Ok, I know that I don’t generally use my blog to discuss politics or anything overly controversial, but the more I see and the more I come to understand, the more I realize that this country is in danger of becoming obsolete and completely dependent on other countries for our quality of life. That is not a good thing, at least not for this country. In order for our country to survive and thrive, we have got to do a better job at buying our own products. But how can we with the prices being cheaper everywhere but here? How can we when we don’t manufacture hardly anything in this country any more? How do we become a manufacturing country again rather than just a consumer country?
I believe I have the answer. I know I am not the first to come up with this answer, but this makes too much sense not to put it our there again. It all comes down to our tax system. Let me show you what I mean:
In this country, according to the Tax Policy Center of the Urban Institute and Brookings Institution, we collect approximately $2.03 trillian a year from Income and payroll (Social security, medicare) taxes. It is 81% of all income collected by the federal government. That money is then used to pay for federal programs, jobs, military ect. I think we could bring in more than this amount to the government where no programs would have to be cut all the while encouraging Americans to buy and produce American goods. As demand rises for more American goods, companies would have to start manufacturing in America as well to meet the demand. How would this work? Like this:
Get rid of income and payroll taxes, and implement a nationwide sales tax. Crazy you say? Think again. With a nationwide sales tax, we cause people to only be taxed on their spending habits, not on how hard they work or how much money they make. Nay sayers will state that this would unfairly tax the rich, but that is a loose argument at best. Just because you make more money than someone else does not mean you have to spend more than anyone else. If you choose to, then pay the taxes and enjoy the luxury, and be proud that you just helped contribute to your countries well being. That is the political side of it. The economic side of it is this: You set a different sales tax level on imported products versus domestic products. For instance:
Our Gross Domestic Product is approximately $14.7 trillion. Our imported products come in around $2.3 trillion. If we taxed GDP at 15% ($2.2 Trillion) and imports at 20% (0.46 Trillion), we could not only trend American’s at buying American products, we could also earn for our government a federal income of $2.6 Trillion. That is $0.5 trillion more than we currently collect in income and payroll taxes.
As more people buy American made products, more income would come into our country’s coffers. As more American companies begin opening more manufacturing facilities, more Americans would be able to find jobs. The more people working in this country, the less would be dependent on this country for financial help and the more that would be buying products in this country forcing the country to grow economically. Less money out of the coffers, more in. Even those who work in this country illegally, getting payed under the table would be contributing to the national coffers everytime they spent their money.
This addresses so many issues at once:
1. Everyone pays their share. No loopholes, no federal tax breaks for large corporations, no tax shelters to sheild the wealthiest of americans from paying their fair share. Everyone pays based on how they spend.
2. Noone goes to jail because they can’t afford to pay their income taxes. The IRS could spend its time accounting for sales tax and not targetting American citizens who either can’t grasp the current tax system or simply can’t afford to pay into it.
3. American products are given the edge they need to be competitive at the lower tax rate, making them more desirable to the American populace.
4. Products become more safe with less chance of having harmful shortcuts due to more products being subject to federal safety regulations such as the prohibition of lead based paints, or inspections that would prevent sawdust breakpads from making their way into our cars, etc.
5. America starts to manufacture again, bringing in jobs, boosting revenues of the states, giving American’s a sense of purpose and pride that has faded heavily over the last 50 years making this country becomes the land of opportunity envisioned by our forefathers.
6. We give ourselves the ability to become innovative. With more products being made here, we will need to innovate to make these products better and imporve on the processes themselves of making the products. As our products become better and more advanced, they will also become more appealing to nations outside of our borders thus boosting our own exports.
7. Social Security remains funded due to an influx of additional income to the federal government. Our elderly remain protected. Incidentally, this also removes the ability for politicians to use scare tactics regarding social security as a means to get elected. They might actually have to exhibit some merit.
8. If there is an excess collected, part could be put into an Emergency fund for natural disasters and the rest could be divided back evenly amongst the citizens as a form of stimulus or just as a simple gratitude.
9. America becomes less dependent on foreign nations and therefor less succeptible to blackmail and extortion by these countries that could hold our needed goods as political capital. Afterall, these other nations do not have our Country’s best interest at heart, they have their own, as it should be.
There will be arguments of course regarding foreign policy. If we cut down on our imports, we will lose out on our exports. To these folks I say look at the numbers. We operate in a trade deficit. Right now, we import a half a trillion dollars more than we export. As the import number drops, it is possible the export will drop as well, but the deficit will either remain the same or shrink in the process. If we stopped all imports and exports, we would actually be ahead by half a trillion dollars, so the arugment regarding exports is pretty much moot.
What about the political ramifications of using less imports? What ramifications? Do you mean the ones where the foreign countries can poison our children with lead in their toys and drinking glasses? Where they can hold products from us knowing we need them and will negotiate away our interests to get them? I beleive we can do without these. These nations will continue to need our help both financially and militarily so diplomacy will still survive. The difference would be that the negotiating power would be in our hands. The thin ice we so carefully tread on every day when dealing outside our borders would become firm beneath our feet.
It’s time for America to get back to putting America first. We have the means to lead the world once again not only in wealth and arts but in industry and innovation as well.
