Trade Infrastructure for Global Competitivenes
Ways and Means, Trade, Trade Infrastructure for Global Competitiveness, February 6, 2020
The WTO is a major part of our trade infrastructure. Our comments on the WTO were submitted to the full committee previously and was first submitted to the Senate Finance Committee in March of last year. Please find them in Attachment One. We will focus here on the interaction of tax and trade. For reference, the latest version of our revised tax reform proposals is Attachment Two. Two elements of these proposals are discussed below, our invoice and subtraction VAT proposals.
Enacting an invoice VAT is far superior to a tariff. The more government costs are loaded onto an I-VAT the better. Indeed, if the employer potion of Old Age and Survivor’s Insurance, as well as all of disability and hospital insurance are decoupled from income and credited equally and personal retirement accounts are not used, then there is no reason not to load them onto an I-VAT. This tax is zero rated at export and fully burdens imports. Seen another way, to not put as much taxation into VAT as possible is to enact an unconstitutional export tax.
The second tax applicable to trade is a Subtraction VAT or S-VAT. It could have a huge impact on long term trade policy, probably much more than trade treaties, if one of the deductions from the tax is purchase of employer voting stock (in equal dollar amounts for each worker).
Employee-owners will find it in their own interest to give their overseas subsidiaries and their supply chain’s employees the same deal that they get as far as employee-ownership plus an equivalent standard of living. The same pay is not necessary, currency markets will adjust once worker standards of living rise. Attachment Three further discusses employee ownership.
Over time, ownership will change the economies of the nations we trade with, as working in employee-owned companies will become the market preference and force other firms to adopt similar policies (in much the same way that, even without a tax benefit for purchasing stock, employee-owned companies that become more democratic or even more socialistic, will force all other employers to adopt similar measures to compete for the best workers and professionals).
In the long run, trade will no longer be an issue. Internal company dynamics will replace the need for trade agreements as capitalists lose the ability to pit the interest of one nation’s workers against the other’s. This approach is also the most effective way to deal with the advance of robotics. If the workers own the robots, wages are swapped for profits with the profits going where they will enhance consumption without such devices as a guaranteed income.
Attachment One – Senate Finance, Approaching 25: The Road Ahead for the World Trade Organization, March 12, 2019
Attachment Two - Tax Reform
Attachment Three – Employee Ownership from Improving Retirement Security for America’s Workers, Center for Fiscal Equity, June 6, 2018
The WTO is a major part of our trade infrastructure. Our comments on the WTO were submitted to the full committee previously and was first submitted to the Senate Finance Committee in March of last year. Please find them in Attachment One. We will focus here on the interaction of tax and trade. For reference, the latest version of our revised tax reform proposals is Attachment Two. Two elements of these proposals are discussed below, our invoice and subtraction VAT proposals.
Enacting an invoice VAT is far superior to a tariff. The more government costs are loaded onto an I-VAT the better. Indeed, if the employer potion of Old Age and Survivor’s Insurance, as well as all of disability and hospital insurance are decoupled from income and credited equally and personal retirement accounts are not used, then there is no reason not to load them onto an I-VAT. This tax is zero rated at export and fully burdens imports. Seen another way, to not put as much taxation into VAT as possible is to enact an unconstitutional export tax.
The second tax applicable to trade is a Subtraction VAT or S-VAT. It could have a huge impact on long term trade policy, probably much more than trade treaties, if one of the deductions from the tax is purchase of employer voting stock (in equal dollar amounts for each worker).
Employee-owners will find it in their own interest to give their overseas subsidiaries and their supply chain’s employees the same deal that they get as far as employee-ownership plus an equivalent standard of living. The same pay is not necessary, currency markets will adjust once worker standards of living rise. Attachment Three further discusses employee ownership.
Over time, ownership will change the economies of the nations we trade with, as working in employee-owned companies will become the market preference and force other firms to adopt similar policies (in much the same way that, even without a tax benefit for purchasing stock, employee-owned companies that become more democratic or even more socialistic, will force all other employers to adopt similar measures to compete for the best workers and professionals).
In the long run, trade will no longer be an issue. Internal company dynamics will replace the need for trade agreements as capitalists lose the ability to pit the interest of one nation’s workers against the other’s. This approach is also the most effective way to deal with the advance of robotics. If the workers own the robots, wages are swapped for profits with the profits going where they will enhance consumption without such devices as a guaranteed income.
Attachment One – Senate Finance, Approaching 25: The Road Ahead for the World Trade Organization, March 12, 2019
Attachment Two - Tax Reform
Attachment Three – Employee Ownership from Improving Retirement Security for America’s Workers, Center for Fiscal Equity, June 6, 2018
posted by Michael Bindner at 10:00 AM
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