Comment by noss
16 years ago
A sales tax break for goods originating from US is, in all ways, a trade barrier. You can expect global mutual treatment. That means decreased foreign demand for US products.
So you end up sponsoring US companies that were not capable to compete with more efficient foreign companies. Which is in itself a more interesting problem. Most European countries have as high, or higher, standard in working conditions (and TAXES!) and they do have positive trade balance.
Does it really seem like a wise decision to make US produced products less attractive on the global market, for the hope that tax cuts on domestic products will match up, and then some, with increased income tax from the new jobs?
An alternative is to instead use taxes to set up better public transport, so the time-and-cost-to-get-to-work radius around companies increase. Making it both easier to find the right competence (larger area, more people to chose from) and making more real estate close (time-wise) to the city, making the cost of living lower.
I agree with all these points, but the point I had been trying to make is that increasing spending in the face of a trade deficit means that we are doing more to spur China's economy than our own.
I'm not sure that the public transport makes a difference with our car culture and low population densities. I can't really think of a good way to do a subway in LA, for example, though they tried.