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Will an Export Tax Restore True Free Enterprise?

Written by Gary North on May 27, 2013

Gary North’s Reality Check

This is a recent discussion between the Export Tariff Guy and the Free Trade Guy.

ETG: What this country needs is an export tariff.

FTG: How would it work?

ETG: Every exporter would pay a tariff on the retail price of everything it exports.

FTG: So, it’s a sales tax on exports.

ETG: That’s correct.

FTG: And why should the government do this?

ETG: It needs the money.

FTG: So, you are in favor of added taxes.

ETG: Extra export sales taxes, yes.

FTG: So, you want the government to spend more money.

RTG: Correct.

FTG: So, you are a Keynesian.

ETG: Of course not. I am a defender of free enterprise.

FTG: You think that free enterprise is promoted by raising taxes.

ETG: Yes. Sales taxes. On exports.

FTG: Any other taxes?

ETG: Sales taxes on imports.

FTG: So, you want bigger government to help promote free enterprise.

ETG: Yes.

FTG: So do Keynesians.

ETG: But Keynesians are not supporters of real free enterprise.

FTG: What is real free enterprise?

ETG: Free enterprise that is promoted by high sales taxes on exports.

FTG: And imports.

ETG: Right.

FTG: How do taxes on exports promote free enterprise?

ETG: Because they reduce the number of exports.

FTG: How?

ETG: By raising prices to foreigners.

FTG: So, they will buy less from American exporters because post-tax prices are higher.

ETG: Correct.

FTG: Why is that good for free enterprise?

ETG: Because it makes available more American-made goods for Americans to buy.

FTG: Because the goods are not shipped to foreigners.

ETG: Correct. So, consumer prices will fall in America.

FTG: So, this is a subsidy to American buyers of American-made goods.

ETG: Correct.

FTG: This subsidy is paid for by Americans who want to buy foreign goods, but who will cut back because of reduced imports due to reduced exports.

ETG: Correct.

FTG: So, free enterprise requires government subsidies to one group of American buyers at the expense of another group of American buyers.

ETG: Correct.

(For the rest of my article, click the link.)

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21 thoughts on “Will an Export Tax Restore True Free Enterprise?

  1. Leland Hauenstein says:

    What we need is an import tax not an export tax. We should tax every American Company that manufactures their products in a foreign country and then imports them to the United States. They should be taxed 100% of the market value of the product to pay for the jobs that they exported away from America. And to pay for the loss of revenue to the States, The Cities, The Local Economies, and the Country. They are using slave labor to produce their products and then import them back into this country and sell them to the very same people that they fired. It is the only right thing to do. They refuse to support the people who support them. Make them pay for the ruined economies that their greed has created.

  2. If you really believe that, you understood -nothing- of what North wrote about. Sad.

  3. shamu10 says:

    Taxes are what this Commie Govt. does best. TEA, Taxed Enough Already! What part of No New Taxes don't these guys understand?? I f you want Less of Something, TAX IT! Quit paying 3rd World Minorities to come here, Take Over, and Out-Breed Americans! Think of the Money Saved.Quit paying Hadjiis to Be our FRIENDS, Ha Ha! Then the Marxists in Charge won't NEED as much $$$$$!

  4. If you remember correctly, we had tariffs on good coming into this country. That's what kept the playing field
    relatively level. When Washington decided to take them off, that's what opened the flood gates for
    our manufacturing to head to other country's. (I'm guessing big money backed that one) I kind of chuckled
    reading this. It's just ass backwards of the way it should be. If you want manufacturing back, reinstate
    the tariffs.

  5. CJMcRat says:

    I really think that there is only one question that a government employee should ever ask. "What is the fastest way for me to get out of your way?" It is my money, I worked for it. I earned my money with sweat and blood. Why does anyone think that taking 50% of my money to give away is a good idea? If I hire someone or go to a store, and pay money, I get something of value in return. What am I getting for my 50%? Please do not tell me that I get safety and security. I live in Chicago where the odds of getting shot are greater than the odds of getting shot in Afghanistan, I work for a business that charges 50% less than any other country in the free world, yet the government is taking so much from us that I worry about our survival. Yet, we are afraid to raise our prices because business would drop. Every day while working I watch a married couple with their two children walk past on their way to the park. They get to do this because they are both unemployed and receiving government money for staying home. I once asked the wife how her job hunting was going, and she replied with a smile, "Why work hard looking for a job when I get paid to stay at home with my children?" Mean while my mum died and I missed the funeral. When my father had open heart surgery, I was at work. I am afraid to miss even a day of work, because there are 11 million undocumented workers depending on my 50%.

    My only hope is for a quick and painless death. If I die at work, my family gets $400,000. Wait I did the math wrong. My family would get $200,000 and the deadbeats who are sucking on the deflated teets of the country will get $200,000 more

  6. Yea, before WWI World War 1, there were only import taxes. Where as other countries that did business with the USA had to pay taxes on their goods or stay out. At the start of WWI taxes were implemented to pay for all kinds of things, bulletts, bombs, airplanes, and other items needed. Since then it just got worse.
    What we really need here in the USA is to manufacture our own goods and tax all those that have a need to sell thier goods here. Let's start with china, russia, japan, just for starters.

  7. Michaelon Wright says:

    What we need to do is to eliminate the IRS (an organization that has been corrupt since it's inception) and go to a system of user fees and a national sales tax. The Fair Tax is an example of a taxing system that would stimulate economic growth and employment. People would then know exactly what government is costing each of us and everyone would pay something toward funding it. We would no longer be punishing working people and those that save and invest providing the money for economic growth. US and international companies would bring a lot of their foreign production and money into this country stimulating economic growth, job growth and wage growth.

