthough I'm not a GST expert). So in effect the US government is screwing American companies....

[TStag]

Just read the article. It's like she's understood VAT but not actually thought the whole arguement through. Let me disect it for you:

 

"A U.S. manufacturer exporting an auto to Germany must pay the German government a VAT equivalent tax of 19 percent of the price of the car plus 19 percent of all the costs of transportation, insurance, docking and duties involved in getting the car to Germany. The U.S. company gets no credit for corporate taxes it pays in the United States."

 

So what? A German company making an identical product would also have to pay all of the above if they were selling the product at home. Granted they wouldn't pay VAT on shipping the car by boat, but neither does a US company (she's wrong on this). And you certainly do not pay VAT on duties, otherwise you would be taxing a tax. That's totally wrong. As for the credit on Corporate tax, does she think a German company would get a credit on Corporate tax payment of VAT? No.

 

"Today, 157 other countries use a VAT tax system that gives foreigners a large and unfair advantage over U.S. producers in both our markets and in foreign markets."

 

That's true and it's growing every day. Why not adopt it in the USA?

 

"Congress tried repeatedly to address this injustice by instructing our trade representatives, in 1974, 1988 and 2002, to negotiate away the unfair VAT advantage. Our so-called friends and "trading partners" refused to deal with the issue, or even to talk about it. "

 

Think it was more because the US was trying to take advantage of them. Plus the WTO would have pointed out that the US Government didn't understand VAT.

 

"Some Members of Congress are now considering legislation to allow our government to impose a fee on imports from other nations that is exactly equal to the VAT subsidy given them by their home government, and also to give U.S. producers a rebate on their exports exactly equal to the VAT charge imposed on them by a foreign country. The former would more than pay for the latter, so this plan should be cost-free to U.S. taxpayers. "

 

Okay so the last bit is hilarious. Firstly what subisidy? VAT is a tax on domestic sales. As a EU company exports to the US then it's no longer domestic. If you sell a foreign made car in a EU company then of course you must pay the same tax as everyone else. Why should US companies sponge off us? The above would be totally illegal under WTO rules as it gives US companies a subisidy. This is totally ridiculous.

 

The simple answer if for the US to follow the UK's lead and scrap GST and implement VAT. It's a similar idea but I think it's fairer and it would ensure a totally level playing field. That's why 157 other countries use it.

 

Now if we want to talk unfair trade rules how about letting a foreign company buy a US airline.....

[TStag]

Sorry to triple post but this article by an American is techncally acurate and explains it all. I don't agree that the answer is to quit the WTO but I do agree that the US should change their tax system rather then attempt to get almost the whole world to change theirs:

 

http://www.progress.org/archive/fold263.htm

Edited September 22, 2007 by TStag