Will Trump’s Tax Reduction Plan Succeed?
Part 1: The U.S. Manufacturing Industry Is In Dire Straits

 
The main points in this article:

  • President Trump’s tax reduction policy criticized for endangering the U.S.’s financial resources
  • If the U.S. doesn’t reduce taxes their manufacturing industry will plummet
  • Japan is in the same situation

There are fears that U.S. President Donald Trump’s tax reduction policy will cause a loss of financial resources that are now supported by tax revenue.

Despite this concern, Trump said in Hawaii on February 9th that he will reduce the burden of taxes on U.S. companies. He said that he will announce a radical new tax system in 2 to 3 weeks time.

Let us take a look at the U.S. manufacturing industry and Trump’s tax reduction plan to assess whether it will be successful.

 

Incentivizing Companies to Return to the U.S. Through Tax Reduction

During his election campaign, Trump vowed to reduce the federal tax rate from the current 35% down to 15%. 35% is a very high rate even amongst developed countries. According to White House Press Secretary Sean Spicer, the U.S. will undergo comprehensive tax reforms in both corporate and income taxes.

But why is Trump so obsessed about tax reductions?

It is to incentivize U.S. companies and investment ventures that have moved overseas to return to the U.S. and create more jobs for Americans. This is why he is offering more competitive tax rates.

 

The U.S. Manufacturing Industry Is In Dire Straits

The influence of globalization has caused the percentage of American workers who work in the manufacturing industry to decline from 22% in 1977 to the current 8%. Some commentators point to the increasing use of machinery as the main reason for this, but countries with high machinery usage such as Germany and Japan are still at 20%. The decline is not because machines are replacing humans.

This is also a serious problem for another reason. The technology that a country needs in order to advance is always developed in the manufacturing industry. Over 70% of development research in the U.S. happens in the manufacturing industry. In other words, if we don’t raise the percentage of workers in the manufacturing industry back to 20-25%, the level of American technology will drop.

It is said that the U.S. cannot make a single aircraft without Chinese technology. From a national defense perspective this is a very critical situation.

 

Japan Is in the Same Situation

Trump’s tax reduction policy is a strategy to break out of this situation. If we look at Japan, its corporate tax rate of 29.74% is also absurdly high. The government is too afraid to lower it, and the Minister of Finance Taro Aso has even confessed that, “Japan is not thinking about what to do”.

But, like the U.S., the effects of globalization have caused Japanese companies to send manufacturing to China. Since the 1980s, Japanese companies have continued to transfer factories to China to take advantage of cheaper labor costs, and Japanese jobs have been lost. Japanese technology went to China, China gained economic growth, and now it is expanding its military budget.

During European colonization, British India became a ‘designated marketplace’ to sell British made products. In much the same way, Japan is in danger of becoming China’s designated marketplace to sell China made products.

If more technology is leaked to China and they develop the skills to make high quality products, Japan will no longer be able to survive without China.

When globalization goes too far and companies avidly seek greater profits, countries will begin to lose the thing most important to them: the spirit of national independence.

From a national defense perspective, this situation cannot be ignored.

 

Tax Reduction + Job Creation = Prosperity

“When the people deposit money it becomes government bonds that support the country; while this is happening, what the government must now do is ‘job creation’: creating new jobs. They must make the effort to create jobs.

And we must make a society where people don’t retire at 60, but can continue to work until they are 75. We must aim for a future world where society can create jobs, even for people above 75.”

This is an excerpt from founder of Happy Science Master Ryuho Okawa’s book “The Laws of Justice”.

Japan now needs to follow the U.S. in their tax reduction strategy, establish a “Japan First” policy, and create new jobs.


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