Ford spending $1.6 billion to build four factories in China


http://www.bloomberg.com/news/2011-08-10/ford-says-it-s-feeling-pricing-pressure-as-china-market-slows.html

The article above is about the slowing down of the auto market in China but still Ford expects growth of its China sales to be between 5 and 10% annually during the next 5 years.

But that is not my subject here. And certainly I do not want to demonize Ford.

My point is the following: Ford made a decision to invest capital in China. We will offer Ford zero tax rate in New Jersey. If they come and set up shop substantially, their stock dividend will also receive VIP treatment. If they do not set up shop in New Jersey, then the dividend that they pay to their investors – except for retirement accounts and those under a threshold income – will be treated unfavorably in the New Jersey tax code. Corporations with operations in New Jersey would be provided with a separate ID number by New Jersey (now we use the same U.S. ID #.)

Of course some major investors could decide to move out of New Jersey in the event that such reforms happen. That is a risk we must take. The tax on dividend of corporations that do not operate in New Jersey should be prudently higher but not punishingly higher. We would call the latter the regular tax rate and that applied to dividend of corporations operating in New Jersey the preferred tax rate.

The decision to invest in China made by Ford is simply a business decision. Our decision to implement a tax policy to promote investment in  the territorial United States (New Jersey in this case) would be a decision of simple good governance; not a reprisal.

Photo above is from Wikipedia and it is a Ford Model T, circa 1911.

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