As I write this, we are returning from Japan where we have spent the last few days visiting one of our sons who is stationed there in the Navy. We walked an average of 10 miles a day, roughly the distance from South Hill to Richmond in the course of the trip, as we visited a number of the historical sites in Tokyo, Kyoto and Nara.

I may share more in the future, but this is a good starting point to discuss how and why we tax the way we do in the United States.  Once, taxing production expenses, such as labor and profit, may have made sense. However, over the years things have changed. We now have an international economy rather than a national economy.  Many other nations understand that and have conformed their taxing model to one that reflects, not where an item is produced, but rather where products are consumed. Japan is such an example.

When we bought gifts for family, we paid no sales tax if we explained that the products were not for use in Japan. However, if another customer planned to use the same item in Japan, they had to pay taxes at the cash register. The larger the item one buys, the greater the tax issue becomes.

Another example: Years ago, a friend intended to buy a Mercedes-Benz sedan.  He and his wife took a trip to Germany where he purchased the car and had it shipped to America. In doing so, he bypassed Germany’s consumption tax. The same is not true if a German counterpart had chosen to buy a Cadillac.

He would have had to pay the General Motors production-based taxes as well as the German consumption taxes. Therefore, if price was the deciding factor, the American car would be at a significant disadvantage against a German produced car.

Three generations ago, quality automobile production was dominated by American car companies. Because the fledgling Japanese companies shipped cars to the United States without adding production taxes, they were able to establish their name brands at lower prices.  Meanwhile, American companies fell by the wayside in international marketing.

Finally, Congress and the administration of President Donald Trump understand the dilemma that this has caused for American manufacturing and are now focusing tax and policy to change the current equation.

At one point, thinking was that production would always go to where labor was cheapest.

However, the wages that a company pays is only one part of the equation. Other factors, such as risk of losing capital investments to a rogue government, quality of workforce and energy costs are only a few of the issues that need to be calculated as a business decides when, where and how they will produce.

Shifting taxation from where a product is made to where it is to be used will encourage manufacturers to produce where it makes the best sense.

As more companies understand that the federal government comprehends the equation, production will return to America.  This alone will increase U.S. employment levels and reduce the need for dependence on government assistance programs.

In the coming weeks, I will focus on, not only the changes that are needed in the federal tax policy, but also the steps that we will be taking in Virginia —  steps that must be taken if we are to return to being one of the best states in which to do business.

Frank Ruff represents Lunenburg in the state Senate. His email address is Sen.Ruff@verizon.net.