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Philip Sugar's avatar

The solution. No tariffs $20k per U.S. worker tax credit

Costs of Unemployed/Underemployed U.S. Citizens

Unemployed U.S. citizens cost the government billions annually. Here’s the breakdown:

Social Security Disability: $150 billion

Medicaid: $871 billion

Food Stamps: $120 billion

Welfare: $1,200 billion

Earned Income Tax Credit: $80 billion

Total Cost: $2.421 trillion

The Simple Math

Value of an Employed U.S. Worker: Approximately $20,000 per employee.

This includes taxes, healthcare, Social Security contributions, etc.

Proposed Policy Changes

Double the U.S. Tax Rate on Corporate Profits: Increase from 25% to 50%.

Tariffs for Compliance Only:

Apply tariffs solely to enforce EPA and OSHA standards (clean environment, safe workers).

Tariffs should match the compliance costs or mirror foreign tariffs.

Economic Impact Summary

Current Rules (Outsourcing Incentive):

Foreign Labor: Net profit = $600,000

U.S. Labor: Net profit = $300,000

Conclusion: Outsourcing is more profitable, encouraging job loss.

Proposed Rules (U.S. Worker Incentive):

Foreign Labor: Net profit = $300,000

U.S. Labor: Net profit = $320,000

Government Tax Revenue: Increases from $300,000 to $560,000

Conclusion: U.S. jobs become more attractive, bringing back employment.

Simplified Math Examples

Using Foreign Labor (Current Rules)

Item Amount

Sales $1,500,000

Labor (25 workers @ $20k) $500,000

SG&A $200,000

Gross Profit $800,000

Tax @ 25% $200,000

Net Profit $600,000

Using U.S. Labor (Current Rules)

Item Amount

Sales $1,500,000

Labor (12 workers @ $75k) $900,000

SG&A $200,000

Gross Profit $400,000

Tax @ 25% $100,000

Net Profit $300,000

Using Foreign Labor (Proposed Rules)

Item Amount

Sales $1,500,000

Labor (25 workers @ $20k) $500,000

SG&A $200,000

Gross Profit $800,000

Tax @ 50% $400,000

Compliance Tariff $100,000

Net Profit $300,000

Using U.S. Labor (Proposed Rules with Tax Credit)

Item Amount

Sales $1,500,000

Labor (12 workers @ $75k) $900,000

SG&A $200,000

Gross Profit $400,000

Tax Credit ($20k/worker) $240,000

Taxable Profit $160,000

Tax @ 50% $80,000

Net Profit $320,000

On Fri, Apr 4, 2025 at 8:19 AM Philip Sugar <philipsugar@gmail.com> wrote:

---------- Forwarded message ---------

From: Philip Sugar <philipsugar@gmail.com>

Date: Thu, Mar 20, 2025 at 5:47 PM

Subject: US Tax Structure

To: Philip Sugar <philipsugar@gmail.com>

I wrote the WSJ and Trump here is the huge cost. We have discussed. Format not great in text. You don’t need tariffs.

If you look unemployed US citizens cost in Billions

$150 Social Security Disability

$871 Medicaid

$120 Food Stamps

$1,200 Welfare

$80 Earned income tax credit

That is $2.421 Trillion for cost of U.S. workers unemployed/underemployed.

The simple math

Summary: Having an employee in the U.S. versus not is worth $20k an employee. They pay tax, healthcare, social security, etc.

Double the U.S. tax rate on corporate profits

Tariffs should only be for compliance. I.e. EPA and OSHA rules. We need a clean environment and safe workers show your costs and we provide a tariff for only those. Or a tariff equal to yours.

Summary:

Under current rules in my example if I use foreign labor I make $600k versus $300k using U.S. workers. It is a no brainer to outsource jobs

Under my rules: I make $300k foreign workers, $320k U.S. workers

That will bring back jobs

AND the U.S. government makes $560k of tax versus $300k of tax

Simplified math:

Using Foreign Labor

Sales: $1,500,000

Labor $500,000

(25 workers at $20k)

SG&A. $200,000

Gross Profit: $800,000

Tax @25%. $200,000

Net Profit: $600,000

Using US Labor

Sales: $1,500,000

Labor $900,000

(12 workers at $75k. More productive)

SG&A. $200,000

Gross Profit: $400,000

Tax @25%. $100,000

Net Profit: $300,000

UNDER US WORKER TAX CREDIT

Using Foreign Labor

Sales: $1,500,000

Labor $500,000

(25 workers at $20k)

SG&A. $200,000

Gross Profit: $800,000

Tax @50%. $400,000

Compliance Tariff: $100.000

Net Profit: $300,000

Using US Labor

Sales: $1,500,000

Labor $900,000

(12 workers at $75k. More productive)

SG&A. $200,000

Gross Profit: $400,000

Tax Credit: $240,000. $20k Per worker

Taxable Profit: $160,000

Tax @50% $80,000

Net Profit: $320,000

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Brendan Cravitz's avatar

Appreciate this perspective, Brian.

At Azabu Foods, our model depends on cross-border collaboration, sourcing high-quality Japanese and producing our flagship product in Japan while building everything else here in the US. Policies like this don’t just disrupt logistics, they undercut the creativity and innovation driving new food brands forward.

All my startup friends in the CPG space importing from Asia, especially Japan, are definitely scrambling even more right now.

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