Tuesday, January 17, 2017

Import Tax

The import tax, or tariff, is the tax used by the US federal government to fund its operations from 1789 to 1913. Other taxes were imposed to fund military actions, but families were able to amass their savings to pass on to their children.

The import taxes on British manufactured goods was 45% in 1828. It allowed US businesses to offer the same items at lower cost and establish US based industries to produce tools, furniture and raw material mining.

Trump’s use of the import tax to allow US industry to recover is a logical move to restore lost industrial jobs to US citizens. In this case, foreign-owned, US based manufacturing companies like Honda will benefit, because they, and others have plants in the US already.     

Voters agreed at the polls that they wanted the products they buy to be made in the US. They realize that they would have to pay more, but it may work out, that all companies with US manufacturing facilities will end up producing most if not all of these products in the US.

Voters also know that the exodus of auto manufacturing after the passage of NAFTA in 1993 was logical, because the cost of maintaining US auto workers was uncompetitive.

Between now and when we need to buy another car, we want these companies to start making the car we want to buy in the US, so we don’t have to pay the import tax.  Most of us will get our way, but I expect Bentleys and Rolls Royce models will be more expensive.

Of the 17.5 million cars and light trucks sold in the US in 2016, 48,000 were Toyota Prius cars.  These are currently “not made” in the US and it will be up to Toyota to see if they will dodge the import tax by cranking up production of the Prius in the US at one of their plants. If they do not make the Prius in the US, I expect the import tax to eliminate most Prius buyers, but we are ready to take that chance.

It will be important to look at the import tax when it is drafted to see if parts and sub-assemblies will be taxed, even if final assembly is in the US.


Norb Leahy, Dunwoody GA Tea Party Leader

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