Most of you didn't catch it when it happened, but our boy Obama reduced the share of Social Security tax paid by workers and it is still in affect. It was a tax reduction for all the people who voted for him. You did not notice that he did not reduce the share of Social Security tax paid by the employer. If you think about it, it is all the same money, the worker's money. The employer would just as soon give the employee the 7% that they pay and have the employee mail in the money to Uncle Sam. It is all games and it is not doing much to help the economy. If you notice that about 25% of what people spend ends up in China. Our government borrows the money from China and gives it to the voters and they send the money back to China when they purchase those good buys from WalMart. Nice game and China knows how to play it a lot better than we do. There are, how ever, some things that we could do to level the playing field, but our voters would have to be smart enough to understand it and that is the rub.
I learned this one from the Communist Manifesto and that is, "all wealth is really labor". I never learned this in Econ 101. In Econ 101, they seemed to be focused on fiscal policy and economic stimulus. It was the new thing back in the 30's and does not seem to want to die. It is still a big part of Econ 101 because it is easy too understand. It is kind of like the "flat Earth" concept. It is easy to understand, except for the fact that it is dead wrong. Now if all wealth is really just labor, why is there so little attention to "labor" and "productivity"? That's the problem. Look at what we have done here in the USA?
For some reason we have tried to hide the cost of our government from the voters. The Social Security system is a good example. We have the voters pay about 7% of their pay toward Social Security and the employer another 7%. Most voters think they are the only ones paying into the Social Security fund. The have no idea that their employer is paying them 7% less and then sending that money into the government. Now we come back to all wealth being "labor". The cost of the product that the employer produces is about 90% labor and 10% profit. Of that 90% labor, you have 14% added for Social Security. This makes every thing that is produced in the USA cost about 14% more than items produced and imported from China. If this is such a great concept, why don't we collect all of our taxes and Social Security in the form of payroll tax? You know that when you add tax or extra cost to an employer's product, he just adds it to the price so the consumer ends up paying in the end. Now what is the solution to all of this and how do we get more jobs here in the USA?
We stop letting China "game" or tax system by shipping in their products that do not have any added tax to compete with our's that are all loaded with hidden tax. The way we do that is to take all the hidden cost off our products and add them back to both China's products and ours at 50% of the current rate. If the added cost is now 33% on USA made products, the new tax would be 16.5% on our and 16.5% on China's products. That means that products from China or anyplace else would cost 16.5% more and ours would cost 16.5% less. If that were the case, you would see a lot more jobs here in the USA while we collected the same amount of tax. It is time that we stopped letting China and most of the world "game" our economic systems and level the playing field. The problem is that our voters don't seem to get it, nor do our politicians. If you don't agree with this, I am not sure this country has a future.
