Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[StealthP3D]

Why? Neither violates any laws.

There's already USA only tax provisions for example. Tons of them. They're a major reason why foreign car makers build factories here.

This was discussed here in some depth just a couple days ago, nobody was able to present any legal basis for either thing not being able to stand in court.

Trade agreements. It's subsidizing domestic goods. This leads to challenges in courts, tariffs and trade wars. We want fair access to markets in other countries that are unsubsidized too. You can't have your cake and eat it too.

 

[Knightshade]

USA thing yeah, unions? The GOP will go nuclear. The Dems will not waste that much political capital on something so trivial.

They need 0 GOP votes to pass it- and they're not going to get any no matter what is in it anyway, so that's irrelevant.

We've seen this show before. Multiple times. We know how it turns out.

This is a re-run of the ACA. Or the last stimulus bill.

Weeks of asking for GOP input in order to put on a show of bipartisanship even though everyone knows the GOP has no interest in ever actually voting for it regardless of content, then the democrats pass it entirely on their own with every single republican that votes voting no in both houses.

That doesn't mean stuff in it won't change- a few democratic senators may require further bribing- but how anyone in the GOP plans to vote has nothing, at all, to do with the outcome.

 

[Knightshade]

Trade agreements. It's subsidizing domestic goods. This leads to challenges in courts, tariffs and trade wars.

It's offering a tax credit to the buyer of goods made here.

Even by foreign companies.

There's already a ton of tax benefits for goods made in the US rather than imports--- and have been for decades-- and they stand up just fine in court.

Why do you think all the foreign car makers build factories here?

In fact by 2018 there were more foreign car companies building cars in the US than domestic car companies.

Insult To Injury: Foreign Manufacturers Now Making More Cars In U.S. Than U.S. Companies

Foreign manufacturers are now making more cars and trucks in the United States than General Motors, Ford and all other U.S. companies, a first. If you live in Michigan, that's probably not good news.If you live in Alabama, it is almost certainly good news. And if you live in the White House?

www.forbes.com

And all of them would have access to the $2500 extra for building EVs here too.

There's no "war" there.

So there's no basis for a "court challenge" for more of the same thing we already do, and have done, for a long time.


If you still think there is something that'd be illegal about a tax credit for domestic made goods purchases though- same question posted to others on the union thing.

Please cite what specific law you think would be the basis for the challenge. Or what specific clause in a specific trade agreement you think this violates.

 

[willow_hiller]

Please cite what specific law you think would be the basis for the challenge. Or what specific clause in a specific trade agreement you think this violates.

(spoiler: there isn't one)

It pretty clearly counts as a prohibited subsidy under World Trade Organization rules. http://www.trade.gov/trade-guide-wto-subsidies

A subsidy has a very particular meaning under the Subsidies Agreement and U.S. law (Title VII of the Tariff Act of 1930). A subsidy is defined as a “financial contribution” by a government which provides a benefit. The forms that a subsidy can take include:

- foregone government revenue (e.g., a tax credit);

A subsidy granted by a WTO member government is prohibited by the Subsidies Agreement if it is contingent, in law or in fact, on export performance, or on the use of domestic over imported goods.

But the USA has a long history of asking for forgiveness rather than permission when it comes to violating WTO rules.

 

[Knightshade]

It pretty clearly counts as a prohibited subsidy under World Trade Organization rules. http://www.trade.gov/trade-guide-wto-subsidies

Doesn't appear to be.

For one:

Under the Agreement, actions can only be taken against subsidies that are “specific.” A specific subsidy is one that is only given to one company, or to a special group of companies.

The subsidy is not given to any company.

It's a personal tax credit to the buyer not the company selling.

Nothing goes to any company at all.

And anybody who files US taxes is eligible to get it.

So it already fails the test for the type of subsidy against which action can be taken.

But the USA has a long history of asking for forgiveness rather than permission when it comes to violating WTO rules.

I mean, yes there's that too... but doesn't appear to even rise to that standard.

 

[Causalien]

Hey guys, am back. The Pandemic has caused quite a toll and opened my eyes on a lot of ppl.

It's another period of disillusionment for me. And showed me how many are still hating on tesla. Especially the rabid woke left.

 

[JRP3]

And showed me how many are still hating on tesla. Especially the rabid woke left.

They mostly aren't the entrenched industries being disrupted and funding the endless FUD campaign, just pawns in the game. Don't be distracted by the bit players.

 

[CLK350]

Remembering basic (first principles) ideas, on the topic of the Union clause .. Ex-UAW President Williams sentenced to 21 months in union corruption probe - And if not comedy, does this get classified as tragicomedy?

And in a lighter vein (but just as right) NOTA Union - An Organization of Transformative Automakers

 

[willow_hiller]

The subsidy is not given to any company.

It's a personal tax credit to the buyer not the company selling.

Nothing goes to any company at all.

And anybody who files US taxes is eligible to get it.

So it already fails the test for the type of subsidy against which action can be taken.

I think you're interpreting the word "given" too narrowly. As the Subsidy Agreement states, a subsidy can be any financial contribution by a government which provides a benefit. It doesn't say it must be a financial contribution to the corporation benefitting.

The US government could pay for advertisements for US-made products, and that would be a prohibited subsidy, even though the contribution itself goes to a TV network.

 

[Knightshade]

I think you're interpreting the word "given" too narrowly. As the Subsidy Agreement states, a subsidy can be any financial contribution by a government which provides a benefit. It doesn't say it must be a financial contribution to the corporation benefitting.

