The U.S. government unintentionally encourages imports because of its tax policies. Washington maintains the second-highest corporate tax rate among industrialized countries. That makes American companies less competitive and encourages them to move production and even headquarters overseas. That, of course, leads to lost jobs and lost revenues.
Further, the U.S. tax code discourages savings by applying high marginal tax rates on every dollar stashed away. That’s a key reason Americans save less than people in other industrialized countries, and it explains why we need to import so much investment capital.
“Whether it’s Japanese trade surpluses or American trade deficits, large, persistent international trade imbalances are truly unsustainable,” Scissors and Foster conclude. That’s the message our leaders need to hear, so they can change American federal policies and make our economy more competitive.
There was a time, not long ago, when books were written about how Japan would dominate the planet someday. Yet while the country remains wealthy, it can no longer aspire to global economic leadership.
That’s a fate that the United States must avoid. We’ve been the engine driving the global economy for decades. For our own sake, and the rest of the world’s sake, we must retain that role.
A good, long look in the mirror -- and taking the right steps now -- will allow us to do just that.