I actually prefer this solution:
Under FairTax, the tax disadvantages of American-based companies operating in the USA vanish, and we could become just about the world's friendliest place to conduct business.
This poster's proposed solution: replace all US taxation with one single, across the board 100% import tariff.
Supporting datapoint: As of 2009, the monetary value of our imports, was virtually IDENTICAL, to the entire combined tax receipts of the United States government.
Within one single percentage point.
So. Rather than all that money being collected from people who produce, who work, and who succeed. Let's collect the same amount - from those who send our jobs elsewhere.
Via one, single, simple across the board - 100% import tariff on everything imported to the United States of America.
No exceptions. No exemptions. Government completely out of the "picking winners" job.
Eliminate the IRS. Eliminate "progressive" taxation. Eliminate capital gains taxes.
Fund the entire federal government, on one single, global import tariff.
It's how America originally operated, and became the greatest nation in history.
Let's do it again.
Before we cease to exist, as a nation...
Time is short. We need to stop finger-pointing, stop stalling, stop finding "reasons" for the current mess.
And fix it! Let's start making America STRONGER for a change.
Sounds like the same thinking that lead to Smoot-Hawley. How’d that work out?
THen, explore taxing options for the fed...
IF there even is a federal reserve mugging the public, after that..
“And fix it! Let’s start making America STRONGER for a change.”
ahhh yes, the Albanian solution (during the Cold War).
The thing I like about FR is all the geniuses that post here.
I actually prefer this solution:
Under FairTax, the tax disadvantages of American-based companies operating in the USA vanish, and we could become just about the world's friendliest place to conduct business.
Another datapoint. The United States is the signatory to the Global Agreement on Trades and Tariffs (GATT). I’m no expert on GATT, but I understand one thing it prevents us from doing is imposing a tariff without “cause.” Said cause must be to match somebody else’s tariff on something we’re exporting. So, when Bush 2 put a tariff on imported steel to gain votes in Pennsylvania, we were taken to a foreign court and we lost the case. This allowed our trading partners to impose tariffs on our exports. They politically targeted other votes Bush 2 needed, Wisconsin cheese was one of those items hit. The economic and political damage was so great the Bush 2 had to concede; it was a huge embarrassment. It also pointed out the danger of signing treaties and how our sovereignty has been affected.
The current administration is trying to sign us up to another such treaty, the UN small arms ban, which will again take us to foreign court, this time to force the government to take away our second amendment rights. And, we’d be “forced” to concede to foreign court imposed second amendment limitations or we’d suffer similar trade damage. Americans would either give up their guns or give up their trade. Either is a win for the Obama administration.
Similarly, we have alcohol in our gasoline because we were taken to a foreign court over farm subsidies. Congress had to cancel direct payments to farmers because of the ruling or face multiple crippling trade embargoes. Congress turned around and came up with a green initiative to pay farmers to grow grains to create alcohol, which a lose/lose for everybody except giant agribusiness.
Looking at top level numbers without looking at the big picture leads to simple-sounding, but impossible solutions.
Here are my picks for the best turnaround scenarios. (Again, simple-sounding.)
1. Tort reform. Make the loser pay the winner’s legal bills. Virtually every decision made by business today starts with; what is our liability. I’ve been investing for 30 years. I can’t count the number of frivolous lawsuits that have been brought against companies where I own stock.
2. The company I work for must deal with federal, state, county and city EPA offices. Every company location has at least one full time employee who does nothing else. Any of these offices can shut us down on the order of any local inspector. That severely limits what we can even think about doing. Do away with the EPA’s. Start over from scratch.
3. The attitude of federal and local government is that every company is a cash cow. Simply do away with most regulatory and permitting bodies. Start over from scratch.
That’s my start on fixing the economy.
We have a spending problem, not a revenue problem
That's one of the biggest problems with the FairTax. It doesn't help spending.
Bringing the government the same amount of revenue as the current system doesn't help for two reasons.
A lot of spending needs to be cut entirely.
A lot of what remains needs to be spent at the state and local level, without giving Washington DC bureaucrats the opportunity to skim their "cut" off the top.
We don't need an alternate revenue stream equal to the current revenue stream.
We need less government! Especially at the federal level.
Perfect - a massive tax increase during a recession. We can tax our way to prosperity! And of course the rest of the world will keep thier as they are.
Your idea will bankrupt the US, in the sense that because of the Laffer curve, nobody will import or export: thus, very little tax receipts. Of course, the necessary response will be a tax on all exports, so you can effectively consider foreign trade to be dead, including for oil.
So how long do you think the public and the government would be OK now with no other sources of tax revenue? Not very long.
This idea would send us Pre-industrial revolution. Don’t also forget it was tariffs that caused the Civil War.
Protectionism is stupid.
Protectionism does not work.
Talk about a destructive idea. This idea only works if the assumption is made that American industry is ready to flip the switch and overnight, take the place of foreign imports. It isn’t. Even companies that manufacture in the US have heavy dependence on foreign supplies. This would increase the expenses drastically for these domestic businesses. It could take years for new domestic companies to come in and take the place of foreign manufacturers, and by that time, you would have greatly inflated costs to the point it would be potentially not worthwhile for a company to consider starting up.
In addition, there are more items than I can count that aren’t even allowed to be manufactured in the US due to EPA and other rules. A lot of batteries for example.
This idea has been tried in one form or other before (Smoot-Hawley for example) and has never worked. It is a feel-good idea only.
You are certifiable.
In 2011, with communications and transportation the way that it is, a 100% tariff would result in a world wide depression that would make 1929 look like boom years, and we wouldn't be immune.
What about the multi-billions that we owe to China, shall we just default and declare war on them?
It's good to know that a deep economic thinker like you says this would produce the opposite result of Smoot-Hawley.
The worst part of this whole vanity post, is that you are actually serious.
“When goods do not cross borders, soldiers will.”
Frederic Bastiat
Including oil?
The problem isn’t imports, its “unfair trade” with China, rediculous regulations and union demands, imported poverty, world welfare and the destruction of education. Simply passing a 100% tarrif on all imports would hurt everybody starting with the little guy.
Wow...that’s an asinine idea.
So, if I follow, it’s basically zero sum. At least at first.
Once domestic manufacturing kicks in tax revenues drop.
About 20 years too late. When US companies started sending production overseas, that’s when they should have been assessed with a special tax equal to three to five years’ payroll for the closed plants. That money should have been impounded (i.e., NOT whizzed away by the congress) as an economic adjustment cushion to absorb the destruction of the US economy.
The horses — and the mules, and the hay, and the tools — have been stolen; no need to worry about buying a lock for the barn door.
There are now more government employee union members than private sector union members in the U.S.
GOVERNMENT EMPLOYEE UNIONS