08-03-2002 23:07									#421
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God, I'm taking a look at ef's '95/'00 data and its a freaking () minefield due to the US population revisions.

OECD seems to do some "tweening" on the population figures, since their estimates of 1995 is 266.4M versus the Census Bureau's estimate for 1995 is 262.7M using the 1990 Census as a base.

There is a lot of things going on when the EU-15 numbers '95 v. '00 are disaggregated. Austria, Belgium, Germany, and France did poorly versus the US. Spain, the UK, Ireland, and the Netherlands all did well.

On an exchange rate basis, everybody got their hat handed to them, except Ireland, Mexico, the UK, Turkey, and central European countries. This would seem to make everybody feel like they're being left behind, when in actual fact, they're all treading water.

Last edited by DanS on 08-03-2002 at 23:24

	09-03-2002 00:43									#422
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DanS,

Might I call your attention to the notes at the bottom of my spreadsheet where I state "Population data is taken from the OECD labour force statistics, except for the USA which uses the latest estimates which I got at the BEA site." - According to the BEA their data for 1991-2000 "are consistent with the 2000 Census of Population".

The OECD is still using population estimates based on the 1990 census - I have used the BEA data as a proxy and whilst they are not exactly the same the difference before 1990 was around 70,000 (or 0.03%).

Looking at the difference between reported growth and the shares of the USA's GDP at PPP's in 1990-2000 it looks like the EU's growth was understated by around 0.4% a year - interestingly this is exactly the amount that the 'hedonic deflator' added to US growth between 1990-97 (data is not available for the old measure from 1998 onwards).


Indeed if you adjust GDP per person for PPP's and the economic cycle (using the OECD's estimates of the output gap) then the Euro Zone caught up faster during the 1990's than it did during the 1980's:

USA's 'Trend' GDP per head at PPP's as % of Euro Zone's:

1980: 158%
1990: 151%
2000: 140%

Last edited by el freako on 09-03-2002 at 00:52

	09-03-2002 00:56									#423
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Oh, OK. I was thinking that the note just referred to the 2000 population for the US, not the 1995 figure.

Let me look at the numbers in that light.

	09-03-2002 01:25									#424
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Here's a link to the file.

http://www.schmelzer.org/ef/GDP%20d...0and%202000.xls

	09-03-2002 02:53									#425
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Now, that’s one nice datasheet.

Re the productivity data, it’s very tempting for me to dismiss them due lack of credibility, but if take them at face-value I’m wondering the following: if it’s possible to maintain that rate of productivity growth without similarly high investment growth, doesn’t that prove they’ve been wasting ahelluvalot of money the past few years? (sorry for taking the negative POV again )

	10-03-2002 22:34									#426
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Man, you Euros' penchant for taxes is really getting me down. I'm trying to export a product at $500 a pop to Europe. To an American, that's $510 including shipping/handling. To a German, however, that's $650. Add on top of that Dollar endaka and we've got a nasty situation.

Because the figure's so high, some potential German distributors want these (what I see as dishonest) business arrangements where they aren't charged too much for the hardware, but rather some nebulous "support" line item. Is this kind of arrangement common?

In the US, my whole chain of import, production and sales is tax-free. Europe is charging for value that wasn't added in Europe. What a load of pure, streaming BS.

Last edited by DanS on 10-03-2002 at 22:44

	11-03-2002 15:54									#427
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What are you talking about ? VAT ?

"To a German, however, that's $650."

Final consumer, or distributor ? Or Einfuhrumsatzsteuer at the importer ?

"In the US, my whole chain of import, production and sales is tax-free. Europe is charging for value that wasn't added in Europe. What a load of pure, streaming BS."

What, no sales taxes, nowhere ?

	11-03-2002 19:53									#428
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"What are you talking about ? VAT ?"

In Germany, 3% customs (reasonable) + 16% VAT (unreasonable), which is collected upon entry.

"Final consumer, or distributor ? Or Einfuhrumsatzsteuer at the importer ?"

Distributor.

"What, no sales taxes, nowhere ?"

On the whole, no. I import boards from Korea. No tax. Then I buy another board from California. No tax. After assembly, then shipping it to any customer in the US (ex-DC) is tax-free. I'm not ruling out the possibility that somebody in the chain might pay some small taxes on a component (in Korea?), but I know the bulk of it US-side is tax-free.

