Whorled View

February 16, 2008

The Homeland Production Agency: An idea who’s time has come.

Filed under: economics,Technology — lullabyman @ 9:11 pm

We should be getting a nice fat tax rebate this year thanks to the economy being in the toilet. I should be grateful but I can’t help but think that this tax rebate will have little effect on the economy while it balloons both inflation and the deficit. Most of everything we buy today is made overseas so all the rebate will really do is put more money into the pockets of our Asian neighbors. Very little of it will end up staying here in the US of A. What good is it if everyone buys a flatpanel TV where only 20% of that rebate stays in the country (as Walmart’s markup), which remainder Walmart employees will use to buy the foreign-made Nintendo Wii to use with said foreign-made TV.

“…only 20% of that rebate stays in the country (as Walmart’s markup), which remainder Walmart employees will use to buy the foreign-made Nintendo Wii to use with said foreign-made TV

The other problem with the existing rebate (besides the dangerous impact on inflation and the deficit) is the removal from circulation by nervous consumers. With the bleak future constantly thrown in our faces people are likely to conserve as much as possible.

To stimulate the economy you must put money in a system that keeps it in the country and keeps it in circulation. President Bush’s current stimulus package does very little if anything to this effect.

My solution came from an idea I had while visiting www.madeintheusa.com. It has a quote in the side bar which says, “There are 293 million people living in the United States. If each one would shift $20 a month in spending from foreign made products to American made products, that would create 5 million new jobs.”

“There are 293 million people living in the United States. If each one would shift $20 a month in spending from foreign made products to American made products, that would create 5 million new jobs.”

Wow. Adjusting $20/month from one brand to another will create 5 million new jobs – and thats without any “new” spending. Imagine if the whole stimulus plan (roughly $1200/family) could be used for only domestically made products. The economic effect would be enormous. But how do you earmark that money for domestically manufactured products? $150 billion is a lot of money, so the corruption to acquire would be an acceptable risk for many (if not most) companies with foreign products. In short, it would necessitate yet another government entity (booo!) to monitor business and corporate supply claims: the Homeland Production Agency or “HPA”.

But it’s time has come. Being a Republican who has some John Birch leanings I shudder to think of creating another government agency, nevertheless it is an evil necessity. There must be an agency that has as it’s main goal the encouragement of production in our Homeland. Such an agency would work closely with the IRS (which it would eventually replace – so really no additional bureaucracy is being created) to provide tax incentives for companies to incorporate US made parts and pieces. Because of tax incentives, corporate taxes must account for which supplies are imported or domestic, and the HPA must verify those claims. Each product then gets a HPA rating where 0% means it is wholly foreign made and 100% means it’s wholly domestically made, all parts and pieces included. Lastly, the HPA would be responsible for making sure tax rebates go toward domestically made products as much as possible.

“Each product then gets a HPA rating where 0% means it is wholly foreign made and 100% means it’s 100% domestically made – all parts and pieces included.”

This last item seems the trickiest (although it isn’t as I’ll show below). How does the HPA make sure that 100% of your tax rebate goes toward purchasing domestically produced products? Simple (although in practice it will be a task initially costing 100’s of millions): by making the HPA pay for the products directly, and through a system already in place that facilitates the power of internet database processing.

It would involve using a modified version of Paypal as the payment system, and your Social Security number gives you access to an HPA-paypal account to where your tax rebate will be deposited. You may even add to this balance if you wish. Any website can implement the HPA-paypal system – as simply as adding any other payment module (as an ecommerce programmer, let me assure you that this is very easy to do).

“Any website can implement the HPA-paypal system – as simply as adding any other payment module (as an ecommerce programmer, let me assure you that this is very easy to do).

For example, let’s say you get a letter from the IRS that your HPA rebate has arrived, so you log onto amazon.com (or any e-commerce website). Let’s say that you want to buy a leafblower, a trampoline, a Wii, a doodad, and a Schwinn ten-speed. You select “HPA-Paypal” for my payment method and check out. HPA pays 100% for the leafblower and trampoline because they’re both made entirely in the US, but only for half of the Schwinn because of the foreign parts, and nothing for the Wii, made entirely outside the US. HPA won’t pay for the doodad either because the doodad manufacturer didn’t register their product with the HPA and so it isn’t in the HPA database. Note that amazon.com doesn’t need any of this information – it’s all taken care of at check-out by HPA when they pull the info from the HPA database. At checkout you enter a credit card to pay for the remainder of the balance that the HPA won’t pay (for foreign manufactured products). Piece of cake … for everyone concerned.

“You log onto amazon.com … select HPA-Paypal for my payment method … and enter a credit card to pay for the balance that the HPA won’t pay. Piece of cake.”

Ten years ago funding domestically made products like this would have been impossibly difficult. Today such a system can be put into place within months (at least on a limited basis initially), and become a necessary and powerful tool to be used down the road to address future economic issues. All the pieces are already in place. It could, in fact, provide the framework for a less intrusive, and consumption based tax method as we begin to deal the the problems inherent in today’s income tax methods.  At that time there would be no more need for the IRS, so we’d end up with no greater bureaucracy than we currently have (it would actually shrink because the HPA based consumption tax would be far easier to administer than an income tax system).  It is, in short, a no-brainer.

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2 Comments »

  1. I like the way you think.

    Comment by Melissa — February 25, 2008 @ 4:49 pm

  2. WooHoo! Free Money from the government! Where should I spend it first??!!?? I will probably use it to pay taxes.

    Comment by robin — March 6, 2008 @ 10:36 pm


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