Green Energy and VAT:

I have for some time been advocating that America pursue a stronger green energy policy. I am adding a new leg to the stool. That leg is a value added tax (VAT).

Basically a value added tax is a tax that is levied only when a manufacturer increased the value of a product and then sells that product. This is in contrast to the current system of not collecting a tax until the item is sold to the consumer. The nice part of a value added tax is that all other nations tax this way. Because America does not use a value added tax foreign goods enter America essentially tax free. However goods made in America are taxed when imported into the country where we wish to sell that good.

The result is that American goods cost more in say China than Chinese goods of equal value cost in America due only to difference in tax systems. This is not a level playing field and means that America continues to be at a competitive disadvantage. We must change the largely ineffective corporate tax structure where for example large oil companies pay no taxes on billions of dollars of profits. The fairest way to do this is to collect taxes on the value added to a product such as gasoline as it moves thru the refining process that changes it from crude oil to gasoline. Value has been added and that value should be taxed.

Collecting taxes in this way will cause industry to pay their fair share of the cost of maintaining America’s infrastructure as well as funding items of nation concern such as national defense and national security. But more to the point it will permit America to tax imports in the same way that other nations tax American goods entering their markets. No longer will goods made in China or Japan enjoy an advantage in price due to an imbalanced system of taxation.

If America can develop low cost energy sources and a balanced taxation system who knows how many manufacturing jobs will flow back to America. We almost surely can reverse the trend of the past 20 years where jobs were lost to manufacturing in places other than America. Once again the American worker could be proud of his job and his country and even his company. Once again American’s would have jobs doing things other than making Subway sandwiches and MacDonald’s hamburgers.

Creating Jobs | The Jobs Crisis