Big capital has constantly decreased its contribution to the state – creating a gap in the state’s coffers which is then filled by more and varied taxes on ordinary people – ultimately shrinking the very market big capital needs to sell its increased production of goods.
Tariffs and Taxes
“Before the income tax was imposed on us just 80 years ago, government had no claim to our income. Only sales, excise, and tariff taxes were allowed.” Alan Keyes
Free trade areas and free trade agreements have allowed for the growth of multinational corporations but the concomitant reductions in tariffs caused a decline in income for the states involved.
Tariffs are defined as “a tax imposed on the import or export of goods. In general parlance, however, it refers to “import duties” charged at the time goods are imported. Tariffs have three primary functions: to serve as a source of revenue, to protect domestic industries, and to remedy trade distortions (punitive function).”
As tariff income declined income taxes and payroll taxes increased. In many cases workers also objected to reductions in tariffs as cheap imports had deleterious effects on their industries and jobs.
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