Wednesday, January 12, 2011

Former Senator Fritz Hollings: Wake Up, America

From Senator Hollings on the Huffington Post -- December 20, 2010 (link below):
The United States was founded in a trade war. The Mother Country forbade manufacture in the colony and required exports from the colony to be carried in English bottoms. The Boston Tea Party that triggered the Revolution framed a Constitution calling for Congress to regulate trade -- not freeing trade. In fact, the forefathers agreed to regulate trade four years before they could agree on first amendment rights. The first bill to pass the United States Congress on July 4, 1789, was a protectionist tariff. We didn't pass the income tax until 1913. We financed and built the United States into an industrial power with protectionism for the first hundred years, causing Teddy Roosevelt to exclaim in a letter: "Thank God I'm not a Free Trader."
In globalization, the task is for the President and Congress to make it profitable to produce in the United States. Congress can make it profitable and jump-start the economy by eliminating the corporate income tax and replacing it with a 5% value added tax. The corporate tax estimate for 2010 is $156.7 billion in revenues. A 5% VAT reaps $600 billion. Exemptions for the low income for food, health and housing still leaves $350 billion to start paying down the debt. Since the VAT is rebated on export, it promotes exports. Canceling the corporate tax releases $1 trillion in off-shore profits that can be repatriated tax free to invest in creating jobs in the United States.
Cheers! Bring the VAT, Senator. I applaud your efforts. A VAT is a proven means to encourage exports and domestic savings, and discourage imports. Every serious industrialized nation has a VAT. We don't. Let's restore a manufactur­ing base in this country...­if we still have the know how. There's an awful lot of shuttered tool and die shops in my neighborho­od here in the Detroit suburbs. Used to be we had the know how. Now, it's no how. We are a pathetic shadow of our former selves...p­eace out.

Read the Article at HuffingtonPost

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