Replies

"How come foreigners can outsource to us and do well selling here at the same time that many American corporations say that they must move production off shore and import the goods to remain competitive?"

A big part of the answer is our tax system. Because of the way corporate income and payroll taxes (not to mention the associated high compliance costs)get rolled up into our production costs at multiple levels, our manufactured goods carry a substantial hidden tax burden that must be recaptured via the pricing mechanism. That is true whether the goods are sold domestically or internationally. If sold domestically, they compete against imports which in many cases have had VAT taxes removed at the border. If sold into a VAT country, our goods have that country's VAT levied when brought across the border in many cases.

IOW, US goods sold here have 1 country's taxes included in their final price and they compete against imports having relatively negligible tax burden. US goods sold in many other countries have 2 countries' tax burdens included and they are competing against goods with only 1 country's tax included. In both cases, the advantage goes to the US competitor.

That is why it is so important to pass the FairTax so that we can put US goods on a level playing field with foreign competition as much as possible, at least with respect to the tax system. With globalization sweeping across the planet, it is absolutely essential.

If sold domestically, they compete against imports which in many cases have had VAT taxes removed at the border. If sold into a VAT country, our goods have that country's VAT levied when brought across the border in many cases.

That is why USA needs to change tax system into VAT.

Second is to introduce national single payer system to relieve employers from the crippling burden and help workers to be more mobile and secure.

The third is to provide free full (tuition/room/board, no means test)scholarships for better 50% of students based on competition exams. This will enable American graduates to compete on the job market without burden of debt to pay.

RE: "US goods sold in many other countries have 2 countries' tax burdens included"

Thank you for your answer but I am only concerned about U.S. goods produced offshore and imported for sale here. I am not sure that you addressed that. If you did then it went over my head and I will revisit your reply. Thanks.

Let me just jump to the reason for my question.

Most "free traders" attempt to deflect arguments against sending production offshore and importing the finished product to sell to the American public by pointing to "insourcing."

"Look how many jobs Americans get from insourcing," they argue. "Other countries outsource to us. Outsourcing offshore is good," they triumphantly declare.

Yes indeed it is -- if the American companies were selling over there and not importing the goods for sale here.

Besides, if foreigners can do it here (insourcing) why can't those American companies do it.

True free trade has American companies producing and selling over there.

But "free trade" IMO is transferring technology, wealth, and production to developing countries in exchange for "cheap" labor. The goods are then exported to America for sale.

Intellectual property gets stolen and soon production shifts to foreign (as in Chi-com) enterprises that elbow American companies out of the way. They then become the exporters. IMO. Not good.