We need to get the economy moving. We haven’t paid for government in more than 10 years — instead borrowing and adding $9 trillion to the debt. We’re off-shoring our economy as fast as we can. We can solve both problems at once.
Our jobs problem isn’t just cheap labor in China, but the fact that 136 countries competing in globalization use a value-added tax that’s rebated on exports. Germany uses its 19 percent value-added tax to produce the president’s green jobs in Charleston: Germany produces the parts at high cost in Germany, ships parts at 3 percent cost, and assembles parts at 3 percent cost in Charleston, producing windmills 13 percent cheaper than any domestic production. The United States charges a corporate income tax, and doesn’t rebate it on exports. So when U.S. exports, subject to the corporate tax, reach Germany, a 19 percent value-added tax is added. It simply doesn’t pay to produce in the United States. Any manufacturer of a substantial nature will soon face off-shore competition that will put it out of business.
President Barack Obama and Congress subsidize the off-shoring through the tax code. Corporate taxes are exempted on off-shore profits unless repatriated. So the incentive is to reinvest for more off-shoring. If Boeing off-shores production to Japan or China, the government gives it a subsidy. If Boeing locates production in South Carolina, the government sues Boeing. President Obama appoints Jeffrey Immelt, the CEO of General Electric and a champion of off-shoring, to create jobs in the United States. GE has already off-shored the majority of its production and jobs, and shortly after his appointment as job czar, Immelt off-shored a $550 million research center to Brazil.
Every nation is building its economy with U.S. investment, technology, research, production and jobs. To reverse this trend and make it profitable to produce in the United States, we need to eliminate the corporate tax and replace it with a 5 percent value-added tax.