January 12, 2016
I love Donald Trump's tax plan. I love his attacks against politically correct speech. I love his smashing of the arrogant media.
But I hate his call for a 45 percent tariff on Chinese products. Can you say: trade war? This is a Smoot-Hawley type non-solution that could cause fierce retaliation and shut down Asian-American trade. Smoot-Hawley was the trade protectionist law that helped trigger the worldwide Great Depression.
As Mark Perry of the American Enterprise Institute points out: The evidence is clear that the people who pay this tariff are lower-income Americans. They are the ones who shop at Walmart and buy toys and clothes and appliances from China at "everyday low prices."
Here's what Trump misses: The way to expand American output and increase the number of high-paying U.S. jobs is to cut the corporate tax rate. Trump wants a 15 percent corporate tax, which would vastly reduce the cost of production in the U.S. – by as much as 20 percent.
Right now our corporate income tax is 35 percent. Think of this as a 35 percent tariff on all we produce and that we impose on ourselves. What we produce is taxed at 35 percent while what we import is not taxed at all. Stupid. With Trump’s 15 percent corporate income tax we cut our tariff on American-made goods in half. That's the best way to make sure no nation is eating our lunch.