Monday, May 9, 2011

China's Rising Wages Propel U.S. Prices .

From WSJ:

During China's 30 years of economic growth, hundreds of millions of factory and urban jobs soaked up surplus rural farm labor. In the past three or four years, he says, that extra labor has been exhausted.

Many analysts predict that China's vast labor force will begin declining in the next year or two, the result of family-planning policies. Others say there's already a shortage of the most active members of the factory floor, workers aged 15 to 34. That group has been steadily declining since 2007, according to Jun Ma, Deutsche Bank's chief economist for Greater China. A shrinking work force will need higher salaries to support an expanding population of elderly.

Plans for Slashing Corporate Taxes Worry Some Firms .

From WSJ:

Under the current thinking, Treasury officials would propose lowering the U.S. corporate rate from the current 35%, among the world's highest, to the upper 20s.

To offset the lost revenue that would come with a major rate reduction, the plan would likely call for reducing or eliminating major business deductions, such as for accelerated depreciation.

But in addition, administration officials have been considering ideas that could result in different tax treatment and possibly higher taxes for some large businesses that are organized as small businesses, according to people familiar with the situation. In particular, small-business representatives worry that the administration will seek to force the largest of those businesses to pay corporate taxes in addition to what they pay now.