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OCT. 17,
2011 -- Ezra Kline published in The Washington Post (10/9/11) a
7,000 word analysis of what Washington should have done to create jobs.
And Eugene Robinson in The Washington Post (10/11/11) states: "…
I love that the Occupy protests … are aimed at just the right target."
We need
to correct five misconceptions to create jobs now: 1. That
the demonstrators in Wall Street are "on target." They should
be at the White House and the Capitol in Washington. They
mistake result for cause. Business doesn't create the business climate.
Government does. Business in Wall Street is only taking advantage of the
business climate or economy that governments develop. The government of
the U. S. has developed an open market with anti-trust laws. But China
has developed a closed market, causing Corporate America to off-shore
to China its production and jobs to make profits to invest in Wall Street. 2. That
the economy is in a "cylical downturn" or "in the worst
recession since the depression." The recession
of 2008 ended in June 2009. Rather than a lack of confidence in the economy
or consumer demand, the trouble with the economy is the off-shoring of
the economy - investment, research, technology, production, jobs, payrolls
- the economy. When the Clinton Administration passed NAFTA, admitted
China to the World Trade Organization, and gave China most favored nation
status, the economy hemorrhaged off-shore. Now, we're in globalization
or an economy war with Corporate America fighting for China, Vietnam,
India, Brazil, etc. Our challenge is to get Corporate America investing
in America and fighting for America.
3.
That you can't spend to stimulate the economy to create jobs and balance
the budget at the same time. You can
do both. Take the tax benefit to off-shore jobs and give it to Corporate
America to on-shore jobs -- cancel the corporate income tax and replace
it with a 6% value added tax. This releases $1.2 trillion in off-shore
profits for Corporate America to invest and create jobs in the United
States. Last year, the corporate tax produced $194.1 billion in revenues.
A 2010 6% VAT would have produced $700 billion in revenues. $70 billion
in exemptions for the poor leaves $630 billion to pay down the debt. Replacing
the corporate tax of 35% with a 6% VAT amounts to a tax cut. This tax
cut creates the business climate that will bring Corporate America home.
And it creates millions of jobs and billions to pay down the debt. 4. That
the value added tax is too complicated. The VAT
is very simple. Rather than a tax on retail sales and on the sales price,
a VAT is a tax on every sale - not on the sales price - but only on the
seller's mark-up or value added. A VAT is a tax on consumption - the more
you consume, the more you pay. Since the rich spend more, they pay more
taxes. Since the poor must spend most of its income on food, health and
housing, exemptions are allowed. You either pass the VAT on or pay it
yourself. The VAT is self-enforcing, eliminating much of the Internal
Revenue Service. This cuts the size of government. The VAT is rebated
on exports, promoting exports, creating jobs. A VAT has no loopholes,
producing instant tax reform. But the tax lawyers and tax lobbyists will
howl. With no loopholes, the VAT eliminates most of the Washington lobbyists.
The tax lobbyists howl: "A VAT increases the state sales tax."
It doesn't. It cuts the federal corporate income tax of 35% to a 6% VAT.
The people and corporations like the VAT. That's why 141 countries compete
in globalization with a VAT. 5. That
the tax cuts in President Obama's jobs plan for workers, firemen, policemen,
and teachers, create jobs. They retain
but don't create jobs. "More than half of it [the jobs plan] is tax
cuts." Business Week (9/19/11). Instead
of passing legislation that counters China's Rimini devaluation, the President
should impose a surcharge on imports like President Nixon imposed in 1971.
Enforcing our trade laws like President Reagan enforced the trade laws,
saving the steel, motor vehicle, computer, and machine tools industries,
would create millions of jobs. If President Obama enforced our trade laws,
it would put a tourniquet on the hemorrhaging of our economy. Senator Hollings of South Carolina served 38 years in the United States Senate, and for many years was Chairman of the Commerce, Space, Science & Transportation Committee. He is the author of Making Government Work (University of South Carolina Press, 2008). © 2011, Ernest F. Hollings. All rights reserved. Contact us for republication permission. |
About Fritz Hollings Ernest F. Hollings served the public for 56 years -- 38 years in the United States Senate and as South Carolina's governor, lieutenant governor and a member of the S.C. House of Representatives. Today, Hollings continues to be influential in public affairs and offers this Web site as a compendium of current and past positions on public issues. Learn more about Fritz Hollings. Receive commentary via The Huffington Post Please visit Sen. Hollings' section of The Huffington Post where you can get an RSS of his columns, subscribe by email or use social media. The Hollings legacy Click here to learn more about Hollings' impressive and distinguished record of public service.
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University of South Carolina Press in 2008 published