To the editors of the Washington Examiner.
From James W. Schneider July 1, 2016
In response to your June 30, 2016 editorial entitled:
“Trump brings heat, not light, to trade debate.”
I am not a Trump supporter and I agree with the bulk of your criticisms of his speech. But your US economic solution at the end of the article is overly simplistic and no longer true.
You state...
"Over the last five decades, free trade has allowed Americans to buy more for each hour they work than they otherwise could have. The economic solution needed is one that neither major party's candidate is suggesting: America should open its doors, seek every new opportunity for freer trade (for example, with Great Britain), and have faith in its workers and businesses to compete with the world as well as they always have."
You imply that once the Federal Government passes these “freer trade” deals, the government will have no impact on America’s ability to “compete with the world as well as they always have”. Nothing could be further from the truth.
US business taxes and regulations have increasingly placed US based labor at a distinct disadvantage for decades. And our present course only promises to make our disadvantage worse.
Businesses do NOT pay taxes - ONLY PEOPLE PAY TAXES. The taxes that businesses remit must be recovered by increasing prices or reducing wages. Likewise, the cost of all business regulations must also be covered in the prices that a business charges.
Until the voters learn that government imposed business costs reduce the demand for US based labor, and increase the costs of US made goods, Congress will continue to hide taxes within US based businesses. This will force more of our best middle class jobs (tradeable manufacturing jobs) overseas.
The problem with our trade deals is not that they allow trading partners to specialize and export what they make best and cheapest - that's a good thing. The problem is the excessive costs that US based businesses must incur to comply with US regulations. These excessive costs have made offshoring and outsourcing, which the trade deals facilitate, the only logical economic choice for many businesses.
This is the main reason why Donald Trump, Bernie Sanders and so many Americans on the left and right believe our trade deals are so bad. They have mistakenly concluded that the trade deals alone caused the loss of so many US jobs to foreign shores. When, in actuality, it was our Government’s failure to recognize how stupid it is to make US based businesses increasingly less competitive in the face of an ever expanding global economy.
You want America to “seek every new opportunity for freer trade”? Then you should demand that both parties FIX THAT!
The solution is simple. But the solution is only politically possible IF the voters learn that they, and they alone, pay for every business tax and every business regulation. But before voters would take action, they must be able to see how much these burdens actually cost them.
Imagine a new law that required every sales receipt include two numbers that totaled to the price the consumer pays. The first number includes the business price. The second number includes all the federal, state and local costs imposed on business and labor. Imagine the voter reaction when they see on every receipt for an American made product, that the total government business TAX is in excess of 30%?
Then the solution would be obvious. Transfer all non-safety related government imposed costs from US based businesses to a consumption tax, or some other non business tax. Some might argue that the price the consumer paid would remain the same, but they would be wrong.
Businesses would focus entirely on the best way to produce their goods and services and eliminate the 30% of unproductive, non-product related costs. This would make US labor cheaper - creating demand for more US based jobs. It would make US made goods cheaper to our trading partners - causing demand for more US exports.
Along the way, because of the tax visibility, a miracle would occur. The people would become aware and continuously question the cost vs. benefits of these programs with every receipt. Every consumer would demand their politicians optimize the efficiency of these programs, or get rid of them. The people would begin to unite on what the role of government should be.
Hiding taxes in business is a corrupt and sneaky way for politicians to hide taxes from the people. But the real calamity is how these burdens are killing America's greatest strength - the world's largest middle class with the world's highest standard of living.
Yes - the solution is simple - never allow politicians to hide the costs of their taxes and regulations in the prices that the people have to pay for the goods and services they receive. If we could do that, then we would end up with a government and an economy that works for all Americans.
