The U.S. Congress is set to consider the first major reform of the U.S. tax code in decades. The proposed Tax Cuts and Jobs Act released on November 2 by House Speaker Paul Ryan (R-WI) and House Ways and Means Committee Republican Members features significant changes to the way U.S. corporations are taxed and carries implications for how they compete around the world.
Dear King George III: stop cutting off our trade from the rest of the world. That was among our grievances in the Declaration of Independence. The next 140 years saw U.S. tariffs rise and fall in response to the domestic preoccupation with the politics of protection.
If the Trump Administration is serious about applying a 20 percent tariff on goods from Mexico to pay for new construction on a wall along the United States and Mexico, it’s the United States that will pay, not Mexico. And the bill could come in as much as 900% above cost.
The United States is the only industrial economy to maintain a worldwide tax system, which encourages American corporations to move their headquarters operations out of the country, and discourages them from bringing their foreign-earned profits home for re-investment. The alternatives being considered by Congress could trigger challenges by our trading partners.