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Humanscale CEO: Tax Laws Kill Manufacturers

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  • Description

    Humanscale CEO Bob King argues the current tax system hinders growth.

  • Duration 3:28
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This country off killing jobs because they specifically take a -- more from companies that high a lot of people.

Like manufacturers.

So joining the company now is Bob king he's the Chief Executive Officer all of human scale -- company makes high end office furniture.

Bob welcome to the program thank -- could be here all right you employ a lot of people.

Are you say that the tax system is against you because you employ people and you grow explain yourself.

Well the simple fact is that only growth companies.

Create jobs right -- we want -- tax system that allows these -- to thrive.

The tax code in the United States does exactly the opposite.

Because what I call it the growth penalties electoral map -- applies to you you're a growth company.

How it held just -- tax system look against you as you grow.

The -- their growth penalty.

As I call it is particularly devastating to growing manufacturers.

In any exist because we have things that we spend a lot of money on -- inventory for example.

It's not tax deductible.

On the other hand we have a lot of money that's owed to us accounts receivable.

That we pay tax on -- if we had in our pockets.

That creates a situation where if you have a -- that's growing it's -- 25% a year it's effective tax rate.

Will be about a 130%.

Of its cash profits are and the faster grows the higher that effective tax rate is okay now tell me about and.

-- -- -- If you employ one extra person you've got to pay payroll taxes for the upfront -- -- -- I bath.

I did -- you go to pay.

Then you have to pay more in taxes but compare that to say -- FaceBook.

Which employs very very few people and they grow like crazy but that doesn't have -- tax book is that an accurate comparison.

Well they have to pay they have -- unemployment tax and that sort of thing when they hire individuals but that what I was saying about growth the faster company grows.

The more devastating this growth penalty is -- The faster company grows to put it that another way is to say the faster company hires people faster so a company creates jobs.

The higher its effective tax rate can be.

It's effective tax rate we're talking again is could be as high as 100% or even 200% of cash profits OK that's not a speed bump to job creation.

That's a brick wall it stops job creation in its tracks.

So companies that you say we should look to that are successful.

Are these Internet driven companies because they don't have what the overhead to inventory that you do.

They're not affected by this growth penalty that's in our tax code because they don't have things like inventory.

Capital equipment they they don't even have very often and accounts receivable.

Manufacturers have these things look how successful these Internet companies are in and finance startups are.

We can do the same thing -- with manufacturers if we -- on burden them from this growth penalty.

And that can be done relatively easily I wish you luck getting through to the politicians to make the changes that are required above king with human scale was the name of the company correct humans down if you wanna see more information about this you can go to humans Telecom and -- have a we have a -- just describe just describing this.

But I would -- The politicians and can do this just by allowing -- to pay tax.

On a cash basis good -- good -- and they don't have to argue about what the tax rate is what -- Balkan -- there thanks so much for being with us.

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