America's massive trade deficit: Why BIG tariffs won't hurt the United States

[pampango]

139. Not the "VAT as a tariff" argument again.

"The Import Turnover Tax is designed to place the same tax burden on imported goods as goods produced domestically, on which is levied a 19% "Value-added Tax" (VAT)."

Everything made in Germany has a 19% VAT applied to it so that a German consumer pays 19% more to buy that product than if there was no VAT. The proceeds from this rather hefty tax are used to fund Germany's safety net and other progressive policies. If imports into Germany did not have to pay a 19% "Import Turnover Tax (ITT)", imports would be that much cheaper than a local produced equivalent.

If the US or any other country wants to apply an Import Turnover Tax, all we have to do is enact a VAT (hopefully we too would use it to fund our safety net and progressive policies rather than defense and corporate welfare) of say 19%. That bring in lots of revenue but it would make everything that we make in the US cost consumers 19% more (of course, for those who believe "we don't make anything anymore", that would be fairly painless), but it woud allow us to charge 19% to all of our imports. While a VAT might be good for funding progressive policies (if we used the revenue that way) it would not be a barrier to imports since domestically-produced goods and imports would both cost consumers 19% more after we enacted a VAT and applied the ITT to imports.