By ERNEST F. HOLLINGS, former U. S. senator
2009 -- In his imposition of tariffs on imported tires from China, President
Obama stated: "We are not going to see a trade war." We have
been in a trade war since World War II, when Japan closed its domestic
market, subsidized its manufacture, and sold its export at cost, making
up the profit in its closed market. Japan, with its closed market, has
Toyota No. 1 as GM, in an open, free trade market, goes bankrupt.
million now unemployed didn't just lose their jobs in this recession,
but to the off-shoring of production and jobs by Corporate America for
a bigger profit. Globalization is nothing more than a trade war with production
looking for a cheaper country to produce. Competition in this trade war
is cut-throat. Japan prevents its advanced technology from being patented
for fear that China will rip it off. After fifty years of free trade agreements,
just read the 547-page 2009 National Trade Estimate Report on Foreign
Trade Barriers that sixty-three countries have against U. S. exports.
"Free trade" is a fraud!
we can solve the problems of our fiscal and trade deficits by eliminating
the corporate income tax and replacing it with a 3% value added tax. This
actually cuts taxes, raises more revenue, and the United States begins
to fight in the trade war. An additional 1% VAT over ten years will pay
$1.3 trillion for health care, and 1% more brings in revenue to start
paying down the debt. With the average corporate tax at 27%, the 5% VAT
cuts taxes by 22% for domestic sales and eliminates taxes (which are rebated)
for Corporate America's exports. China has a 17% VAT. Today, U. S. production
pays an average of a 27% corporate tax and, when its export reaches Hong
Kong, China adds its 17% VAT -- for a total of 44%. The 5% VAT immediately
removes the 44% tax advantage to off-shore Corporate America's production
and jobs to China; and it removes the VAT tax advantage that 152 countries
have over the U. S. in the trade war.
Constitution, all trade measures must initiate or derive in the House
of Representatives. This relieves the Senate from introducing any trade
measures. When a trade bill comes over to the Senate from the House, the
bailout and bonus crowd keeps the Senate hamstrung with "fast track."
They fix the trade bill in the Finance Committee and once the bill is
reported for consideration on the floor of the Senate, "fast track"
forbids any amendment. Take it or leave it. Of course, to get the money,
the Senate takes it. With a two-year term, House members are constantly
campaigning for money and not about to cut their throats by introducing
a trade bill unless it's been sanctioned by the President. So it's up
to President Obama. Does he continue to campaign for the money or does
he save the country by replacing the corporate income tax with a 5% VAT
- by cutting taxes and engaging in the trade war?
Senator Hollings of South Carolina served 38 years in the United States Senate, and for many years was Chairman of the Commerce, Space, Science & Transportation Committee. He is the author of the recently published book, Making Government Work (University of South Carolina Press, 2008).
© 2009, Ernest F. Hollings. All rights reserved. Contact us for republication permission.
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