In 1993 we cut spending and raised taxes on everything -- including Social Security -- giving the country eight years of its strongest economy and giving President Bush a balanced budget in 2001. President Bush put the country on borrowing and steroids to the tune of $5 trillion, and President Obama has kept us on $4.5 trillion of steroids for his first three years. President Obama's deal keeps the government on $7 trillion of steroids for the next ten years. It's time to get off the steroids and pay for government.
We keep stimulating to create jobs. President Bush proved tax cuts don't create jobs. Stimulation doesn't create jobs. An infrastructure bank program would be good if we had the money. It calls for more steroids, and the roads needing repair also need to be widened. Getting the rights-of-way for the roads, and architects to redesign bridges is too slow, too weak. We've got to do something strong, something real. Corporate America invests and creates jobs -- but now in China. We have got to make it profitable for Corporate America to create jobs in the United States.
We continue in hot wars everywhere and ignore the cold war -- the economy war. Globalization is nothing more than an economy war with production looking for a country cheaper to produce. Every country competes for investment, research, technology, production and jobs except the United States. Wall Street and Corporate America want to keep the China profits flowing and the president and Congress want to keep the contributions flowing. So you don't hear much about the economy war. But now is the time to fight.
We can get into the economy war by taking the tax benefit to off-shore jobs and give it to Corporate America to invest and create jobs in the United States. Eliminate the corporate income tax and replace it with a 6% value added tax. Since the average corporate tax is 23%, reducing it to 6% amounts to a tax cut. The corporate tax is not rebated on export, but the VAT is rebated, promoting exports. Immediately, the corporate CEOs and tax lawyers will howl. It puts their loophole games out of business. The VAT gets rid of loopholes, tax lawyers and lobbyists, and since the VAT is self-enforcing, we can eliminate some of the Internal Revenue Service. Last year's corporate tax produced $194.1 billion in revenues, whereas a 6% VAT for 2010 produces $700 billion in revenues. Exemptions for the poor of $70 billion still leaves $630 billion to pay down the debt. And spending cuts can produce more billions to pay down the debt. With the corporate tax cancelled, $1 trillion in off-shore corporate profits becomes immediately available to invest and create jobs in the United States. So cutting taxes with a VAT takes the government off steroids, allows Corporate America to make a profit in the United States, stops the hemorrhage of off-shoring jobs, promotes exports, cuts the size of government, produces billions to pay down the debt and creates million of jobs.
But the Grover Norquists will howl: "It's too complicated," "it's regressive," "it's a money machine." With computers the VAT is easily installed and administered. 140 countries compete in globalization with a VAT and don't find it "regressive" or a "money machine." Strong economies like Germany, China, and Brazil, all have a VAT. Germany uses its 19% VAT to build windmills in Charleston, S. C. Manufacturing the parts at high cost in Germany so there is no tax, shipping the parts at 3% cost, assembling the parts at 3% cost, Germany produces windmills in the U. S. 13% cheaper than any domestic production. Since the costs of a VAT are typically higher for small business, many countries, including the United Kingdom, exempt some small businesses from the VAT. But a Government Accountability Office study in 2008 showed that the administrative cost for a VAT was lower than administering the income tax.
Now that you've hit the ball, follow through with two things. First, enforce our trade laws like President Kennedy enforced the War Production Act in 1961 to save the textile industry; like President Nixon imposed a 10% surcharge on imports in 1971 when our trade deficit was a miniscule of what it is today; like President Reagan imposed a 45% tariff on motorcycle imports in 1984, saving Harley-Davidson. Finally, fix the vote against any override of a veto against the continuation of the Bush tax cuts and announce that you will veto any bill that continues the Bush tax cuts.
If President Obama does these things now, he and the country can recover. But some will oppose recovery.
Lloyd Chapman: Republicans Trying to End Small Business Programs Again
Doing Something Real, Former South Carolina Senator Hollings. Posted: 8/10/11 04:01 PM ET
“Campaign Contributions” are in most cases simply bribes (Check the definition of the word bribe). In the early Roman Republic bribing a public official was a capital offense. During Rome’s decline it was a common practice. Our republic is now in its death spiral. The looting of the treasury confirms that bribery and corruption are rampant. Even the Supreme Court is in on it. Allowing corporate campaign contributions under the guise of free speech is ludicrous. Treating the symptoms (taxes, VAT, etc.) is futile. We must eradicate this cancer (bribery) before it consumes us.
Before it's too late!
No pun intended!
He could create jobs via tax reforms like VAT (which is tricky) or by creating tax credits for businesses that use local labor/ materials while adding tax on off-shore labor/ materials/ money. He could insist on reversing income tax to Clintan's era, while lowering corporate tax to levels used in Eurpope (and adding tax for off-shoring).
Unfortunately, his idea of leadership is compromising the positions of his party to the point that his party has nothing to stand for.
He even went through 6 months of debt-ceiling debacle instead of using other tools in his disposal to squash the tea party and show some leadership.
I doubt we have much to expect from this administration
Senator Hollings, thank you.
No more, since corporations love it - because it has gotten them and the Few even richer.
The glaring trade deficit and disparity of our tariffs compared to those of more prosperous countries like South Korea and China (their tariffs are ten times more on our exports than ours on their exports) bring this home more than ever to the few rational left among us in this country..
We allow factories to close down, jobs to be outsourced etc. etc. rather than protect our own jobs, wages and benefits.
Obama did consider a value added tax. You're idea is not new.
It's my understanding he discarded the idea because he knew lobbyists with the help of House Republicans would never agree.
My question for you is this? Why can't you get the children in Congress to earn their pay and put America above of their own self-serving interests.
That said, this is a Democrat who is speaking our principles. A modified and simplified tax code that can actually equate to cuts for some, but removes the loopholes and tricks that allow others to pay no tax.
Excellent article, Senator Hollings. My apologies for lumping you in with your successors.
First, I suggest we eliminate the minimum wage. Let the market pay less wages so employers can hire more workers. Then let the workers supplement their income with second jobs, or reduce the number of video games and cars they buy.
Second, apologize for damning companies for existing. Existing to help workers, shareholders and executives to survive in the world, preferably with a useful product no one else is making at all or as good.
Socialism always fails.
Ever been to Finland? Here's some info from Wikipedia:
Finland was a relative latecomer to industrialisation, remaining a largely agrarian country until the 1950s. Thereafter, economic development was rapid, Finland built an extensive welfare state and balanced between the East and the West in global economics and politics. With the best educational system in Europe, Finland has recently ranked as one of the world's most peaceful, competitive and livable countries.
Would you advocate invading them before their pernicious socialism spreads?
As for damning companies, their primary reason for existence is not to 'help workers, shareholders and executives survive in the world', it's to make a profit. The things you mentioned are secondary. That's fundamental to capitalism. Unless your bio is bogus, you know that.
And, if you're really a lawyer, you learned in law school the fallacy of asserting a given something 'always' happens.