Amazing

By ERNEST F. HOLLINGS, former U. S. senator


Hollings

NOV. 10, 2014 -- 1. All in Congress are for tax cuts, jobs, closing loopholes, tax reform, downsizing government, helping small business, and balancing the budget. Replacing the 35 percent Corporate Tax with a 7 percent VAT is a tax cut, closes all loopholes, gives instant tax reform, is self-enforcing and downsizes the government (IRS), helps small business, and provides billions more so that the budget can be balanced in two years rather than ten. It also releases $2 trillion in offshore profits for Corporate America to repatriate tax-free, invest in the U.S., jumpstart the economy, and create millions of jobs. It's amazing that there is not a peep from the President, Congress, or politicos about this replacement.

2. 160 countries compete in globalization with a Value Added Tax (VAT) that's rebatable on export. The Corporate Tax is not rebatable. 160 countries don't find the VAT "complicated" or "an added sales tax." It's amazing that the President, Congress, or politicos refuse to mention, debate, or consider a VAT.

3. Globalization is nothing more than a trade war with production looking for a country cheaper to produce. The United States was born in a trade war (Boston Tea Party), and our Founding Fathers built the nation's strongest economy with protectionism. Congress passed the Tariff Act of 1787 two years before the Constitution, and four years before Madison's First Amendment freedoms. In globalization, David Ricardo's "Comparative Advantage" is now China's and Japan's closed market and predatory practices. This requires all countries to protect items vital to the nation's economy. It's amazing that President Obama fails to protect steel, motor vehicles, computers, and machine tools, as President Reagan did in 1984. It's amazing that President Obama fails to enforce the Defense Production Act of 1950. It's amazing that the President, Congress, and politicos continue to talk "free trade," and against "protectionism."

4. A successful entrepreneur in the U.S. must pay the 35 percent Corporate Tax, and when his exports reach China, a 17 percent VAT. A competitor in the U.S. could produce the same product in China, import it tax-free into the U.S., and put the entrepreneur out of business. Having a Corporate Tax, and not having a VAT, stultifies manufacture in the U.S. It's amazing that the President and Congress continue to stultify production and jobs in the U.S.

5. Everybody knows that Wall Street, the big banks, and Corporate America contribute to the President and Congress to be against a VAT; to do nothing about China's and Japan's closed market and predatory practices; to do nothing about China's devaluing its currency; to do nothing. And the President and Congress do nothing. At last week's election everybody identified the economy as their greatest concern.

It's amazing that the President and Congress are paid to not make it attractive for Corporate America to produce in America; to do nothing about the economy. And when the voters had a chance at last week's election to do something about the economy, they did nothing.

Senator Fritz 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 Making Government Work (University of South Carolina Press, 2008).

© 2014, Ernest F. Hollings. All rights reserved. Contact us for republication permission.

About Fritz Hollings

Ernest F. Hollings served the public for 56 years -- 38 years in the United States Senate and as South Carolina's governor, lieutenant governor and a member of the S.C. House of Representatives.

Today, Hollings continues to be influential in public affairs and offers this website as a compendium of current and past positions on public issues. Learn more about Fritz Hollings.

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