As a student at Harvard, John Fitzgerald Kennedy traveled Europe. Kennedy could see the rise of Hitler and realized England had adopted a policy of appeasement to the rise. In his senior year, he wrote his award-winning book, Why England Slept. Today, the United States adopts a policy of appeasement to globalization.
Globalization is nothing more than a trade war with production looking for a country cheaper to produce. And the war has expanded from trade to production, research, technology, techniques, jobs, payrolls -- the economy. Every nation struggles in the economy war to maintain and build its economy -- except the United States.
In the New Hampshire debate, Governor Huntsman exclaims: "We don't want to start a trade war." Japan started the trade war after World War II by closing its market, subsidizing its manufacture, selling its export at cost, making up the profit in its closed market -- making Toyota #1 as GM went broke. In the same debate, Governor Romney exclaims: "We've got to stop China from stealing our jobs." China steals intellectual property -- not jobs. President Obama and Congress do the "stealing" by continuing the tax benefit to off-shore jobs.
Corporate America invests in China because there are no labor, safety or environmental concerns. If you make a profit, pay no corporate tax unless profits are repatriated. Just reinvest for more profit. If not profitable, walk away with no legacy cost. Facing this kind of competition in globalization, the United States must develop an economy attractive to invest and protect the investment.
The president and Congress say they are developing an economy to create jobs in the United States. Tax cuts or Federal aid for policemen, firemen and teachers is no way to build an economy. It takes private investment. Ed Schultz, on MSNBC, continually exclaims: "You can't increase the taxes on the job creators. Really? Where are the jobs?" In China. To get Corporate America out of China and investing in the United States, we've got to lower the taxes "on the job creators." All we have to do is to take the tax benefit to off-shore jobs and give it to Corporate America to on-shore jobs -- replace the 35% corporate tax with a 6% value added tax. This tax cut reduces the cost of exports 29%, creating jobs. It releases $1.2 trillion in off-shore profits for Corporate America to repatriate and create millions of jobs. In 2010, the corporate tax produced revenues of $194.1 billion. A 2010 6% VAT would have produced $700 billion. The VAT is a tax on consumption, not income. The more you spend, the more you pay. The poor have to spend most of their income on food, health and housing, so exemptions for the poor leaves billions to pay down the debt. The VAT is self-enforcing: you either pay it or pass it on. Much of the IRS can be eliminated, cutting the size of government. The VAT has no loopholes, so it eliminates the tax lobbyists. The lobbyists will howl: "You can't go for a national sales tax." This is not a national sales tax. It's cutting the 35% corporate tax to a 6% VAT. We must get in step with the 141 countries that use a VAT to compete in globalization or keep losing our economy. Germany uses its 19% VAT, which is rebated on exports, to produce green jobs in the United States 13% cheaper than any domestic production. It produces the parts at high cost in Germany to avoid any tax; ships the parts at 3% cost, and assembles the parts in Charleston, S. C., at 3% cost, producing windmills.
The way to stop China's predatory practices is retaliate, but President Obama refuses to retaliate or enforce our trade laws. We passed the Defense Production Act in 1950 to make sure that we had defense materiel on hand to defend the country. In 1991, Admiral William Crowe, former Chairman of the Joint Chiefs of Staff, warned us that we were depending on foreign favor to defend the country. We were off-shoring too much of our defense manufacture. Having defeated Russia in Afghanistan, we're now begging Russia for helicopters for Afghanistan. If President Obama would enforce the Defense Production Act, it would create millions of jobs. Instead of TARP, if President Obama imposed a tariff on imported automobiles like Brazil, or imposed a 10% surcharge on imports like President Nixon did in 1971, when our trade deficit was a miniscule of what it is today, it would create millions of jobs. If President Obama would protect steel, motor vehicles, computers and machine tools like President Reagan did in 1984, it would create millions of jobs. Instead of enforcing our trade laws, President Obama calls for free trade and warns against protectionism.
The duty of Corporate America is to make a profit -- not develop the economy. Corporate America will work an economy any way a government fashions it -- be it free or communist. Intel has gone from the United States to Ireland, to China, now in communist Vietnam. The duty of government is to develop and protect a strong economy. The United States was founded on protectionism and made an economic superpower with the Tariff Act of 1789. Wall Street, the big banks, and Corporate America want to keep the easy off-shore profits flowing. But if the president and Congress adopt a VAT to compete in globalization; if the president and Congress enforce our trade laws or retaliate against predatory practices, this will cut into the off-shore profits. So any move the president and Congress make to fight in the economy war is met with cries of "free trade," "protectionism," "don't start a trade war." Wall Street, the big banks and Corporate America are the biggest contributors to the president and Congress. So the president and most of the Congress join in the cries.
Our country has 24 million Americans looking for jobs. But the president and Congress continue to subsidize the off-shoring of jobs and the economy. In The Time Of Our Lives Tom Brokaw relates: "Wherever I go I am asked what has happened to us? Have we lost our way?" Not lost -- just asleep. Wall Street, the big banks and Corporate America pay the president and Congress to keep the country asleep.
Wrong:
any savings in corporate America's business, WILL NOT be used for job growth or paying workers a living wage. Profits or savings do not translate into more jobs or better pay.
"The duty of Corporate America is to make a profit -- not develop the economy. Corporate America will work an economy any way a government fashions it -- be it free or communist." REALLY?
This statement shows the degree of contempt, to which congress and big business holds for the American people and their ability to decipher or comprehend such statements.
Actually, by choosing to participate in a free market by opening a business, they are, by default, also choosing to develop an economy. It matters not, if they hire one or million workers, they are creating economic opportunities.
Another republican myth exposed.
A) two thirds of American corporations don't pay federal taxes. That would be more acceptable if businesses in the US were struggling but the fact is that corporations have been reporting record profits for the last couple of years, even while the overall economy has been struggling to recover.
B) While our marginal corporate tax rates ARE very high (only Japan's are higher), the EFFECTIVE tax rate on US corporations (i.e. the % of income they actually pay after deductions, subsidies, credits, etc) is actually significantly LOWER than the global average in other developed countries.
C) The US consistently ranks in the top five in the world (usually behind Hong Kong and Singapore) for it's overall "business friendly" environment. In 2011 the US ranked #4 (New Zealand took over #3 this year) ... out of 183 global economies.
Yes, the corporate tax code needs to be revamped and yes, that could include lowering the marginal rates (and a VAT is an intriguing option, especially if exemptions are incorporated to make it less regressive), but the bottom line is that our business environment in the USA is actually pretty damn good/business friendly already and we should be careful about how much more we do to "encourage business" through lower taxes or other such incentives, especially if it is going to take up other resources that are need more urgently elsewhere....