Why don't we quit taxing our exports?

Question

A nation that taxes its exports is doing nothing more than attempting to get the people of other nations to pay for the operations of its own government, but it does so at the expense of making its products more expensive in the international marketplace. That's why some nations take the step of removing all taxes from the products they export.

In the US we tax things at all stages of a products manufacturing. That means that from step to step the percentage of the price passed along that is due to taxes gets larger and larger. Some years ago I read somewhere that in an automobile sitting on the showroom floor at a US car dealer the amount of the sticker price that was due to taxes was 60%. On a car with a $30,000 sticker price that would mean that $18.000 of the sticker price was due to taxes. The absolute accuracy of that statement is immaterial for our purposes, but it is probably fairly close.

Now, suppose we take the step of removing all taxes from the autos we produce that are sitting on our docks for export. All of a sudden that $30,000 car would be selling in the international marketplace for $12,000. At that price we could probably be selling Cadillacs to the Japanese for less than they could buy their own Toyotas, and it would mean no cut in wages for our workers and no cut in profits for our automakers. Just imagine what removing all taxes from US exports would do for US based businesses, and for our workers.

For US citizens there would be absolutely no change in the prices we pay for autos and other US made products. It would just mean a huge boost in our export sales.

If at every step along the way we have, let's say, 18% tax, and the added price to be passed along was always $100. At the first step the amount of tax would be $18, and the price would be $118. At the second step we add another $100 making the taxable price $218, and the tax $39.24, which is greater than the 18% tax rate. That's how the 60% figure could indeed be accurate.

Yes, the Constitution does indeed forbid taxing exports. But that applies to finished goods, not to taxes previously imposed at every step along the manufacturing process.

Answer 1

I have no idea where you got this 'data' from, but I venture it's from one of the 'anti-tax sites', and includes any type of tax which even remotely affects the price of an automobile. That would include property taxes on the assorted factories which make the assorted parts, taxes paid by workers on their incomes, and sales taxes on supplies used by the assorted manufacturers, just to mention a few.

What you propose to do is ludicrous, at best. And, for your information, The Constitution of the United States expressly prohibits the imposition of export taxes by this country.

Answer 2

You have some faulty data there, especially the part about 60% of an automobile's sticker price is due to taxes.