How do You Get Progressives To Support A Regressive Sales Tax? Call It An Import Tax!

[TomCADem]

Aim at Chinese and Mexican consumer imported goods, then use the additional revenues to fund Trump's proposed personal income tax cuts that primarily benefit the rich. In addition, by taxing imports from Mexico, Trump will claim that Mexico is paying for his wall even though it really American consumers that are paying for the wall through this consumption based tax.

Does Trump's 20 percent tax on imported goods sounds familiar? Well, perhaps because Steve Forbes proposed something similar back in the 90s as a means of funding a tax cut for the rich.

https://www.brookings.edu/research/dont-buy-the-sales-tax/

Don’t Buy the Sales Tax

The tax reform panacea in vogue several years ago was the flat tax. This go around, it’s the retail sales tax. Advocates praise the simplicity, the potential for economic growth, the enforceability, and the fairness of a tax system based on consumption. But when examined closely, the simplicity breaks down, payments would be close to impossible to collect, and the tax’s fairness would be, at best, questionable. Nonetheless, more plausible consumption and income tax reform plans should not be ignored.

The politics of tax reform are cyclical, and once again, we’re hearing the call for sweeping change. The flat tax and the idea of fundamental tax reform dominated policy discussions in 1995 and the early part of 1996. These proposals aimed to replace the income tax, drastically simplify taxes, and spur economic growth by flattening tax rates, eliminating tax preferences, and taxing consumption rather than income. In 1997, however, Congress and the President moved in essentially the opposite direction. The Taxpayer Relief Act of 1997 showered new deductions and credits on various groups of taxpayers, made taxes more complicated, and raised effective marginal tax rates for many people.

Now, as 1998 begins, there are once again renewed calls to tear out the income tax and start over. Although the flat tax has certainly not disappeared, the newest plan to attract significant attention is a national retail sales tax. Representatives Dan Schaefer (R-Colo.) and Billy Tauzin (R-La.) have proposed a 15 percent sales tax which they claim will replace the personal and corporate income taxes and the estate tax. A group called Americans for Fair Taxation has launched a multimillion dollar campaign to replace income, estate, and payroll taxes with what they claim would be a 23 percent sales tax. These plans would tax almost all private consumption and all government expenditures. Ways and Means Chairman Bill Archer (R-Texas) has indicated general support for a sales tax but to date has officially kept his options open.

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Even if the tax were enforceable at these rates, the implied effects on economic growth would be small at best, and certain sectors of the economy, such as employer-provided health insurance, could be affected significantly. The sales tax would raise burdens on low- and middle-income households and sharply cut taxes on the top 1 percent.

[HassleCat]

1. Why would this appeal to progressives?

Because it's anti free trade? Everyone knows it's supposed to pay for the wall.

[herding cats]

2. What progressives are supporting this?

It's a terrible idea that will hurt our poor and working class even more. How could a progressive support something like that?

[Hoyt]

3. "Progressives" were wrong on global trade. Trading among ourselves, tariffs, are truly regressive.

[TomCADem]

4. Change.Org Petition - Replace NAFTA, and the Trans-Pacific Partnership, with Ethical Tariffs

How is Trump's proposed tariffs different from "Ethical Tariffs"? The effect is the same. The only difference is the packaging. To re-package Trump's tariff in "progressive" language, you just strip out the xenophobic, racist language, and say that you doing this for the benefit of Mexican workers who are being exploited. Indeed, they are so exploited that more Mexicans have been leaving the U.S., then coming into it.

http://www.usnews.com/news/articles/2016/01/05/more-mexicans-leave-the-us-than-come-across-the-border

The study shows a net loss of 140,000 Mexican immigrants from the United States. One million Mexican migrants and their children left the U.S. for Mexico, while just over 860,000 left Mexico for the United States.

While this may seem like a desirable outcome from an immigration control perspective, it may signal problems in the U.S. economy. Among other things, it means that the children of Mexican returnees – kids who are U.S. citizens – are leaving the country. U.S. losses may be Mexico’s gain in a world market that rewards multilingual workers.

https://www.change.org/p/bernie-sanders-replace-nafta-and-the-trans-pacific-partnership-with-ethical-tariffs

The SOLUTION, is a paradigm shift; a new breed of trade agreement that economically incentivizes that corporations produce their goods in locations with humane labor standards and living-wage pay; and economically incentivizes that hosting governments create/nurture those conditions for corporations to exist within.

Let's call this solving concept "Ethical Tariffs." It's the proposal of a trade pact featuring the largest number of participating nations that would be achievable. Ideally, each participating nation would agree to levy trade tariffs based on a sliding scale in which the tariff being applied would be commensurate with a grade assigned the exporting nation's labor conditions, minimum rate of pay, and general human rights record. With the grade to be assigned, presumably, by an independent governing body agreed upon/created by the participating nations.

Were an agreement such as this to be entered into by a large enough number of nations, it would provide nations an economic incentive to ensure fair and humane treatment of their citizens, generally, and of its workers, in particular. (Economic peer pressure, to put it crudely.) Nations with poor records in these areas would find it difficult to bring their goods to foreign markets, because of their low "grade" and resultingly high tariffs on their goods; while the nations with excellent records in these areas would find it easy to bring their goods to foreign markets, because of their high "grade" and low (or even nonexistent) tariffs on their goods.

Already, nations have their credit rated by credit-rating agencies; and receive a grade that is heeded, and responded to, by their fellow nations; because money is just that important. The leap in awareness, here, need only be that governments should agree to have rated, and co-heeded by one another, the standards they provide for their labor force; because, theoretically, people are just that important.

We all know what a credit rating is, and how apparently essential it is; well, "Ethical Tariffs" would behave as a labor rating, and be at least equally essential.

Corporations, meanwhile, would organically tend to reward nations that secure high minimum standards for their labor force (and wider human rights for their wider citizenry). This reward would occur when corporations seek cheap or free exportation of their product by purposefully locating their manufacturing within the borders of the nations with the lowest (or nonexistent) tariffs levied against them, due to their high labor standards. What might even occur, could be a race, of sorts, between nations; a race to treat workers humanely. Planet earth has hosted many an arms race... maybe someday its first human-rights race.