We the People or Corporations
We the People or We the Corporations?

Written by Mark Sanguinetti, the web site author

The Constitution gives Congress express power over the imposition of tariffs and the regulation of international trade. As a result, Congress can enact laws including those that; establish tariff rates; implement trade agreements; provide remedies against unfairly traded imports; control exports of sensitive technology; implement U.S. product standards, such as food safety & environmental protection; require that import tariff rates charged are by product type and country from which received. Tariffs by product type is what the United States historically has done in previous centuries and decades when it had a yearly trade surplus or close to balanced trade with other nations. Today other nations, for example China, currently manage trade in this manner charging tariff taxes by product type and have a yearly trade surplus. In contrast, the United States today has low tariff tax rates for products imported and a high yearly trade deficit. Fast Track and the Trans-Pacific Partnership would not allow congress to apply the U.S. constitution to our U.S. foreign trade.

The authority of Congress to regulate U.S. international trade is set out in Article I, Section 8, Paragraphs 1-3 of the United States Constitution:
The Congress shall have power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and to promote the general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
To borrow money on the credit of the United States;
To regulate Commerce with foreign Nations, and among the several states, and with the Indian Tribes;

To verify the words “duties” and “imposts” from the constitution as a tax, which is the context of the above are imposed tariffs levied by the government on imported goods. These words are used to describe a tax on goods purchased abroad. “Excise” taxes are taxes paid when purchases are made on a specific good, for example gasoline. Excise taxes are often included in the price of the product. An excise tax for gasoline can and should be invested in U.S. public roads to drive on for car owners that purchase the gas that is taxed. 

From this article of the U.S. Constitution taxes are described with three specific words, “duties, imposts and excises”. Two of these words refer to taxes on imported goods coming from other countries with only one of the usages referring to taxes related to goods that can be produced within the United States. Literally taxes on imported goods are listed twice as much as taxes on goods that can be produced within the United States. However, today our nation is NOT following the U.S.  Constitution as we have a number of taxes paid by U.S. manufacturing companies and their individual productive workers with their income taxes with goods produced in the U.S.A. that can be purchased in our country by our citizens.  Also if exported to foreign countries the goods are often also charged import taxes by the foreign country.

One of the additional taxes that is being ignored in the U.S. is when U.S. goods are exported to other nations they are also charged with a Value Added Tax (V.A.T.). This tax system also has different names depending on the country. This is a tax on the amount by which the value of a product has been increased at each stage of its production or distribution. The V.A.T. tax system is used by the majority of other nations. It has similarities to our sales tax system. However, our sales tax system is only applied and taxed within individual U.S. states and not taxed on goods received outside of individual states and also not taxed on foreign imported goods. In contrast other nations that use a V.A.T. tax system or a tax system with a different name, such as China, Japan, Mexico, Canada and European Nations apply these taxes uniform through their nation and also on imported goods.

When foreign nations like China charge V.A.T. taxes to their companies, if the goods are later exported, for example to the U.S., the company can get a full V.A.T. tax refund from their government.  Also our nation has very small import taxes, for example 2% or less, charged to companies which import goods from foreign countries to the United States. This is one of the main reasons we have less revenue flowing into the U.S. federal government with instead yearly increased federal debt. Every congressional representative regardless of their political party could be either working to correct this or supporting other congressional representatives who are working to follow the above from the U.S. constitution. Or at least working to form a level playing field of taxation in the United States.

Next in the above U.S. constitutional text, congress is to regulate borrowing money based on the credit of the United States. Yes, borrowing large sums of money to stimulate the U.S. economy can have risk. While the actual U.S. production of goods and services to stimulate our U.S. economy takes more work, planning and education for our people. Being successful with U.S. production will provide real increased wealth to our U.S. economy with limited risk and actual stability compared to only borrowing money, which has to be paid back often now to a foreign nation or citizens through federal government bonds that today are purchased. Nevertheless, Congress has constitutional authority to manage and calculate borrowing money based on the credit of the U.S. However, real wealth for any nation is from the actual production of goods and services within their nation.

Congress has the authority or power to regulate commerce with foreign nations along with commerce between U.S. states. Commerce is the activity of buying and selling, especially on a large scale. The word commerce has the same basic meaning as the word trade, except at a larger scale. The constitutional role of the U.S. congress involves the regulation of U.S. trade with foreign nations, the U.S. states and the Indian Tribes. This should not be outsourced to foreign tribunals. Any feedback to congress from companies could primarily be from those companies who produce goods in the U.S. or at least are considering plans to set up factories and plants in the U.S. thereby creating real wealth as a society and nation. With U.S. factories and competition between U.S. companies in the production of certain product types, tariff taxes can then be placed on these product types when competing with foreign imported goods. Also the amount of tariff tax can vary by product type and nation, with specific product types having a higher tariff tax than other product types. When the U.S. last had a trade surplus, 1975, this was how our tariff tax system was operated. As an example, a product with no U.S. factories and production can have the lowest tariff tax. A product type with competing U.S. factories can have the highest import tariff tax rate. The amount of tariff tax can also vary by country with a nation like Canada getting lower tariff taxes than other nations, for example, China.

Since we have U.S. manufacturing companies and specifically their employees taxed through income taxes, which did not begin as part of the U.S. Constitution, amendment 16, until 1913, we should also have U.S. taxes on imported goods referred to in the U.S. constitution as Duties and Imposts. Obviously, the U.S. should at least have a level playing field of taxation. Namely, if our U.S. productive workers are required to pay an income tax, then there should also be a tax on imported goods. Otherwise one of the primary reasons that U.S. companies will offshore production to foreign nations is to lower taxes. Even with the rise of wages overseas for their productive workers compared to the U.S. workers, companies will often still offshore production to foreign nations and companies to avoid U.S. taxes.

