Reforming Tax and Farm Law: Think Locally, Act Globally to Reduce Trade Barriers

“We’re #1” is not something you chant when you have the world’s highest corporate tax rate. Unless you are doing so sarcastically — or you want to punish businesses for … well, being in business. 

Yet that is where the United States currently stands. We impose the highest corporate tax rate on the planet – 39.2 percent. Hooray. Obvious to all but the ideo-illlogical is that this hampers our ability to compete with the planet. 

If we invite companies into our country — and then beat them about the head and shoulders with a bat — we should at least have the decency to not act surprised when they get up and leave: 

Top U.S. Firms Are Cash-Rich Abroad, Cash-Poor at Home 

U.S. Companies Stashing More Cash Abroad As Stockpiles Hit Record $1.45T 

Look At The Humongous Amounts Of Money US Tech Companies Stash Overseas To Avoid Taxes 

Wouldn’t it be outstanding if we made it more attractive for these trillions to be brought home and invested here? We’re entering Year Six of the non-recovery “Recovery” — a cash infusion of this magnitude would go a long way towards allowing us to remove the quotation marks. 

And it would open the cornucopia of creativity, innovation and life-improvement that always follows free market activity. Yet that’s not what the progressive leadership has in mind: 

Democrats Eye Tax on U.S. Groups’ Overseas Cash 

Ummm, no. Just — no. 

Abolish the Corporate Income Tax 

Yes please – let’s do that. 

We must keep the global market in mind when examining more and more of our once-solely-domestic policy. What we do here no longer stays just here. Countries all around the world are watching — and reacting. 

Our New Deal-era farm policy has over the last eighty years metastasized into a full-on nightmare mess. Worse, as over those eight decades the farm market globalized, the world’s nations have raised and re-raised us — tax-for-tax, regulation-for-regulation, subsidy-for-subsidy. 

An eye for an eye leaves the whole world blind. Government action for government action leaves it destitute. 

Acting unilaterally is a thing of the past — that is what got us here. In fact, anything short of full-on global reform creates all sorts of new government-induced problems: 

(T)he European Union (EU), which supplied as much as 20 percent of global (sugar) exports in the 1990s, shifted from a net exporter to a net importer following sugar policy reforms in 2005.

Their reforms? Unilateral tear-down of their trade barriers – which sounds good. Except it allowed Big Sugar Subsidy Brazil to flood their market – and wipe out nearly all domestic production. And now the EU is paying about 25% more for sugar. 

Something similar is happening here.  Into the midst of this global omni-protectionist nightmare, we in 1994 dropped the North America Free Trade Agreement (NAFTA).  Which greatly opened up our trade with Canada – and Mexico. 

Mexico is also a large sugar producer. And the Mexican government is a huge part of the process. The Federales currently own outright 20% of all Mexican production…. 

Mexico has since 2008 exported (to us) nearly 8 million tons – yet have imported more than 1.2 million tons for domestic use. 

In a truly free market, they would send us 1.2 million tons less – and keep it for themselves so as to not need imports. But in the patchwork quilt that is the global Trade War subsidy scheme, Mexico has manipulated their sugar price to be about 10% higher than ours. So they are playing the margins and reaping the windfall. 

Yet for some reason we can’t export to Mexico at anywhere near similar levels – to avail ourselves of their higher price.  Hmmm…. 

Government is an organism. And like any other organism, its first instinct is self-preservation — remember the Internal Revenue Service (IRS), the Federal Election Commission (FEC) and other arms of the Leviathan impeding and attacking less government groups? 

So when the government-run Brazil and Mexico sugar industries see an opportunity to use government against its opponents — they do so. 

The solution? Negotiate a global across-the-board reduction in government. 

This is where the World Trade Organization, usually a colossal waste of space, can actually be of some good use…. 

The world’s sugar-producing nations need to sit down together, each with a copy of everyone else’s lists of protectionist sugar policies. And start horse trading. 

“Brazil – how about if you get rid of this subsidy, we’ll each get rid of one.” 

“Mexico – if you get rid of this tariff, we’ll each get rid of one.”  

Let the subsequent discussions ensue. Lather, rinse, repeat. 

The rest of the world has learned this lesson on corporate taxes — and hosts trillions of what should be domestic dollars as a result.

We should play catch-up there, dramatically drop our rates — and simplify our code. 

And then take that lesson learned and apply it to what is now global farm policy.

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