I slept on this. Yesterday I was pretty peeved that demand would be shot in places like Germany (I do about a 1/4 of my business in Germany!), but today I'm most concerned about the disparity in prices. Who do you think the German end-consumer is going to blame, when they see that they can get the board for $530 in the States, but over $700 in Europe? The government?

	11-03-2002 20:06									#429
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"On the whole, no. I import boards from Korea. No tax. Then I buy another board from California. No tax. After assembly, then shipping it to any customer in the US (ex-DC) is tax-free. I'm not ruling out the possibility that somebody in the chain might pay some small taxes on a component (in Korea?), but I know the bulk of it US-side is tax-free."

States with sales taxes ?

Anyway, the import-VAT will be deducted from the final-sale-VAT. First payment is from the importer, your distributor will be charged upon sale etc.

"Who do you think the German end-consumer is going to blame, when they see that they can get the board for $530 in the States, but over $700 in Europe? The government?"

Mostly an overvalued $. What "board" ?

	11-03-2002 20:22									#430
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"States with sales taxes ?"

Everybody has sales taxes, including DC. But sales tax doesn't apply when you ship things across state lines (or rather, collection is not enforced and nobody collects--been that way for the last couple hundred years). Since I haven't even sold a board to a DC customer, none of my sales have been subject to sales tax.

"Anyway, the import-VAT will be deducted from the final-sale-VAT."

Either way, the VAT is charged somewhere, which eventually creates the price disparity to end consumer.

"Mostly an overvalued $. What "board" ?"

People aren't going to blame an overvalued $. They can surf the internet and see that if they were in the US, they could get it drastically cheaper. I would not blame them for thinking that a US company is trying to stick it to them.

Re the board, it's the digital video input board that I talked about 3 or 4 months ago.

	11-03-2002 20:49									#431
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"Everybody has sales taxes, including DC. But sales tax doesn't apply when you ship things across state lines.... Since I haven't even sold a board to a DC customer, none of my sales have been subject to sales tax."

"Either way, the VAT is charged somewhere, which eventually creates the price disparity to end consumer."

I don't get the point. If you had a 16 % sales tax in US state X, it would be exactly the same for the end consumer.

That they are not enforced across state lines is funny. Just shows that the EU is overtaking you on economic integration.

" They can surf the internet and see that if they were in the US, they could get it drastically cheaper."

After calculating the euro price, 13.8 % cheaper for VAT effect, assuming zero US sales taxes.

	11-03-2002 20:54									#432
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"After calculating the euro price, 13.8 % cheaper for VAT effect, assuming zero US sales taxes."

Yes, 16% more expensive.

"If you had a 16 % sales tax in US state X, it would be exactly the same for the end consumer."

The point is as clear as the nose on my face. The end consumer will take a look at the advertised price in Germany and compare to the advertised price in the US and will start asking questions of me, not their governments.

	11-03-2002 20:59									#433
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"The end consumer will take a look at the advertised price in Germany and compare to the advertised price in the US and will start asking questions of me, not their governments."

You advertise a tax free price ?

Anyway, put up a net price "X +VAT".

That's the way Metro does it.

People know that VAT is on virtually everything, and are smart enough to make that little calculation. If US net price = D net price after currency conversion, that will be no problem.

	11-03-2002 21:02									#434
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"You advertise a tax free price ?"

Of course.

Re advertising the net price, that's impossible. My customers are not the end consumer. In the US, they will advertise the price at which they're selling the board to the American end consumer.

Once the Germans start comparison shopping, they'll readily see the difference.

Last edited by DanS on 11-03-2002 at 21:09

	11-03-2002 21:10									#435
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So what's the freakin' problem ?

You advertise it for 500 $ (+eventual sales taxes) or 560 ? (+eventual VAT).

If you are directly shipping to an end customer that has no VAT obligation, it's the end price anyway. Just as with your sales taxes intra-US, there is at least no enforcement of a VAT obligation of a non-EU business. There has been some discussion about closing this loophole esp for internet trade, but this is not the case yet AFAIK.

What advice did you get on that tax issue ?

	11-03-2002 21:12									#436
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You should really stop that cross-editing.

" Re advertising the net price, that's impossible. My customers are not the end consumer."

How is the distribution set up ?

"Once the Germans start comparison shopping, they'll readily see the difference."

Can they order at the US distributor ?

	11-03-2002 21:23									#437
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"How is the distribution set up ?"

I sell direct to home theater computer manufacturers and dealers. They then either integrate the product into their products, or they sell individual boards to the end consumers.

"Can they order at the US distributor ?"

Nothing's stopping them, but I think by and large a completed transaction is unlikely.

