December 16, 2009

The Louisiana Libertarian: Success in an International World=FairTax

The Louisiana Libertarian

Tuesday, December 15, 2009

Success in an International World

There is a war which is going on within America and the world. It has played out in many of the political skirmishes over recent election cycles. The question of American sovereignty as the world become more interconnected and "closer" together. If one listens to the Neo-Conservative response to this interconnectedness, it would seem that the more trade ties with other countries, the weaker we become. Protectionism is their gameplan. On the other hand, libertarians and progressives explain that without a wide open and subservient (to our partners) trade agenda, we will fall behind the world in the 21st century. I believe that using either of these approaches will be disastrous for our nation...
...Now that I have outlined different paths ideologues wish for us to take, I would like to take a little time to outline a more practical and advantageous approach. First, we should keep in mind that capitalism is a redistribution of wealth that compensates those with goods and services that are sought after and roots out those who are not providing wanted goods and services. Therefore, I am not afraid of trade unions. Nations can join those unions, but the rules of the union should be equivocal for all members, not penalizing richer members at the expense of poorer ones. If the poorer nations offer the goods and services, they will be enriched. The fair compensation of workers should be indexed to the standard of life/cost of living index rather than a one size fits all approach.

Next, the US should embrace international free trade. What we need to do is completely revamp the tax code. I recommend the FairTax. Brazil is looking into the FairTax and we should be afraid. I will have a blog explaining this interesting tax reform idea in detail. What it is in the most basic form is the repealing of Income, Corporate, Payroll, Medicaid, Medicare, and Capital Gains taxes and rolling it into one 23% consumption tax. While 23% seems high, keep in mind that we as consumers pay all of these taxes at the checkout counter already. Economists have calculated that the final price for goods are inflated 22% because companies have to add the taxes down the line anyways. Every time corporations and smaller businesses are further taxed, all they do is roll the cost down to the consumer. Add that 22% embedded tax plus the income taxes, payroll taxes, Medicare, Medicaid taxes and you see that you are being bled. Due to our wild tax system that NO ONE understands not even the IRS itself, corporations move their operations out of the U.S. It isn't as much to do with cheaper labor but our laborious tax structure. We have the second highest corporate tax rate. We have high personal income taxes. We have a 6.5% payroll tax which is matched by the employer which must be paid to the Federal government, that's a 13% tax. As you can see, the tax structure is a burden on rich, poor, and average American people and corporations. With a simple one time 23% consumption tax, which would stimulate investing since that would never be taxed (Capital Gains) until you went to buy something. This is a simple overview, but keep this in mind, 50 corporate leaders were asked if the U.S. Adopted the FairTax, would they move their corporate offices to the U.S.? Their answer? 48 of the 50 said they would absolutely move to the U.S. The other two? They said they would "strongly consider" it. The FairTax was not created by politicians. It was created by economists who wished to create a powerful taxing machine that would lower the tax burden on ALL people, and end the political earmarking done in the current code.

With companies moving back to the U.S. And new businesses moving in, America could be a powerhouse in trade again. We also need to promote solar, wind, water, and other alternative fuels NOT with federal subsidies, but instead staying out of the way. Government regulations need to loosen for new industries. By adding regulations we discourage or downright trample on small entrepreneurs who wish to enter the industry. Heavy taxation and high costs to comply with federal and state regulations not only hurt small entrepreneurs, but is welcomed by bigger businesses who understand that these impediments ensure that only large ventures could even hope to enter the industry, i.e. less competition.

In conclusion, I argue that we should not only embrace a world stage to sell goods, but also become a major player who competes directly with all other nations. With a FairTax, return to strong free market principles, and even including trade unions which help to engender good will with our neighbors without exploiting ourselves to their benefit are the steps we should take to build a positive flow of capital from around the world to America, create jobs in America, strengthen our current businesses, and promote small business development.

We can be American in an international world. In fact, giving up our values would hinder our progress. America became a great power through trade. We believed in free trade. Let's not lose those principles. We should embrace them and revitalize our economy and put it on a solid footing.

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