Mar 26, 2015
Oneida Ltd• For years, Revere shipped copper
coils about 20 miles to another manufacturing company named
Oneida Ltd.
• Oneida cut and formed the copper
• Then plated silver on the form to produce...
…a silver bowl designed by Paul Revere
That’s as American as apple pie? Right?
WRONG…
…ON TWO COUNTS!
The Paul Revere silver bowl
• Now made in China
• Today, Oneida buys the silver bowl, silver flatware and other products from China
• How can China produce that silver bowl over there and ship it over here and compete?
The American Apple Pie• America now imports apples from
China
• So you really can’t say “…as American as apple pie…”
• How can apples from over there be refrigerated, shipped and still compete with apples grown just down the road?
It’s the cheap labor, right?
WRONG
First, let’s first look at the benefits
of producing that silver bowl
in
China vs. USA
…as China manipulates its currency…
The Paul Revere Silver Bowl
Assume production cost of 元 100
if made in China
@ manipulated exchange rate of 元 7 to $1, the production cost
in China is $14.28
@ free market exchange rate of 元 4 to $1, the production cost
in China would be $25.00
China’s currency was
undervalued by an estimated
40% back in July 2005
Exchange rate valuation
Based on the differences of trade balances
and international economic growth,
that 40% should have grown about 5% points
more a year since July 2005
Recent Press Release:
China has adjusted
its currency by 15%
since July 2005
BUT…
China’s exchange rate for its yuan should have been appreciating
by 5% points more each year since July 05 or 12.5%
So the “adjustment” by the government of China of 15% really nets to only
2.5%
Yuan still overvalued about 40%
Currency manipulation
works the same way
for apples grown in China…
In other words, the government of China manipulates its currency to
subsidize the cost of manufacturing and farming
in China
It’s not only currency
• Tax structure • Health care • Environmental Stewardship• Government loans not repaid• Piracy of intellectual property/ reverse engineering• Other Subsidies
Currency manipulation on top of
these subsidies can reduce costs as much as 80%
when producing in China
This happens without even considering
the cost of labor
That’s how China competes…
…AND THAT’S AS CHINESE AS APPLE
PIE !
But it is more than China…
• The USA has a trade deficit with virtually every other major trading nation in virtually every class of goods…
• Because the USA became the worst place outside of the Middle East or Africa to locate a factory or a farm…
What made the USA the worst place to locate a factory or a farm?
• The USA is the only nation that has a tax system biased against domestic jobs
• The USA is the only nation that has a health system biased against domestic jobs
Wait A Minute!!!
• I just saw a report that the USA just “leapfrogged” to become the third cheapest country in which to do business due to the “plunging” dollar
• Mexico and Canada cheaper
• China excluded from survey
Do we want a weak dollar or a strong dollar?
We want a naturally strong dollar - Trade balance is good
- Makes imports cheaper - Foreign travel is less expensive
- Sign of a strong economy
Artificially Strong Dollar
• Something is fundamentally out of balance
• Internal problems with competitiveness of USA production of goods & services
• External problems with manipulated currencies in Asia and other protectionist practices by foreign nations
So we can change what is fundamentally wrong
or
we can just let our economy and our currency and our future
deteriorate
USA tax system is a tax on domestic jobs
• All income, payroll, savings, property, investment & inheritance taxes are taxes on jobs
• The products produced must carry these costs
• Unless, of course, the products are produced in another country
• As a result, production of farm, manufactured and service goods are moving to countries that support domestic jobs with taxes for jobs
Furthermore
How can a US producer compete
if it must carry the burden
of the health care costs of its workers
and its foreign competitor does not?
Revere’s fabricating costs• In 2007, about 10% of Revere’s
fabricating costs were for the health care of its people and their families
• If you buy a product made from Revere copper or brass, you are paying for the health care costs of our people
• If you are buying a foreign product, you are not paying for any US producer’s health care
What about Revere’s exports?• Of course, the cost includes the health care
costs of Revere people
• The foreign country’s border adjustable tax imposed on Revere’s exports helps pay for the national health care cost of that nation
• So, in order to compete, Revere people have to cover their own health care cost and those of the foreign workers they compete against!!!
• That’s just as true for farm products whether you are considering taxes or health care…
What makes a tax system biased for jobs?
In order to answer this question, it is necessary to understand
Border Adjustable Taxes
All major foreign countries have them
The USA does not
Border Adjusted Taxes
• Value Added Tax (VAT) is most common
• World average is 18%
• World Trade Organization (WTO) compliant
• Rate & application depends on country (making some compliant & some not so…)
Let’s say a good produced in the USA
costs $10 to produce and ship
to a foreign border
Then let’s assume it costs
another $10 to get to a consumer
Assume $10 to produce in the USA and ship to a foreign border
Then another $10 to get to a consumer
COUNTRY
VAT RATE
FRANCE
@19.6%
CHINA
@17%
VAT APPLIED @ BORDER 0 $1.70
VAT APPLIED @ CONSUMER $1.96 $1.70
TOTAL VAT
CHARGED $1.96 $3.40
A Fair Question
Is the VAT Tax of China
really a National Sales Tax?