Historically, the avoidance of taxes was one of the reasons for the fall of the ancient Roman Empire. For the U.S. less revenue from taxes via duties and imposts has resulted in less revenue flowing into the U.S. federal government, with a matching increased federal government debt. As an example, the percentage of revenue for the U.S. federal government from import taxes in 1912 was about 31%. Today and in previous years the percentage of U.S. federal revenue from import taxes has been about 1%. And at the start of 2016 U.S. federal debt reached 19.5 trillion dollars. For the year 2017, it has already reached 20 trillion dollars which shows an increase of U.S. federal debt of about 500 billion dollars. In comparison to our U.S. trade deficit for the year 2016, it was about 503 billion dollars. This is calculated with 2.209 trillion dollars of exports minus 2.712 trillion dollars of imports equaling minus 503 billion dollars. This is not the only reason for our increased U.S. federal debt, but one of the primary ones. As an example, the U.S. federal debt compared to U.S. GDP (Gross Domestic Product) increased greatly because of World War 2 and all the needed federal expenses required for its funding. Since 1980 our U.S. federal debt compared to our U.S. GDP has again increased a large amount. In 1980 it was 32%. At the beginning of the year 2016 it increased to 105%.

A primary reason now for the increasing U.S. federal debt is our high yearly U.S. trade deficits, which have been over 350 billion dollars every year since 2000. This loses the real wealth creating U.S. production of goods and services along with the loss of higher paying jobs for the majority of U.S employees. When combined with today’s U.S. income tax system this means less revenue for the U.S. treasury via individual income taxes. As an example, if someone earns $70,000 one year and then $40,000 the next year from a job loss this means less income for the individual and less revenue for the U.S. federal government. Also multi-national companies bringing in revenue from the U.S. markets now are also allowed to offshore their U.S. sales to tax havens, as one example in the Cayman Islands, to avoid U.S. corporate taxes. The corporate tax is from the income from entities registered as corporations and not as individuals. The avoidance of U.S. corporate tax is done through a company setting up an offshore in Cayman Islands subsidiary company, which is owned by the parent company. Offshore banking is then used with sales directed through the subsidiary company rather than through the in U.S.A. parent company. They generate sales in the U.S. and then send it to the Cayman Islands to avoid U.S. taxes with less revenue for the U.S. federal government. Instead a much smaller Cayman Islands tax. U.S. federal government debt in 2000 was about 5.5 trillion dollars. Today for the year 2017 our U.S. Federal Government Debt is estimated to be about 20 trillion dollars. 

As a remedy for the very high yearly trade deficit of the United States the primary method that is being promoted in the United States is the lowering of the value of the U.S. dollar in comparison to the value of the currencies of other nations. For the year 2015, the three nations with the highest trade surplus globally were China at 293.2 billion dollars, Germany at 285.2 billion dollars, and Japan at 137.5 billion dollars. In comparison to their trade surplus with the United States for the year 2016, China had 347.038 billion dollars, Japan had 68.938 billion dollars and Germany had 64.865 billion dollars. These were also the three nations with the highest trade surpluses with the United States. The U.S. Democratic Republic has helped these nations economically, especially Communist China which has risen greatly since being granted by the U.S.A. MFN (Most Favored Nation) status on 12/27/2001. In order to get a trade surplus, nations China and Japan combine a lowered currency value with their import taxes. China and Japan use detail with their import tax system to protect certain key industries, while combining this with a V.A.T. tax system. For information on China's import tax system go to this web page china-briefing.com. For a basic overview of Japan's import tax system go to this web page: Japan Customs. Germany using the Euro has a slightly higher currency value than the U.S. dollar with as of the year 2017, 1 Euro = 1.192 US dollars. Germany uses Import Duty Rate taxes combined with a 19% GST or V.A.T. tax.

Comparing the two means of promoting made in USA goods instead of imported goods. Both the lowering of the value of the U.S. dollar and adding import taxes could increase the cost of imported goods making made in USA goods more competitive. However, the global lobbyists in the U.S.A. today want to deceive people into thinking that import taxes will only increase the cost of goods for poor people to purchase. In contrast, the companies that import goods still want to have competitive pricing for the U.S. market to make sales. The real questions on what is being ignored in the U.S.A. when comparing the lowering of the value of the U.S. dollar with import taxes. Which brings revenue to the U.S. federal government which could be spent to help the poor people of the U.S.? Import taxes bring direct additional revenue to the U.S. federal government, while a lowered value of the U.S. dollar does not. Which lowers the cost for foreign investors to buy U.S. assets, such as U.S. real estate? Answer is a lowered global value of the U.S. dollar. Which of the two does the U.S. federal government through congress have more control of? Import taxes or the value of the U.S. dollar? The currency values between nations are not controlled by one nation alone. This would need to be agreed on between nations and this includes being regulated by the International Monetary Fund (I.M.F.) an international organization which has 189 participating countries. The I.M.F. works with a World Bank framework that keeps track of the volume of money and regulates the amount of money traded. A major factor of currency value determination is the world investor market with the purchases of the currency of a nation. High investments for the currency of a nation mean a needed stable currency value with the currency not dropping in value. In contrast, nations have control of their own individual tax systems.

Article I, Section 10, Paragraph 2 states as follows: 
No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it’s inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.

From the above we again read that Congress by laws passed has control of taxes, duties or imposts with this not being controlled or managed by individual states. except what is absolutely necessary for it's inspection laws. For example, food safety. And these import taxes (Duties and Imposts) shall be for the use of the treasury of the United States.

Source: Mark Sanguinetti, Web Site Author