Fw: [ncfairtax] Fw: "VATs Mean Big Government" (Dan Mitchell, Cato, in WSJ)
--- On Thu, 6/4/09, Philip Hinson <plh001@...> wrote:
From: Philip Hinson <plh001@...>
Subject: [ncfairtax] Fw: "VATs Mean Big Government" (Dan Mitchell, Cato, in WSJ)
To: "FairTax District Directors" <FAIRTAX_DD@yahoogroups.com>
Cc: "Georgia FairTax" <firstname.lastname@example.org>, "FL FairTax" <email@example.com>, "SC FairTax" <firstname.lastname@example.org>, "NC FairTax" <email@example.com>, "AL FairTax" <firstname.lastname@example.org>, "Mississippi FairTax" <email@example.com>
Date: Thursday, June 4, 2009, 9:56 AM"Under current law, American goods sold in America do not pay a VAT -- but neither do German-produced goods that are sold in the U.S. Likewise, any American-produced goods sold in Germany today are hit by a VAT, as are, of course, German-made goods. In short, there already is a level playing field."
I am surprised that Dan Mitchell, who should should know better, would publish such a grossly misleading statement as that. What he totally ignores is that the US tax burden in the form of imbedded income and payroll taxes (as well as the enormous compliance costs associated with them) are not and cannot be "border adjusted". Therefore, US goods sold in the US have 1 layer of taxation included in their price while German goods sold here have zero layers. In Germany, US goods have two layers of taxation (US embedded taxes plus German VAT), while German goods have only 1 layer of taxes. In both cases, the advantage goes to the German produced goods. Clearly, this is not a level playing field.
For those who believe that the only factor affecting the trade deficit is labor costs, consider this. There are 30 countries in the OECD - the largest economies in the world. One of those 30 has no border adjustment element in its tax system and that one has a trade deficit larger than the other 29 combined. In fact, the other 29 have a net trade SURPLUS. Bear in mind that neither China nor India are in the OECD.
The reason that some of us "obsess" (in Mr. Mitchell's terms) about trade deficits is that they translate directly into JOBS.
"A study by Policy Matters Ohio calculated that U. S. trade deficits between 1994 and 2000 removed 135,000 actual and potential jobs in Ohio alone, 100,000 of which were in the manufacturing sector."1
1. The Chinese Century - The Rising Chinese Economy and its Impact on the Global Economy, the Balance of Power, and your Job; Dr Oded Shenkar, Ohio State University
----- Forwarded Message ----
From: bill spillane <billspillane@ yahoo.com>
To: FAIRTAX_DD@yahoogro ups.com
Sent: Thursday, June 4, 2009 1:41:13 AM
Subject: "VATs Mean Big Government" (Dan Mitchell, Cato, in WSJ)The FairTax is not a VAT. The VAT on top of the income tax is NOT "fundamental tax reform", it's fundamental disaster.