	11-03-2002 21:27									#438
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So, if a german customer sees the higher VAT price, he/she will:

- try to order directly
- ***** at the german resaler.

Where's your problem in this ?

"Nothing's stopping them, but I think by and large a completed transaction is unlikely."

Why ?

	11-03-2002 21:39									#439
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"Where's your problem in this ?"

Because the natural inclination on the Euro side is to try to avoid those taxes. Some have asked for a relationship where I provide, let's say, $50 in hardware (taxed) and $450 in support (not taxed). Of course, I decline because that would set up a price differential among even my European distributors. But I have no idea whether it would be legal or not--it does strike me as dishonest.

I've thought about having a forwarding agent in Ireland, which I don't think is subject to these taxes. (?)

	11-03-2002 21:44									#440
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"Why ?"

The American dealer would probably be disinclined to provide cross-border support. It would just be a hassle.

	11-03-2002 22:06									#441
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This sure is tedious. Roland, DanS's whole point is the tax difference. Don't get so wrapped around the axle.

	12-03-2002 13:13									#442
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GP: I'm only trying to figure out what the problem is and whether there is a solution to it. So far we are at the 4th possible problem if I have counted correctly...

Dan:

"Some have asked for a relationship where I provide, let's say, $50 in hardware (taxed) and $450 in support (not taxed)."

"Support" to the end customer ? Or the distributor ?

Looks like an odd construction, as the distributors' final sales price would be under VAT anyway. At first glance this makes only sense as it's easier to hide "support" than actual goods. Looks 100 % illegal.

"I've thought about having a forwarding agent in Ireland, which I don't think is subject to these taxes. (?)"

Ireland has VAT too (and a 21 %standard rate, I may add). And if the final sale is in Germany, you won't legally escape the german rate. IIRC your irish agent would just have an UID tax number for moving it on to Germany where VAT would be due.

	12-03-2002 13:28									#443
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Roland, is it that hard? He doesn't like that his product costs more in EU than in US becuase of the higher sales tax, VAT, excise, whatever.

	12-03-2002 19:55									#445
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GP: You know lawyers are trained to do unbelievably tedious tasks. Compared to what he usually does, this stuff is positively scintilating!

"Looks 100 % illegal."

Roland: Thank you--that was helpful. The nexus of the "problem" is no more complicated than GP describes. It's just the differential due to much higher taxes. This differential complicates my business relationships and screws up my demand response. And since there's no US taxes to complain about, it's my job as a reb-blooded American to complain about Europe's, where it impacts me.

""Support" to the end customer ? Or the distributor ?"

The distributor. It's totally bogus, IMO, so I just said that my lawyers wouldn't like it.

	12-03-2002 20:24									#446
	Help yourself to an AD-FREE life

What does everybody think about XM radio (XMSR)? This looks to me like one of the only bright spots in aerospace and communications, even though I would be looking for a deep discount before investing.

There's really not much else interesting in my screen. COMS is a hold.

	12-03-2002 23:57									#447
	Got spare money?

I don't approve of your screen watching. Better to buy an index fund. That exposes you to a reasonable risk/return. Investing in your business is good for more of a higher risk/return position with the advantage that here you have insider information.

	13-03-2002 02:04									#448
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I'm coming to find that you're at least partially correct, GP. Not that watching my screen has been unprofitable. Rather, it hasn't suggested enough clearly interesting candidates for me. So you come out modifying your screen and spending more time separating the wheat from the chaffe at the riskier end.

I am loathe to modify my screen too much, because it gets further away from my element. Instead of taking on risk that I might not clearly understand, it seems worthwhile to round out the buying with an index fund or two.

Re my business, you assume that I would be a buyer. You learn from the mistakes of your father. My father lost his objectivity and assumed way too much risk in one of the riskiest businesses available (wildcatting). Because of this, I view any money I put into my business as an allowance for things I like to do or areas I would like to learn more about. I can't even bring myself to label it a speculation, much less an investment.

	13-03-2002 02:57									#449
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If you are a stock picker, the odds are against you. Why not compile a portfolio of:

-index funds

-personal business ventures

Hold the index funds until you retire. The personal business ventures you can get in/out depending on your lifestyle and your knowledge of their value.

	13-03-2002 04:28									#450
	Index Funds Inflate your Upload Space

Unless you are dollar cost averaging, I would recommend buying iShares rather than index funds. You have more control of tax consequences and with the exception of Vanguard (who are comparable), you can't beat their low management fees.