My experience with lean/JIT in the manufacturing space shows when it is actually done at every level your business starts hemorrhaging money waiting for parts to arrive. Each step of the process unless perfectly foretold adds 1-3 weeks in a good quarter. It is actually the local preference that we keep more spares than we do, but accounting says no.
If you read the fine print with how Toyota implemented lean you find out that they made their partners contractually obligated to keep inventory, not themselves. Inventory was still kept but who paid the tax bill and who paid upkeep changed.
I learned it was much better to deal with CEO/investors grumbling about $$$ tied up in backstock than Type A Sales Manager + CEO/investors wondering when the f^ck a single critical component would let us restart the production line to launch an overdue product. I don't miss that job! There was also the "Google the new CEO on his first day and find out he's under SEC investigation for withholding payments to his previous corp's suppliers to pad the balance sheet for buyout" but that is another story entirely!
This way they don't have to cash out for whole containers at a time. Sure they'll have to pay for more declarations, but overall it's usually worth it, especially if the goods can sit there for a year or more.
Our customs systems here is totally not made for this new world though.
If you want them to in-house more production, allow all of them to write-off 100% of capital equipment purchases in the first year.
This taxation is why corporations often prefer to lease rather than own, and why they often pay out dividends rather than using the money to collect assets.
These taxes reduce the amount of money you can spend on capital equipment, inventories, and facilities, which reduces your maximum rate of growth.
All of these are the reasons that software businesses are so heavily advantaged by the tax code. They don't have to pay taxes on (much) capital equipment or inventories, and the smaller facilities are also beneficial from a tax perspective.
I mean, yes, but not really. They're not a meaningful portion of their revenues. Typically it's around 1% of the acquisition cost of the item inclusive of any fees required to get it in your inventory. This is akin to complaining about paying BWC taxes which are about 1% of your payroll. If they're a real hardship to your business, your business has more problems than holding excess inventory.
>Corporations are taxed on assets that they accrue (increases in total holdings are taxed as 'profit'). This applies to inventories, capital assets, and real estate.
and
>you did already pay taxes on holding that inventory.
Inventories are taxed as property which is, in general, about 1% of the cost (to the company) of the item.
You're conflating income and property taxes. What your describing in your previous posts is an income tax, which is the tax paid on the net income associated with an asset. However, you have to dispose of the asset to pay that tax. Until then the asset is property and it's only subject to property tax.
Normal accounting disclaimer applies. Definitely get an accountant and don't take accounting advice from the internet.
Most jurisdictions don't have the asset taxes you're describing. Some do, in which case inventories cost extra to hold each and every year.
>"You're conflating income and property taxes. What your describing in your previous posts is an income tax, which is the tax paid on the net income associated with an asset. However, you have to dispose of the asset to pay that tax. Until then the asset is property and it's only subject to property tax."
No, when a company uses its revenues to buy stuff and hold onto it, the government counts the value of that stuff as profits, and taxes are paid on that 'income' in the fiscal year of acquisition. The assets are then gradually depreciated (with the depreciation treated as a loss). If the assets are sold off, income taxes are assessed against sales in excess of the depreciated value, and losses are assessed (along with corresponding write-offs) against sale values below the depreciated value of the asset.
>"Normal accounting disclaimer applies. Definitely get an accountant and don't take accounting advice from the internet. "
I completely agree with this, especially since tax law varies widely, even between Canada and the USA.
This is not quite right, though it is mostly correct in describing depreciation. When you purchase a depreciating asset it has a book value that is depreciated over time. That book value is not counted as income and definitely not as net income (profits), though it will appear with other assets on the balance sheet. You've essentially converted one type of asset to another, there is no gain or loss there to tax.
For depreciating assets, the depreciation is deductible because it represents a loss in value of the asset. In general, this can be taken when the depreciation is realized. If you dispose of the asset you pay taxes based on the deprecated value, like you've described.
It's important to realize that corporate taxes are almost exclusively on net income, that being the money left over after the business has done all of it's financial activities.
“The 100-day reports make clear: more secure and resilient supply chains are essential to our national security, our economic security, and our technological leadership. The work of strengthening America’s critical supply chains will require sustained focus and investment.”
https://www.whitehouse.gov/wp-content/uploads/2021/06/100-da...
> Please no. The last thing we need is another bunch of half-baked regulations passed because a bunch of people who don't know what they're talking about demanded "something must be done!" in response to some temporary crisis. COVID will subside eventually, dysfunctional regulations have much greater staying power.
Pick your poison: either capital decides to build a sufficiently resilient supply chain or they get subjected to "half-baked regulations." They're not going to do the former, so say hello to the latter.
Do nothing and profiteer during the next crisis is not an option capital should be permitted to take.
ERCOT also didn’t know it was shedding natural gas compressor station circuits when performing rotating blackouts, causing a cascading failure when natural gas generators were starved of fuel. That’s just plain ol’ incompetence.
And despite all that incompetence, they were much better at maintaining the power supply than north Georgia. That would seem to imply that the system is even better than the performance gap would indicate.
That would just make things worse.
I don't know why people demand even more "free market" when governments spent 40 years giving more power to the private sector.