The US government could pay for advertisements for US-made products, and that would be a prohibited subsidy, even though the contribution itself goes to a TV network.

import tariffs on cars already vary WILDLY from one WTO member to the next.

The EUs import tariffs are 4 times higher than the US. Chinas are 10 times higher.

Does that not unfairly benefit domestic manufacturing in some WTO nations more than others?


Heck- compare Tesla making a car in China- versus making THE SAME MODEL CAR in the US, then importing into China. One is hit with a HEFTY tariff- the other is not. Seems fine by the WTO.


Meanwhile the US tariff on light duty trucks is -ten times higher- than the US duty on cars.

Infamously this 25% truck tariff was retaliation for the EU imposing a high one on...US chicken exports.

But it means when Toyota builds a truck in the US... they get a significant cost benefit rather than importing it from Japan.

It's over 50 years later and the WTO seems just fine with this arrangement HEAVILY favoring domestic production of vehicles (and the wildly different ones across member nations on passenger cars too).


For that matter, going back to trade.gov as you did-

https://www.trade.gov/import-tariffs-fees-overview

It mentions products made primarily in the US may qualify for duty free entry from over 20 nations (while goods from all the other WTO nations would not)

So again- non-equal treatment of domestic made vs foreign made goods has been in place for generations, and the WTO seems fine with it.

 

[TheTalkingMule]

Considering the entire EV picture is going to be Tesla and a bunch of Chinese manufacturers, it'll be perfectly acceptable to inch more towards a Chinese style domestic EV subsidy.

And this union provision is going absolutely nowhere, it's just payback to make the UAW seem relevant. Zero chance it makes it through. It plays the dual role of payback for votes and a token cut Biden can point to when Republicans start asking for serious trimming.

 

[willow_hiller]

So again- non-equal treatment of domestic made vs foreign made goods has been in place for generations, and the WTO seems fine with it.

Here's the exact language of that Title 7 of the Tariff Act of 1930: https://enforcement.trade.gov/esel/newlaw.htm

(B) Subsidy described. A subsidy is described in this paragraph in the case in which an authority

(i) provides a financial contribution,

(ii) provides any form of income or price support within the meaning of Article XVI of the GATT 1994, or

(iii) makes a payment to a funding mechanism to provide a financial contribution, or entrusts or directs a private entity to make a financial contribution, if providing the contribution would normally be vested in the government and the practice does not differ in substance from practices normally followed by governments,

to a person and a benefit is thereby conferred. For purposes of this paragraph and paragraphs (5A) and (5B), the term "authority" means a government of a
country or any public entity within the territory of the country.

(C) Other factors. The determination of whether a subsidy exists shall be made without regard to whether the recipient of the subsidy is publicly or
privately owned and without regard to whether the subsidy is provided directly or indirectly on the manufacture, production, or export of merchandise. The administering authority is not required to consider the effect of the subsidy in determining whether a subsidy exists under this paragraph.

As you say, traditional practices and case law will give context to the plain text, but right at the end there it does say that subsidies can be direct or indirect. And it's hard to argue that a "Made-in-America" tax credit is not an indirect price support for American goods to the detriment of foreign ones.

 

[Knightshade]

Here's the exact language of that Title 7 of the Tariff Act of 1930: https://enforcement.trade.gov/esel/newlaw.htm



As you say, traditional practices and case law will give context to the plain text, but right at the end there it does say that subsidies can be direct or indirect. And it's hard to argue that a "Made-in-America" tax credit is not an indirect price support for American goods to the detriment of foreign ones.

Let's try and boil it down.


How is "buyers of US made cars get a tax credit and buyers of imported cars do not" an illegal price support for American goods to the detriment of foreign ones.- but "Imported trucks pay a 25% tariff and US made trucks do not" isn't?

That second one has remained true and legal for 57 years so far.


Or for that matter how are either different from "Cars imported to China pay a 25% tariff but China-made cars do not"? Which again is the current situation the WTO seems fine with.

 

[ZeApelido]

I'm drunk.

Is TSLA at $1000 yet?

 

[willow_hiller]

How is "buyers of US made cars get a tax credit and buyers of imported cars do not" not ok- but "Imported trucks pay a 25% tariff and US made trucks do not" just fine?

As far as I can tell, path dependency. It's that way because that's the way it's been.

But that doesn't mean new rules won't be challenged by WTO members.

 

[Chunky Jr.]

In case anyone was wondering, it looks to me like "Reaction Score" is equal to 2*Helpful + 2*Informative + Like + Love + Funny - Disagree. Playing with numbers in a spreadsheet, that's how it worked out for me

correction: it's 2*Helpful + 2*Informative + Like + Love + Funny - 2*Disagree

 

[Knightshade]

As far as I can tell, path dependency. It's that way because that's the way it's been.

But that doesn't mean new rules won't be challenged by WTO members.

I suppose they might try... though I don't think much of the case given the myriad examples, of which I mentioned only a few of, where the WTO seems fine with this kind of favoring-domestic-production thing.

And not entirely sure by whom. All the major foreign car makers in the US market already produce domestically in the US- so they'd also get to benefit from the credit.

 

[Prunesquallor]

https://twitter.com/x/status/1398451449105846277

Serious question. Have you ever had a drone crash on their property? Can you knock on the door to get it back?

 

[Prunesquallor]

I'm drunk.

Is TSLA at $1000 yet?

. Only a three-martini dinner, so I’ll settle for $901.

 

[Prunesquallor]

correction: it's 2*Helpful + 2*Informative + Like + Love + Funny - 2*Disagree

How'd you figure it out? Seems like more unknowns than equations.