[supercat]

I don't know what to think of it. Is a tarriff moving closer to a capitalist system or moving it away?

One important question, IMHO, is how much money a government will take in taxes if:

1. A domestic worker produces a good which is then consumed domestically.
2. A domestic worker produces a good which is exported.
3. A foreign worker produces a good which is imported for domestic consumption.

The income tax system taxes #1 and #2. Since the cost of a good must include any taxes that flow into government as a result of its production and sale, I would think income taxes put our country's companies at a competitive disadvantage.

Can anyone explain any problems in my theory?

[RipSawyer]

Can anyone explain any problems in my theory
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There are no problems in your theory, you are absolutely correct. But you don't go far enough, there are many other taxes buried in the cost of goods, not just the income tax.

Plus, there is the cost of complying with all sorts or regulations, environmental and otherwise which the Chinese don't have to worry about, all this puts us at a great disadvantage. The question for the future is what all this will mean with new technology changing the face of manufacturing, in the future it may be possible to manufacture most of what we need with almost no labor input with the advent of nanotechnology. I am only speculating, I don't claim to have any idea what things will actually be like ten years from now but I think they will be hugely different from today.