During the presidential campaign, Donald Trump promised to cut taxes. He promised to cut personal income taxes and change the tax brackets, but even more importantly he promised to cut corporate taxes. His argument was that many companies have left and are planning to leave the US because corporate taxes are simply too high for them to remain competitive in the global marketplace. Trumps plan will slash the corporate tax rate down from a whopping 35% to just 15%.
Going from 35% down to 15% seems like a big drop, and it is, but look at what some other nations are taxing their companies:
- Ireland 12.5%
- Canada 15%
- Germany 15.83%
- Switzerland 8.5%
- Paraguay 10%
- Cyprus 12.5%
- Qatar 10%
- Iceland 20%
- Montenegro 9%
- Liechtenstein 12.5%
- Albania 15%
According to taxfoundation.com, the United States has the third highest corporate tax rate among 188 other nations. Well no wonder Burger King moved their corporate headquarters to Canada! They wanted to be treated fairly and remain competative since they are a global brand. They were tired of paying 35% taxes while some of their competitors were in Canada paying as little as 15%.
President Elect Donald Trump has already begun negotiations with several companies here in the US that have been planning on moving some or all of their operations down to Mexico (which has both a lower corporate tax rate and cheaper labor). It is funny how much work he is getting done already and he hasn’t even been sworn in as the President yet. Anyway, just in the last few weeks, two major manufacturing companies have decided to change their minds on their planned moves to Mexico, keeping their operations here in the heartland:
The Ford Motor Company and The Carrier Corporation
Ford was planning to move a Lincoln manufacturing plant in Kentucky down to Mexico. After negotiations with the President Elect, Ford released the following statement:
You can also read an article from the Wall Street Journal that outlines the deal struck between the President Elect and the Ford Motor Company here: http://www.wsj.com/articles/fords-change-on-kentucky-plant-is-an-olive-branch-to-donald-trump-administration-1479501654
I don’t know how much clearer things can get, but it seems that pro-business, low-tax policies help keep jobs here in the US and help ignite the overall economy.
The Carrier Corporation was also planning a move to Mexico, from their home state of Indiana. Similar to the negotiations that the President Elect went through with Ford, he also was working on persuading Carrier to stay. Carrier recently released this tweet:
You can read more about the deal between Donald Trump and the Carrier Corporation here: http://www.indystar.com/story/money/2016/11/29/reports-trump-announce-deal-keep-carrier-jobs–state/94637112/
I don’t really have too much more to say here, I think what I have outlined is pretty self explanatory. When a country treats their businesses well and keeps a competitive corporate tax rate, good things happen. Entrepreneurship is what the United States was founded on, and why it grew to become the greatest country on earth. If we keep restricting our businesses with ridiculous regulations, high taxes and penalties, we will see our companies being forced to leave to more business friendly countries. I think Ford and Carrier are hard proof that cutting taxes works!
I also want to mention one other thing about Donald Trump’s tax plan. He has promised that this 15% tax rate will apply to ALL businesses in the US, including small businesses and freelancers. Will this not lead to thousands of new businesses being started up? While the top income tax rate in the US is at 39%, I can promise you that some of these people are going to find it very attractive to start their own company and enjoy a much lower tax rate of only 15%.
What happens if there are thousands of new businesses being created? Thousands of new jobs are going to be created. When thousands of new jobs are created, these new employees can now spend money, buy homes, invest, pay taxes, and on and on. This is how you grow an economy. I am very excited for the next 4-8 years, and you should be too, whether or not you like Donald Trump as a person… it is the business friendly environment that is what we should be looking forward to.