FairTax Overview
Indeed, it has been estimated that border-adjusted regimes effectively grant foreign producers an
approximately 18 percent price advantage over U.S. produced goods, whether competing here or
abroad.37 Since virtually all our trading partners have such border-adjusted regimes, our failure to
follow suit results in the equivalent of a self-imposed handicap, stimulating outsourcing, encouraging
plant relocations, and lowering the wages of American workers. A recent report by Jerry Hausman,
Massachusetts Institute of Technology Professor of Economics, states that the U.S. failure to recognize
and confront this problem costs us more than $100 billion in exports annually. 38
Our failure to counteract these border-adjusted taxes explicitly encourages consumption of
foreign, rather than American, automobiles. And it converts many of our nation’s retailers into what are
effectively tax-free trade zones for foreign produced cars.
In effect, the U.S. tax system is distorting the international marketplace and literally driving
plants and good jobs out of this country at a devastating and unsustainable pace.
With each passing year, manufacturing has become an ever-decreasing part of the overall
economy. Consider that the value of all goods manufactured in the U.S. was roughly 30 percent of the
value of all goods and services in the economy in 1953, 25 percent in 1970, 20 percent in 1982, and it
fell to 11.5 perc