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Hollings, Sen. Fritz, “Critical Needs Ignored,” HuffingtonPost.com, 11/07/12

November 7, 2012 By

“The presidential campaign ignored the real needs of the country. Four problems — four solutions.…

Second, we must pay for government — not plan to pay. In 2001 we gave President Bush a balanced budget but he and President Obama have refused to pay, adding $10 trillion to the debt in twelve years. Now everyone is running around with plans for later Congresses to pay. Congress can pay for government now by replacing the 35 percent corporate income tax with a 7 percent value added tax (VAT). One-hundred-fifty countries compete in globalization with a VAT that’s rebated on exports. The corporate tax is not rebated. A U.S. manufacturer exporting to China pays the 35 percent Corporate Tax and is levied a 17 percent VAT when exports reach Shanghai. But a China manufacturer exports to the U.S. tax free. This 52 percent difference is killing manufacture in the United States. The Corporate VAT is not regressive, needs no exemptions and eliminates all loopholes — instant tax reform. Last year’s corporate tax produced $181.1 billion in revenues. A 7 percent VAT for 2011 would have produced $872 billion. This tax cut, with spending cuts, will balance the budget in two years. Eliminating the Corporate Tax releases $1 trillion in offshore profits for Corporate America to create jobs in the United States…

Third, we make wars in Iraq, Afghanistan, Pakistan, Somalia and Yemen; threaten wars in Syria and Iran, but refuse to fight in the trade war in which the world is engaged. Globalization is nothing more than a trade war with production looking for a country cheaper to produce. Tax cuts and federal aid for policemen, firemen and teachers don’t build a strong economy. It takes private investment. The president and congress must make it profitable to invest in the United States and protect the investment. The VAT tax cut is a good start.

The United States was founded in a trade war — the Boston Tea Party. Instead of calling for “free trade,” the Founding Fathers rejected David Ricardo’s comparative advantage in agriculture and opted for manufacture by enacting the Tariff Act of 1787 — two years before the Constitution. This protectionism worked so well that Edmund Morris in Theodore Rex wrote that, after a hundred years, the Colony was “$25 billion richer” than the Mother Country. But Wall Street, the big banks, and the U.S. Chamber of Commerce want to keep the China profits flowing. So they shout “Free trade! Protectionism!” and contribute to the president and congress doing nothing.

In 2006, the Princeton economist Alan Blinder estimated that in ten years the U.S. would offshore 30-40 million jobs, or an average of 3-4 million jobs a year. David Wessel reports in the Wall Street Journal “between 2007 and 2010 (U.S. Firms) added 200,000 U.S. jobs and 600,000 outside the U.S…” BusinessWeek headlined (10/14/12) “Despite profits near record highs many executives are planning to trim their payrolls.” We lose 4 million jobs a year due to our deficit in the balance of trade. Great Recession? The recession has been over for three years. We are having a weak recovery because we are offshoring more jobs than we are creating.”

http://www.huffingtonpost.com/sen-ernest-frederick-hollings/critical-needs-ignored_b_2088479.html

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Hollings, Sen. Fritz, “Making Romney Electable,” HuffingtonPost.com, 04/25/12

April 25, 2012 By

“The voters are frustrated. The country is fighting in all the wars but globalization. Globalization is nothing more than a trade war with production looking for a cheaper country to produce. Every country develops an industrial policy to protect its economy. Our industrial policy is to call for “free trade” and have Corporate America develop China’s closed market. The United States needs to develop an industrial policy to make Corporate America want to invest and create jobs in our country.

Fundamental to an industrial policy is a Value Added Tax, which is rebatable on export. The corporate tax is not. A U.S. manufacturer exporting to China is taxed twice: the 35 percent corporate tax and a 17 percent VAT when the product reaches China. But U.S. manufacturers in China import their product into the U.S. tax-free. We are not only building China’s economy, but Germany’s. The BMW plant in South Carolina doesn’t make the engine or technological parts in South Carolina. They are produced in Germany, shipped at 3 percent cost; assembled at 3 percent cost and BMW produces a motor vehicle in South Carolina 13 percent cheaper than Detroit. Using its 19 percent VAT, Germany probably has as many manufacturing jobs in the U.S. as it does in Germany — which we welcome.

The people are tired of the campaign. All they have heard for a year is that both candidates are for jobs, but the plants keep closing in their states. They have caught on to ten year plans to balance the budget; to do filibusters to fundraise; taxing the rich to balance the budget; appeals to their pride and charades to create jobs. Candidates and media worry about Medicare that goes broke in 2024 and Social Security that goes broke in 2033 but not the country that’s already broke. The people are frustrated because the country is fighting all the wars but globalization. They are looking for the candidate to do something real to create jobs and pay for government. Replacing the 35 percent Corporate Tax with a 6 percent VAT does something real. The VAT has no loopholes; gives instant tax reform; produces billions to eliminate deficits and creates millions of jobs.”

http://www.huffingtonpost.com/sen-ernest-frederick-hollings/making-romney-electable_b_1453065.html?utm_source=Alert-blogger&utm_medium=email&utm_campaign=Email%2BNotifications

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Hollings, Sen. Fritz, “Untying the Knot,” HuffingtonPost.com, 04/09/12

April 9, 2012 By

“There is an immediate solution to deficit spending and creating jobs — just replace the 35 percent Corporate Tax with a 6 percent VAT. The 2011 Corporate Tax produced revenues of $181.1 billion. A 2011 6 percent VAT would have produced $728 billion. This will cut taxes, eliminate loopholes, give instant tax reform, promote exports, free up $2 trillion in offshore profits for Corporate America to create jobs in the United States, provide billions to avoid deficits, and create millions of jobs.