Border Adjusted Taxes
VAT (Value Added Tax)
- also rebated for exports
- usually does not tax full value ($10)
- VAT wars
Border Adjusted Taxes
• VAT (Value Added Tax)
- rebated for exports
- usually does not tax full value ($10)
- VAT wars
• National Sales Tax
- not applied to exports
- applies to full value of imports ($20)
- WTO compliant and simple
Impact of a National Sales Tax on the supply chain for a US consumer
• A National Sales Tax will place a tax burden on the entire supply chain
• That means all foreign made components or products will be fully taxed
• Just as if they would be if produced in the USA
• Foreign made treated the same as US made
Border Adjusted Taxes
• VAT (Value Added Tax) - rebated for exports - usually does not tax full value ($10) - VAT wars
• National Sales Tax - not applied to exports - applies to full value of imports ($20) - WTO compliant & simple - regressive
• Fair Tax - a National Sales tax that replaces all Federal Taxes - not regressive (it’s fair)
Make it not regressive
• Prebate
• National Health Care
- offsets regressive nature of sales tax
- lifts burden off US production costs
So how do we compete?
• Need to offset currency manipulation
• Need a border adjustable tax
• Need a national health care system
BUT REMEMBER, THIS IS A COMPETITION!!!
Look at Best Practices
Nations need to behave like corporations and sports teams
that continually look at the best practices
of whomever they are competing against plus add a new wrinkle...
(like a Fair Tax)
So we need to determine the best practices
for our products to compete in a global
environment…
• Zero tolerance of currency manipulation
• Elimination of all taxes on jobs - income taxes (corporate & private) - payroll taxes
- taxes on investment and savings • Fair consumption tax (w/health care)
Best Practices
Objection from Farmer Brown“I don’t like a sales tax that adds to the
price that people have to pay for my goods!”
“Farmer Brown, do you like a system that taxes your goods but not imported goods?
“No!”
“Well, Farmer Brown, that is what you have now!!!”
Taxes, Taxes, Taxes
Tax his land, Tax his bed, Tax the table At which he's fed.
Tax his tractor, Tax his mule, Teach him taxes Are the rule.
Tax his cow, Tax his goat, Tax his pants, Tax his coat.
Tax his ties, Tax his shirt, Tax his work, Tax his dirt.
Tax his tobacco, Tax his drink, Tax him if he Tries to think.
Tax his cigars, Tax his beers, If he cries, then Tax his tears.
Tax his car, Tax his gas, Find other ways To tax his ass
Tax all he has Then let him know That you won't be done Till he has no dough.
When he screams and hollers, Then tax him some more, Tax him till He's good and sore.
Then tax his coffin, Tax his grave, Tax the sod in Which he's laid.
Put these words upon his tomb, "Taxes drove me to my doom..."
When he's gone, Do not relax, It’s time to apply The inheritance tax.
Accounts Receivable Tax Building Permit Tax CDL license Tax Cigarette Tax Corporate Income Tax Dog License Tax Federal Income Tax Federal Unemployment Tax (FUTA) Fishing License Tax Food License Tax, Fuel permit tax
Gasoline Tax Hospital Assistance TaxHunting License Tax Inheritance Tax Interest expense Inventory tax IRS Interest + Penalties(tax on top of tax)
Liquor Tax Luxury Taxes Marriage License Tax Medicare Tax Property Tax
Real Estate Tax Service charge taxes Social Security Tax Road usage taxes Sales Tax Recreational Vehicle Tax School Tax State Income Tax State Unemployment Tax (SUTA) Telephone federal excise tax
Telephone federal universal service fee taxTelephone federal/state/local surcharge taxes Telephone minimum usage surcharge taxTelephone recurring/non-recurring charges tax
Telephone state and local tax Telephone usage charge tax Utility Taxes Vehicle License Registration Tax Vehicle Sales Tax Watercraft registration Tax Well Permit Tax Workers Compensation Tax
This list does not include corporate taxes such as taxes
on IncomePayroll
Health care or
health care costs which act like a tax on producing
goods and services in the USA
Virtually all taxes are a burden on domestic jobs in
Agriculture,Manufacturing
and Service industries
Only one
is a tax on goods
that are imported
That is theState Sales Tax
which treatsgoods produced
in foreign countriesthe same as
goods producedin the USA
That means a sales tax
is a
tax for (domestic) jobs
So if we want to keep jobs here
we must replace all Federal
&
many other State Taxes
with a Fair Tax
which will tax imports
the same as
goods produced in the USA
A Fair Tax
for
Fair Trade
Visit: Fairtax.org
Research papers
- impact on manufacturing & agriculture
- fairness
- numerous other questions
Best Practices
• Zero tolerance of currency manipulation• Elimination of all taxes on jobs
- income taxes (corporate & private) - all payroll taxes
- all taxes on investment and savings
• Fair consumption tax (prebate)• National health care plan financed by fair
tax• Rules (enforced) based trading
Worst Practices for Global Warming
• The world is working to make carbon emission worse
• The Kyoto Treaty and Regional/National Greenhouse Gas Initiatives exclude China
• They drive manufacturing to countries that have lower environmental standards
• Causing carbon emissions to increase
China’s Pollution Flow
Almost 25% of the particulate matter that falls on California originates from China and Southeast Asia.
Policy making• The international trade & tax policies of the
USA are destroying the best jobs in the USA
• The correct policies are not protectionist but balanced and recognize the degree to which trade is managed by every country in the world but the USA
• National & international environmental policy making is contributing to global warming due to its biased impact on international trade and the relocation of production capacity
We need to Change
This will require an alliance of
farm, factory, service
and national security
representatives
WWW.PROSPEROUSAMERICA.ORG
Wake up, America!
Visit: reverecopper.com and learn more
Please carry the message…
Thank You.