There were times when industrial and manufacturing base, outside the Western world, was virtually non-existent or very little. After that, Soviet Union and its allies tried to challenge Western monopoly on industry and manufacturing. But, due to their Socialist and Communist economies, those attempts were complete and utter failures. After the fall of Soviet Union, West was once again unopposed, with very few exceptions like Japan. Now, since the Asian countries like China and India have started to open their markets, the competition here at home and in global markets is intensifying. It is very important, more than ever, for us, to establish and maintain a highly competitive business environment for our businesses.
There is almost a consensus in business community, as well as in the field of Economics and Finance that the two most restrictive factors for the growth of business and manufacturing are government regulations and taxes. Especially in United States, compared to other major competitors in global markets, the regulatory and taxation burden on businesses is staggering, and rising. This has made it extremely hard for our businesses, especially manufacturing sector, to compete against low cost, less regulated and less taxed competitors. We have been continuously losing grounds, and there is a desperate need to change this scenario.
To explain it further, let me give you an example. Take the example of any manufactured good in your house, or even your house, itself. First of all there is tax on raw material. Then there is tax on manufacturer. After that there is tax on distributor. Then comes retailer. All the transporters and communication providers involved in the process pay taxes, too. All the employers involved in the process have to pay Social security, Medicare, health insurance and other taxes, as well. Everyone involved in the whole process has to comply with and pay regulatory cost, liability, etc. After all this, consumer or business, the ultimate buyer and end user, who has already paid the income and other taxes, gets all these taxes bundled up in final price.
Result? By the time a final, useable and needed or wanted product gets into your hands, it is at least six times the cost of raw material used to manufacture that product. What does this mean? It means, what you buy for six dollars, has the raw material of less than one dollar in it. Assuming no taxes, the same product would have cost you less than three dollars. Yes, you got it right, three instead of six dollars! And these three dollars includes all the raw material, labor, services and utilities, profit margins and virtually everything required to get it into your hands as a finished product, all the way from raw material.
Let’s go a little bit further with this, assuming there are no taxes to pay, at all. It means that your cost of living, along with everyone else would be reduced to half, at least, instantly. Imagine what you can buy and do with remaining half of your income? I mean, the net demand would be doubled at once. This doubled net demand would result into lots of start-ups, and expansion in existing businesses. These startups and business expansions would need lots of construction, equipment, services and other stuff.
This hike in business activity would make the original demand tripled. After that, all these new and expanded businesses cannot be run without employees. Since the demand is suddenly tripled, due to no taxes, we would have to triple the number of work force to meet the increased demand. So, if we have hundred million workers right now, we would need three hundred million. Wow! Doesn’t matter how many legal or illegal aliens we get, they would not be enough to fulfil this demand. There goes out of window, the unemployment problem.
Since demand for the labor would be much higher than the supply and availability of labor, and demand for goods and services still is high, everyone would get a wonderful raise in pay and benefits because it would be extremely critical for employers to attract and retain employees, at any cost. Even if you add the factor that higher demand would increase the prices, keeping the rapidly increasing competition in mind, the cost of that six dollar product would still not go higher than $3.75. With a handsome raise and 37.5% reduction in cost of living everyone would still be much better off. This would definitely change the way you live, and raise your standards of living to a much higher level.
Also, imagine, how much you can save? How much you can invest, to increase your income even more. With all these savings, investments, startups, business expansions, increased demand and 100% employment, where the stock market will be? How rapidly and handsomely your 401K would grow? How easy would it be for you to have an early and fulfilling retirement, regardless of social security, Medicare or other crepe? Would it be hard for you to afford your and your families healthcare and other expenses, regardless of Obamacare or whatever?
Do you get it, now? Government plays Robin Hood with us. No wonder why lefties like Robin Hood so much. They rob our money in taxes and then redistribute the same money to us in welfare. We are far better off keeping this money to us, so that we can use it for our, our families’ and each other’s benefit. Like our early days, we do not need Robin Hood. Our free markets and their hidden hand can take care of everything, like it did in early days.
By any means, I am not proposing that the taxes should be zero. As long as we have government that is impossible because this parasite lives on our money. It is like mosquito. It sucks our blood and then gets us infected and sick. I am giving you this example to explain the ripple adverse effects of taxation, especially the excessive taxation which is required by big governments in order to survive, exist and grow. Minimum taxation is necessary to have small and limited government as intended by our founders. You really love this country? You really want our problems to be solved? You really believe in our right to pursue happiness? There is only one way to do this. Get this beast, otherwise known as government, out of our way, and be proud of living at your own.
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