Everyone in Congress is for these initiatives, but not one of the 535 members will introduce the VAT solution, nor will President Obama. Why not? Because Corporate America doesn’t want to increase the cost of their China exports to the United States. U.S. exports to China are taxed twice: the 35 percent corporate tax and a 17 percent VAT when exports reach China. China’s exports to the United States are tax free. 141 countries compete in globalization with a VAT that is rebated on exports. Wall Street, the big banks, and Corporate America are the biggest contributors to the President and Congress. Contributions for reelection in Washington come before the nation’s economy. Talk shows and the political pundits don’t mention the VAT solution because the press and media are owned or in bed with Corporate America.

In 2006, the Princeton economist, Alan Blinder, estimated that for the next decade off-shoring would cost the U.S. Economy an average of 3 to 4 million jobs per year. We are off-shoring jobs faster than we can create them. The recession ended over 2 ½ years ago and we wonder why the recovery is anemic. The economy would come alive by replacing the 35 percent corporate tax with a 6 percent VAT.”

http://www.huffingtonpost.com/sen-ernest-frederick-hollings/untying-the-knot_b_1412370.html

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Hollings, Sen. Fritz, “It’s the Economy, Stupid,” HuffingtonPost.com, 01/27/12

February 2, 2012 By

“We need to get in step with 141 countries that use a VAT to compete in globalization. The VAT is rebated on exports, creating jobs and removes the subsidy of foreign imports. Substituting the 35% corporate tax with a 6% VAT is a tax cut and releases $1.2 trillion in off-shore profits that Corporate America can repatriate tax free and create millions of jobs. The VAT is on consumption rather than income - the more you spend the more you pay. Now the rich pays its fair share. In 2010, the corporate income tax produced $194.1 billion in revenues. A 6% VAT in 2010 would have produced $700 billion in revenues. Since the poor spend most of their income on food, health, and housing, exemptions for the poor still leave billions to pay down the debt. The VAT is self-enforcing — you either pay it or pass it on. Much of the IRS can be eliminated, cutting the size of government. The VAT has no loopholes, giving instant tax reform. It puts the tax lobbyists out of business. They will howl: “We can’t have a national sales tax.” Substituting the corporate tax with a VAT is not a sales tax. Corporate America merely factors in the 6% as a cost of production rather than 35%. The lobbyists will call for tax reform — the lobbyists’ playground. We always end up closing two loopholes and adding four more. It took us six years to find the Ethanol loophole. When I left the Senate in 2005, tax expenditures or loopholes were costing the budget $1.3 trillion every year.”

http://www.huffingtonpost.com/sen-ernest-frederick-hollings/its-the-economy-stupid_2_b_1237247.html

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Hollings, Ernest F., “Why America Slept on Globalization,” The Post and Courier, 01/17/12

January 17, 2012 By

“Globalization is nothing more than a trade war with production looking for a country cheaper to produce. And the war has expanded from trade to production, research, technology, techniques, jobs, payrolls — the economy. Every nation struggles in the economy war to maintain and build its economy — except the United States.

In the Jan. 7 debate in New Hampshire, Gov. Jon Huntsman exclaimed: “We don’t want to start a trade war.” Japan started the trade war after World War II by closing its market, subsidizing its manufacture, selling its exports at cost, making up the profit in its closed market — making Toyota No. 1 as General Motors went broke. In the same debate, Gov. Mitt Romney exclaimed: “We’ve got to stop China from stealing our jobs.”

China steals intellectual property — not jobs. President Obama and Congress do the “stealing” by continuing the tax benefit to offshore jobs.

Corporate America invests in China because there are no labor, safety or environmental concerns. If you make a profit, you pay no corporate tax unless profits are repatriated. Just reinvest for more profit. If not profitable, walk away with no legacy cost. Facing this kind of competition in globalization, the U.S. must develop an economy attractive to invest and protect the investment.

The president and Congress say they are developing an economy to create jobs in the United States. Tax cuts or federal aid for policemen, firemen and teachers is no way to build an economy. It takes private investment.

Ed Schultz, on MSNBC, continually exclaims: “You can’t increase the taxes on the job creators. Really? Where are the jobs?”

In China. To get Corporate America out of China and investing in the United States, we’ve got to lower the taxes “on the job creators.” All we have to do is to take the tax benefit to offshore jobs and give it to Corporate America to onshore jobs — replace the 35 percent corporate tax with a 6 percent value added tax. This tax cut reduces the cost of exports 29 percent, creating jobs. It releases $1.2 trillion in offshore profits for Corporate America to repatriate and create millions of jobs. In 2010, the corporate tax produced revenues of $194.1 billion. A 2010, a 6 percent VAT would have produced $700 billion. The VAT is a tax on consumption, not income. The more you spend, the more you pay. The poor have to spend most of their income on food, health and housing, so exemptions for the poor leaves billions to pay down the debt.

The VAT is self-enforcing: you either pay it or pass it on. Much of the IRS can be eliminated, cutting the size of government. The VAT has no loopholes, so it eliminates the tax lobbyists. We must get in step with the 141 countries that use a VAT to compete in globalization or keep losing our economy. Germany uses its 19 percent VAT, which is rebated on exports, to produce green jobs in the U.S. 13 percent cheaper than any domestic production. It produces the parts at high cost in Germany to avoid any tax; ships the parts at 3 percent cost, and assembles the parts in Charleston, at 3 percent cost, producing windmills.

www.postandcourier.com/news/2012/jan/17/17hollings/?print

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Hollings, (fmr.) Sen. Ernest F., “Value-added tax will solve debt, jobs problems,” TheState.com, 06/08/11

June 9, 2011 By

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.

http://www.thestate.com/2011/06/08/1850324/hollings-value-added-tax-will.html

 

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