Categorized | Tax, Trade

International Competition vs. the VAT

American factories close or move offshore.  Jobs are
lost.  The U.S. became a net food importer in 1998.  Lest we
complain, the Free Trade Promoting Pharisees shout us down with
dogmatic incantations: "This is good.  If American farms and firms
cannot compete internationally, they must give way to a new and more
efficient economy!  We’ll be better off in the long run."

 But as John Maynard Keynes said:  "In the long run, we’re all dead."

The truth is we are not "competing" against foreign firms, but
foreign governments.  One major barrier, deftly explained by Jerome Corsi, is the Value Added Tax (VAT)
We have no VAT in the U.S., but 137 countries do, including China,
Canada and Mexico.  The VAT is like a sales tax, but imposed at
each stage of production.

 Corsi explains that a U.S. car
that sells for $23,000 here, will cost $26,680 in Germany because a VAT
adds 16% to the cost.  But VAT countries rebate the VAT to their
domestic firms.  So a German car selling for $23,000 in Germany,
can enter the U.S. market at less than $20,000 after the VAT rebate.

annual VAT disadavantage, which has nothing to do with competitiveness,
is estimated at $450 billion per year - $180 billion disadvantage to
U.S. exports, and $270 billion in export subsidies (VAT rebates).

 Someone give the Free Trade Pharisees a calculator.  Let them sell beef or steel elsewhere with this disadvantage.

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