Thursday, December 16, 2010

a balancing act…..

Over the past few decades, America has seen it’s trade deficit and tax revenue shortfall expand exponentially.  In short, we are addicted to low cost goods and oil, and don’t have the money to pay for necessary social programs, roads, wars, education, and medical treatment.

We need to understand that all goods imported into this country have a social cost, like goods that are made here.  Goods made in the U.S. are subject to taxes, work rules, environmental rules, and so on.  Eventually, all goods need to be disposed of, or cleaned up, often at public cost. 

Imported goods don’t pay for education, medical insurance, social security, roads, wars, environmental clean up, and so on.   

We need to have tariffs that reflect that cost.  Maybe a formula would be to look at our Gross Domestic Product (GDP), our total cost of government (COG), divide the  GDP/COG and come up with a percentage.  Simply stated, if the GDP is $14 trillion and the COG  $1.4 trillion, the tariff on imported goods would be 10% across the board.   Imported oil would have this tariff added to the already imposed state and federal taxes.

Approximately $2 trillion worth of goods are imported into our country on an annual basis, meaning the social cost would be $200 billion, no small piece of change.

An additional benefit would be to balance the playing field between domestic and imported goods by balancing the cost of doing business.  I don’t blame businesses going to where they can be most efficient and competitive; that is their job.  If the U.S. is the most competitive place to manufacture, producers will make their products here.  

Yes, imported goods would go up in price, and almost everything we buy has some import element to it.  But, if we’re looking at a “flat” world, our policies need to reflect the real cost of doing business, no matter where products are manufactured.


  1. Technically, many goods bought overseas are taxed 5% when the consumers purchase them at the store. If you consider the markup stores put on the goods, it ends up being almost 10% anyways.

  2. The tax is on all goods sold, whether they were produced here or not. This is about fairness in the tax system, with all imported goods having the same accountability as domestically produced goods.

  3. But, assuming imported goods have a higher profit margin than domestically produced goods. Profits are taxed 30%. Not only is the government getting the 5% on the larger markup, but they are also getting the 30% from the higher profits.

  4. To quote Benjamin Franklin, "the only things certain in life are taxes and death".

    Tariff policy = taxes Union policy = death.
    Bottom line; until both are controlled by Government, companies and/or businesses will continue to go elsewhere.