Article

58805

Chicago, Central USA
Day 545, 16:30
Article #26


Just using this official seal while I still can folks, I won't be Vice President in a few more days

There has recently been a rather public debate concerning the import taxes that our government currently has in place. If you couldn't tell from the title or just don't know me, I am highly in favor of decreasing our import taxes, but I'll get to the reasons why shortly.

First of all, let me begin by saying how incredibly happy I am that this debate has entered the public sphere. Activity is a rare thing in our country these days, and it fills me with hope that perhaps our future isn't as grim as some people might believe.

Now, onto the reasons why we should lower import taxes. Three articles have been written on the subject, which means that it must be very important indeed. The one which seems to have brought the debate out of the shoutbox and into the media is [USA] Lower Import Taxes? , by ConquerorBiff . This article gives a nice overview of the beginnings of the debate in the shoutbox. The second article to appear on the matter is The Generals Take on Import taxes , by General Patton 47 , and is the first article to give voice to the movement to keep import taxes where they are now. The third and, before this article, most recent, is DOWN WITH IMPORT TAXES? Please stop this madness! by Victor von Doom . I suggest that everyone who reads this article goes and reads all three of these, gives comments, and votes them up. Even if you don't agree with the ideas presented, it is still important to let people know you appreciate their contribution to the activity of our country.

After some consideration, I must admit that the article by General Patton 47 has me confused. Relatively early on in his article, he states:

Let me first run through how import tax and free trade works in e-sim and then show the difference as to why this rl ideal is not applicable to e-sim economy.

Which on some levels, is quite true. The RL economy has very little semblance to the economy we face here in e-Sim.

He argues that having an economy whose companies are protected by high import taxes results in overall prosperity for all involved, and cites the following:

A good example here is to look at UK's economy where the markets are closed off and UK produces some of the cheapest goods in the world. Even without cheap imports coming into the market, UK companies are extremely competitive since there are no barriers to entry.

I'm not sure here if he is referencing the RL UK, a point which would be invalidated because he just stated that RL and e-Sim are totally different, or the UK as represented in e-Sim, which would be invalidated once more because the e-Sim UK is not only more protectionist than we are , but also has the notable handicap of not currently existing on the map.

He also states the following:

1. All industries are in a perfectly competitive model. Company owners do not have market power due to no barriers to entry. Consquently most company owners make slim profit margins because if there were any excessive profits new companies would come into the market.

when pointing out reasons why the e-Sim economy is different from the RL economy. It seems, however, that he is conveniently ignoring that opening companies costs gold, and cost to begin operations is definitely a barrier to entry in a marketplace.

He concludes his article by announcing that all raw materials that a country can produce, and all manufacturing companies, should have a 99% import tax placed on them. Which, as I will explain later on, is a quite insane proposal.

As for the article by Victor von Doom , I feel that my overall opinions on the matter will constitute an adequate response to the points he raises.

In America, we are blessed with high iron, one of the more valuable resources a country can have. As we have high iron, our iron and weapons companies have no excuse to be inefficient, whatsoever. Even if import taxes are lowered to 1% on iron and weapons, our companies should still be able to profit. Having a 15% import tax on goods that we ourselves can produce as efficiently as possible only encourages inefficient companies to open and make an attempt at profit, with the result of hurting overall economic growth.

One of the points covered in the pro-import tax articles is that with lower import taxes, foreign citizens can undercut domestic markets and hurt American businesses. While there is some truth to this, the only businesses that they hurt are businesses that are highly inefficient, and serves to show that we have too many people producing a certain good. All these import taxes do is allow companies that should not exist to exist.

Examples in the pro-import tax articles cite undercutting of weapon sales in our markets. Some might say that this shows import taxes should not be lowered. I, however, see something different. If we are actually being hurt in industries that we should have maximum efficiency in, even with a 15% import tax, something is wrong. The answer is, most certainly, not to raise import taxes to 99%.

As for industries that have difficulty producing domestically, our grain import tax is 15%. There is absolutely no reason for it to be this high. Food, houses, tickets, etc (except for gifts), all have 15% import taxes. Why? Producing such goods through domestic companies is inefficient, as you don't have the productivity bonus from having the appropriate high resource.

The goal here, the idea behind reducing all import taxes to 1%, is to encourage efficient industry and the lowest price for the consumer. I believe that these goals can be accomplished through this, and I sincerely hope Congress will see the truth behind this and lower the import taxes.

Previous article:
[CG] The Enemy We Face (12 years ago)

Next article:
Admin, I Know You're Excited About This Premium Account Change, And... (12 years ago)