United States President-Elect Donald Trump has a warning for American companies: if you shut down a factory in the U.S. and then relocate it to another country you will face a 35 percent tax.
Sending out a series of tweets, Trump issued a stern warning for U.S. companies that want to relocate their factories to places like China, Mexico and other low-wage countries. He believes that by threatening a 35 percent tax he will be able to make them stay in the U.S.
Here is his tweet:
The U.S. is going to substantialy reduce taxes and regulations on businesses, but any business that leaves our country for another country,
— Donald J. Trump (@realDonaldTrump) December 4, 2016
“The U.S. is going to substantialy [sic] reduce taxes and regulations on businesses, but any business that leaves our country for another country, fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its products back into the U.S. without retribution or consequences, is WRONG! There will be a tax on our soon to be strong border of 35% for these companies wanting to sell their product, cars, A.C. units, etc., back across the border.”
At the same time, Trump wants to cut taxes and reduce regulations on business. Therefore, according to Trump, “the United States is open for business.”
Although Trump’s base is probably celebrating and Trump’s opponents public against it but secretly celebrating, there are a number of arguments to make against his policy proposal.
First, if you support private property rights then any company should be able to relocate operations to anywhere they want. Second, protectionist policies never work and only make everyone poorer. Third, the laws of comparative advantage are imperative to a successful country. Fourth, Trump and the Republicans were supposedly against this kind of government interference so it just contradicts the last eight years of opposition to President Obama. Fifth, there is no such thing as exporting jobs because you can only import and export goods. Sixth, if U.S. workers want to price themselves out of the labor market then they can do so but they have to pay the consequences for such an act.
It’s sad that someone like the lovely former Alaska Governor and vice-presidential candidate Sarah Palin even understands this basic premise. Writing in an op-ed in Young Conservatives, Palin chastized the latest Trump-Carrier deal as examples of “corruption,” “socialism” and “crony capitalism.”
Here is what she writes:
“Foundational to our exceptional nation’s sacred private property rights, a business must have freedom to locate where it wishes….When government steps in arbitrarily with individual subsidies, favoring one business over others, it sets inconsistent, unfair, illogical precedent. Then, special interests creep in and manipulate markets. Republicans oppose this, remember?
“Instead, we support competition on a level playing field, remember? Because we know special interest crony capitalism is on big fail.
“However well meaning, burdensome federal government imposition is never the solution. Never. Not in our homes, not in our schools, not in churches, not in businesses.
“[K]now that fundamentally, political intrusion using a stick or carrot to bribe or force one individual business to do what politicians insist, versus establishing policy incentivizing our ENTIRE ethical economic engine to roar back to life, isn’t the answer.”
Bribing companies with corporate welfare is not sound policy, and neither is placing a tax on a company if they leave the U.S. for Mexico, India, China or Bangladesh. Any politician should just advocate for real free trade, which offers a plethora of real opportunities to people at home and abroad (SEE: Hey, Donald Trump, Countless Ordinary Americans Benefit When Firms Move to Mexico).
As you can probably tell from the major news outlets and on Twitter, the left is upset by this policy, but they would have been perfectly OK with it if President Obama or Hillary Clinton had done the same thing. The right seems to be split, but the supporters would have been outraged if Obama or Clinton did the same thing.
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