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US Autarky?

Are Tyler and his comment threads suggesting that once a dollar leaves the US, it never makes its way back?

Please explain how, absent a corporate income tax, the US is going to effectively tax foreign investors, if they invest via a US or foreign corporation. This is a major practical problem of eliminating the corporate income tax completely. It would be very difficult to get one’s ounce of tax flesh out of non-US investors and put them on equal footing with US investors (the same issue arises with a system relying solely on consumption tax).

Perhaps I am ,,, oversimplifying, ironically given the comment. But I’d like to understand how a standing exchange market for US dollars can exist if every US dollar is not ultimately consumed here in the US? And if every dollar makes its way back to the US, as it surely must, then why does taxing corporations matter? If you wish to argue that foreign investors take their corporate profits out of the US and then never spend them, then the US price level falls by exactly that much – certainly more effective at “raising revenue for Americans” than trying to tax it away.

An earlier comment by the commetor suggests, correctly in my view, an inevitable iron triangle of taxation. But why should we care so much about corporate tax fairness? After all, many billions of dollars are lost through tax planning and avoidance by corporations, and the corporate tax generates only a small share of US government revenues – so we are going to give up the idea of a truly simple (or zero) corporate tax because of some perceived unfairness in not taxing certain savvy foreign investors?

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