As the late senator from Washington state, Warren Magnuson, who served for more than 30 years in Congress, once said, “All that each industry seeks is a fair advantage over its rivals.” Wilt Chamberlain had a fair advantage on the basketball court because he stood 7-foot-1. It allowed him to score 100 points in a single game.
The Trump 2.0 tax bill now moving through Congress should establish a fair advantage for U.S. companies.
Tariffs are, of course, Donald Trump’s retaliatory stick to stop foreign countries from discriminating against goods and services made in America. Everything from our dairy to our wheat, our pharmaceuticals and our digital tech products is punished by the taxes and tariffs charged in Europe and Asia — especially China.
But Trump also wants an additional carrot approach to increase domestic production from Maine to Michigan to Montana. Trump wants Congress to pass a 15% corporate tax rate, down from the current 21% rate.
That’s a real sweetener. The U.S. would slide down the tax scale from once having one of the highest corporate tax burdens (35% as recently as 2017) to having close to the lowest in the world starting next year.
This would suck capital investment back to America in a nanosecond and financially seduce companies to reshore factories, labs and headquarters back here with bargain-low tax rates. When Ireland cut its tax rate to the lowest among industrialized nations at 12.5%, it became the fastest-growing nation in Europe, and its tax receipts soared.
The 15% corporate tax rate can be easily “paid for” with the higher tariff revenues collected from the 10% tariff rate that now applies to all nations and the higher duties on nations that won’t negotiate.
The Trump grand vision is to create a level taxation playing field by imposing higher tax rates on products made in places like Beijing and then lower taxes on things made in Baltimore. Since other nations impose value-added import taxes and tariffs of up to 25% on products with the “Made in America” label, the 15% corporate tax here at home makes perfect sense as a counterpunch. This isn’t protectionism — I believe fervently in the benefits of international trade — but simply a shrewd and legal (per the General Agreement on Tariffs and Trade) strategic move to put American companies and workers first.
From my first meeting with Trump back in January 2016 when he was running for president to the current day, he has always talked up the 15% corporate tax rate for all businesses.
Recently Trump has been telling Congress, if they won’t lower the corporate tax rate to 15% for all American companies, then offer this lower rate on business profits of companies whose products are predominantly made and manufactured in the USA. This could easily be paid for with Trump’s new across-the-board tariff.
There’s a lot of dimwitted chatter in Washington about RAISING tax rates so that the rich pay their “fair share.” That would only handicap our own business owners and benefit our competitors.
By contrast, the Trump 15% corporate tax rate would give American companies and workers a major leg up in international markets. Studies by economists at the American Enterprise Institute find that this “fair advantage” tax policy would lead to higher wages for American workers and higher share prices for American shareholders and retirees. That’s a good way to put America first.
Stephen Moore is a visiting fellow at the Heritage Foundation. He is also an economic advisor to the Trump campaign. His new book, coauthored with Arthur Laffer, is “The Trump Economic Miracle.”
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