Wage Protection Import Tax—This domestic tax on imports arriving from any country with lower minimum wages. This levy/import tax would be in direct proportion to the disparity between the domestic minimum wage and the minimum wage of the country of which the item is being imported from.
This tool whether it be called: surcharge, tariff, customs duty, toll, levy, duty, or import tax, is a form of taxation that would be applied to imported goods and used at the discretion of each individual government; preferably authorized through international trade agreements.
Such an import tax policy should be introduced to deal with the global need to build up a standard of living, creating a better quality of living for people worldwide by reducing the advantage of repressing wages. Currently governments can suppress wages and reduce the standard of living in their own countries in order to gain a competitive edge exporting, this is both unethical in the way it’s suppresses the quality of life in the manufacturing country and harms the importing country’s economy.
The Wage Protection Import Tax will allow nations to implement wage protections based on the disparity of the minimum wage of the producing country and the domestic minimum wage of the importing country, supporting wages in that importing/taxing nation while motivating exporting nations to increase their wages/standards of living to avoid the Wage Protection Import Taxes of the importing countries.
If a Wage Protection Import Tax does not happen wages will continue to be allowed to erode in higher wage paying nations directly effecting the ability of lower income paying nations to export products to those higher wage paying nations due to the decreased ability that declining wage income will have on its standard of living i.e. available discretionary income of that higher wage earning nation and their consequential current and future spending.
As real wages decrease in developed economies under the current trade system their respective governments will spend less on military, as military might shifts the balances of power changes, instabilities will occur, and new conflicts will arise, potentially setting off major wars around the world. As developed nations allow their real wages to slip away, they play a long-term dangerous game, for themselves and the world.
The worlds current process of having lowest wage possible, race to the bottom strategy, creates the opposite of what’s needed, it is hurting and suppressing everyone, reducing wages in developed nations and suppressing wages in developing economics, repressing the global standard of living in the overall global economy.
A Wage Protection Import Tax would be implemented by estimating the hours of labor in a given import and multiplying those hours by the difference in each these nations’ minimum wages, if there is a negative amount, that would be the Wage Import Tax on that imported item.
Example: the equivalent of $10 minimum wage in nation “A,” $2 minimum wage in nation “B,” estimation of one hour of labor in the manufacture of the imported item, in this example there would be a Minimum Wage Import Tax of $8 on that item charged by the importing nation “A” regardless of what the actual factory wage was, the motivation for using the old bad tactic of the past in which nations would reduce their wages to the lowest possible level in order to create a competitive export advantage will now be somewhat lost.
TA new perspective of implementing policies that will obtain the best quality of living/a higher minimum wage with all the infrastructure and educational advantages that will arrive in the long run with such a focus on, standard of living, rejecting the old policies of focusing on trade advantage through wage suppression. A higher standard of living will become the new goal in the way to compete in global trade.
Once this policy starts to happen around the world nations at the lowest level of hourly minimum wages will begin to make greater gains as their respective governments raise minimum wages domestically to reduce the amount of, Wage Protection Import Tax, their nation would be charged by more developed nations, while some support for wages will be given to nations with higher wages. Although the differences in the minimum wages were not likely to be the true difference in wage costs of any given product, it will be helpful in sustaining some real wage support, while generating additional tax revenues in more advanced economies. This wage protection import tax will ultimately help increase the standard of living for people working for the lowest wages around the world, while offering some wage protection to higher earning nations.
The same process could be created for pollution, governments that have good environmental policies/laws could tax the imports from governments that have bad environmental laws/policies, this would protect the good environmental policies of nations by not having good environmental policies an economic liability in trade, while motivating better environmental policies/laws of the nations that do not have good environmental policies/laws.
Using a logical, rational and negotiated international trade and tariff policy the international community can change the trajectory of quality-of-life from, that of being harmed by trade, to that of being improved by trade. The current policy of having a race to the bottom economic and environmental policy where the lowest wages and worst environmental policies give the greatest trade advantage can be changed to the opposite through tariffs on lower wages and bad environmental policies, consequently improving the lives of all.
Although something like this could be started at the WTO it most likely won't happen there. For a Wage Protection Import Tax to happen it will probably take unilateral action by single nation. Then perhaps, through leading by example, a change in the international mindset on what tariffs are, and can be, will happen.
An organization could also be set up and tasked with officiating a fair process of establishing rules and procedures for implementation of the Wage Protection Import Tax. It will require a lot of give and take from many nations, but goals and policies can be set in motion creating a new international standard for calculating a fair, Wage Protection Import Tax, beginning a new era of achieving a higher standard of living and maintaining a higher standard of living.
© Robert R. Senger. All Rights Reserved.