Border Adjustment Tax
Politicians always talk about creating jobs, but they’re only talking about manufacturing jobs because it panders to the unions who fund their election campaigns. Manufacturing jobs are important, but the fact is we have a consumer-driven economy in the US, and we live in a global economy. Some politicians are proposing a 20% Border Adjustment Tax to penalize companies who import and “encourage” them to start making products in America. Unfortunately, this grossly simplistic idea will seriously hurt the core of our economy… retail. Most Americans will not be able to afford a 20% increase in prices. And a 20% increase in cost to importers will not suddenly make them start building their products here in American. They’ll more likely try to find even less expensive places to build their products so that consumers can afford to buy them.
And as long as nothing is done about depreciation, cost of goods sold, Made in USA labeling laws, and out of control regulations, manufacturing will not come back to the USA even with a border adjustment tax. American businesses do not need negative incentives to start making products in this country. They need to be wooed back after decades of being driven away by their government.
The other obvious flaw with the Border Adjustment Tax is that it violates a primary rule of the governed: NEVER allow the government to create a new tax! New taxes never go away and they almost always go up over time.