THE FAIRTAX: THE EQUALIZER
A container ship in the Port of Los Angeles in July (Tim Rue/Bloomberg News)
Photo: Wall Street Journal August 14 2025
Today’s Grassroots Corner comes from FAIRtax supporter Ben Mathes, who analyses the FAIRtax effect on America’s trade balance. Ben makes a compelling case that the FAIRtax does more than President Trump’s tariffs to right the imbalance. He writes:
The Fair Tax and International Trade
The Fair Tax proposal has been introduced in the U.S. House of Representatives as HR25 … . Simply stated, the Fair Tax eliminates all U.S. federal income taxes and replaces them with a national sales tax. Go to www.FairTax.org for details.
As concerns international trade, the fair tax eliminates all taxes on U.S. manufactured products, such as the corporate income tax and employment taxes. Those revenues to the U.S. federal government are replaced with a consumption tax. Why is this significant?
The income tax system increases the price of U.S. products and gives a price advantage to imports. The Fair Tax eliminates federal taxes embedded in the price of products made in the USA. Imports from countries with cheap labor, state enterprises, government subsidies and/or the Value Added Tax (which is a subsidy of exports by the domestic economy), no longer have price advantages. U.S. Customs regulations abets imports with De Minimus of duty value less than $800 per import per day. (Repealed May 1, 2025 by President Trump.) The Fair Tax will reverse our trade deficit because it taxes consumption, not production as does the income tax. U.S. products and imports are taxed equally at the point of purchase. U.S. exports will also be price competitive in foreign markets.
In 1953 the share of manufacturing in the U.S. economy was 25%, now 13%. In 1970 manufacturing employment was 24.3% of the labor force, now 8.5%. The decimation of U.S. manufacturing has resulted in detrimental socioeconomic consequences. Good paying manufacturing jobs – the foundation of the middle class – have vanished. Recreated manufacturing in the inner city will give hope to low income people who have now few prospects for a better life because of the absence of good paying manufacturing jobs. Work will give meaning to their lives.
The attached graph [see below] shows the history of the U.S. Trade Deficit in Goods. [Editor: Note that the top line of the graph is zero, so falling lines indicate negative territory, a larger trade deficit and federal debt.] The deficit to date reflects the accumulative transfer of our wealth to foreign countries, enriching them at our expense. Our deficit with China, totaling $279 billion just in 2023 finances its aggrandizement – a military threat to the U.S. Our deficit accounts for the current account deficit of the United States – our international financial “bottom line.”
The United States is in very serious financial and social trouble. The U.S. trade deficit in goods is both the cause and effect. It is not too late for Americans to change federal taxation to save our country from a financial collapse.
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We thank Ben for this thought-provoking piece showing the FAIRtax as a better alternative to President Trump’s tariffs as a way to right the trade imbalance. The FAIRtax also promotes reciprocity and national security better than tariffs. If you would like to contact Ben, you can reach him at BenMathes@comcast.net.
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Ben Mathes
James B. “Ben” Mathes, now retired, has worked 45 years in international trade, mainly export sales. His experience includes export promotion for the U.S. Department of Commerce, export sales for a manufacturer of welding equipment, formation of the American Export Association, export sales for a manufacturer of lubricating oil and grease, and as a consultant to establish and manage a buying office in Houston for a foreign distributor. Mr. Mathes has traveled to 27 countries on business. He has a B.A. with honors from the University of Maryland and an M.A. with Distinction in International Business from the American University. He is a veteran, U.S. Army.
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If you have ideas like Ben’s on how the FAIRtax would improve the U.S. economy, I would love to hear from you.
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