  8. trailblazer1 says:

    Too bad Abbott and Costello aren’t alive. This would make a great vaudeville act. LMAO

  9. You can't have a export tax in the US. They are banned by the constitution.

    Article 1 section 9
    No Tax or Duty shall be laid on Articles exported from any State.

  10. Tionico says:

    you just want more of the same. How about shrinking gobbermunt down to the point where it ONLY deals in the fourteen or so areas the Constitution commands they deal, and none other? Then maybe the ever-widening maw of FedGov will cease to devour our substance. Stop growing the beast, then perhaps we won't need to continue to figure out more ways to take money out of OUR pockets to feed it. A truly FREE market has NO restrictions on it. None. Get it? Not a thing. Let PRICE allocate resources to best suit the PUBLIC. Its MY money, let ME spend it how I want. Stop taking it to do things I abhor.

  11. Tionico says:

    better yet.. shrink government back down to wher it is supposed to be. Get FedGov OUT of everything NOT assigned to it in the COnstitution. Then we won't have to work until late June every year to feed the monster. Maybe WE can enjoy a larger part of the fruits or OUR OWN labours? The problem I have with the "fair tax" scheme is that it does NOT do a thing to shrink government. THAT is the problem, WHY do we continue to accept as a given that government MUST stand in the place of an all knowing all caring provider and fixer of all we need? Until we cure ourselves of THIS disease, NO tax plan will work. The present system removes the God-extablished connexion between what a man's hand does and what his mouth gets to eat. Just like that woman walking her kids to the park.. why should I look for work when "the government" (read: YOU, sir, who are standing therte askiong me how my job search is going) pays me to stay home with my kids? She's right. Why should she? The cure? STOP IT. Stop paying people for nothing by taking, at gunpoint, the sustenance of those who DO work!.

  12. Tionico says:

    so what? How many OTHER taxes are illegal, yet paid in silence? How many other things do FedGOv mind, that they oughtn't?

  13. Let me see if I have this right. We want to encourage and increase exports, such to help increase jobs for Americans who make stuff for export, the jobs increasing tax revenue for the government. So what does this administration do? It increases taxes on Exports, such to penalize exporting of American made goods. Obama has to go.

  14. Both excessive import and export duties have been proven time and again, to be counter-productive, since other countries just raise their duties, resulting in a trade war, in which everyone loses.

    The FairTax treats everyone exactly the same and doesn't tax business at all. Therefore it allows U.S. manufacturers to lower their prices, to better compete with foreign manufactured goods, both in the USA and abroad. This means more sales of U.S. manufactured goods, which in turn, means more jobs in the USA. The cost of manufacturing goods overseas would remain constant, while the elimination of the corporate income tax would dramatically reduce the cost of manufacturing in the USA. This would not only repatriate many off-shored U.S. jobs, but bring in many new jobs, as foreign companies move their facilities to the USA, to take advantage of the lower U.S. manufacturing costs. All those new and returning jobs would allow the FairTax rate to be lowered over time, as the tax base broadens, with all those new consumers. Furthermore, the only defense that any other country would have is to implement their own FairTax. But by the time they could do that, many of those manufacturers would have already moved their operations to the USA and would be hesitant to move again.

    Under the FairTax, individuals win, since there is no longer an IRS to fear and savings aren't taxed, U.S. manufacturers win, since there is no longer a corporate income tax to artificially inflate their costs, unions win, since demand for more workers will swell their membership, and retailers win, since there will be more consumers with jobs to pay for their products. The poor win. Seniors win. Singles win. Couples win. Home buyers win. Retailers win. Manufacturers win. Everyone in the USA wins.

  15. Everything could be balanced out and financial slavery to the state would end by simply instituting the FairTax.org Plan.

  16. Gary Wayne says:

    No National Tax. Leave taxing for govt services up to the States where the people have control of the State Legislators and if you don't like the way a State runs government? The vote with your feet and go to a State with no income tax, low sales tax and no property tax. This is what our Fore-Fathers had in mind when the said the States were Sovereign. Even the Militias need to be Sovereign to the States once again. The Federal Government is afraid of Sovereign Free Men, that is why they are attempting to Federalize everything and walk all over our tenth amendment.

  17. trailblazer1 says:


  18. Seymour Kleerly says:

    We're really paying the Arabs to be Israel's friends not ours.

  19. Wilford Biggs says:

    I think the problem here is that our Constitution prohibits Export Taxes. Import taxes are permitted by the constitution but export taxes as expressly prohibited. I do not have a copy of the constitution at my disposal but I am sure that is the case from my study in constitutional las classes.

  20. Fed Up Grandma says:

    How many companies have left this country because of the IRS and their BS? Where exactly is the IRS headquarters?

  21. Lets be logical on this!
    1st export taxes only move manufacturing/jobs out of the country.
    2nd we need a fair tax system that makes all people pay something and those that use a great deal of government services for having multiple children should pay more.
    3rd is an export tax, but only on natural resources for we need to keep them here for our own use and additional job creation.
    4th is we do need import taxes. This is help with a level playing field. There are two many countries dumping products at cost or loss to undermine our markets. They also have a much lower standard of living and cost of living, lower taxes, no attorneys suing on everything driving up cost, lower energy, labor and tax cost. They have less or no union protections, no EPA or other government regs that drive cost through the roof.
    5th is a fine on anyone trading services in order not to pay taxes…. fine equal to 5 years gross pay and 1/2 all assets.
    6th is loss of all assets and prison time for hiring one illegal immigrant