Donald Trump wants to run for president. He says he can beat Hillary. Sometimes Donald Trump has something good things to say, and sometimes he makes me shake my head in disbelief.
During a speech in Raleigh, North Carolina, “Trump referred to the constantly growing field of Republican candidates as ‘clowns,’ and said former Florida Gov. Jeb Bush and Sen. Marco Rubio have already made major gaffes. . . . Addressing criticism that he lacks the political experience to be president, Trump said he’d be strong on foreign policy. ‘I’ve made a lot of money beating China and other countries,’ he said. ‘I only have experience beating other countries. Is that good experience?’”
Here is one of Trump’s economic solutions. “He said Ford and other companies looking to move manufacturing to Mexico or overseas should face a 35 percent tax when they ship the goods back to the U.S. That would bring the plants back home, he argued. ‘That’s what’s going to happen, and there are hundreds, thousands of those deals,’ he said. ‘I will make this country so rich – if I run on the 16th [of June] – just you watch.’”
The first question I would ask Mr. Trump is why companies would spend so much money moving their factories overseas. The answer is simple: it’s cost effective. Why is it cost effective? Because the corporate income tax in the United States is so high when compared to other countries that the cost of goods would be lower and Americans would actually get a better deal. “At 35%, the United States has the highest nominal top corporate tax rate in any of the world’s developed economies.”
It seems to me, instead of threatening to tax corporations 35%, Mr. Trump should work to lower the corporate income tax. Not only would this lower the cost of manufacturing, it would lower the cost of goods for all Americans. Lower taxes are what will make America rich and fully employed, not tariffs.
The next question I would ask Mr. Trump is who would pay this tax and who is paying America’s very high corporate income tax of the companies that reside in the United States? You and I are.
When a corporation is taxed, it counts the tax as the cost of doing business. All business expenses are passed on to consumers, from paying utilities and salaries to equipment and government regulations. When Congress calls for more taxes on Big Oil and automobile companies, they are actually calling for a tax on us. Does anybody think that businesses really absorb the taxes they are charged? If you do, then you must be a Democrat.
If Mr. Trump is elected President, and somehow gets Congress to pass a tax on United States companies doing business in foreign countries at the 35% rate, it will only mean that those automobiles will cost more to American consumers.
Don’t we get excited when foreign automakers move their manufacturing plants to the United States? There’s KIA in LaGrange, Georgia, Volkswagen in Chattanooga, Tennessee, and BMW in Greer, South Carolina. South Carolina is also getting a new Volvo plant.
Americans benefit because of these foreign companies doing business in the United States. In most cases, states work hard to get them to set up shop in their states. They do this with tax incentives. “Volvo is receiving at least $204 million in incentives from the state and electric utility Santee Cooper.”
In a 1978 speech, Zoltan Merszei, who served as President and CEO of Dow Chemical Co. until his retirement in 1979, said the following in a speech to the Empire Club of Canada: “A fact of life is that money is a coward. Money crosses national boundaries freely. Investment capital will not flow down a hazardous, unlit street where the risk is visibly higher than the potential reward. Money has no national loyalty. Like poker chips, money has no permanent home.”