This week Donald Trump laid out a serious plan to jumpstart the nation’s limping economy. But Hillary Clinton’s unserious response shows this election is a choice between economic growth and class warfare politics. Trump proposed tax cuts, regulatory relief, unfettered development of coal, oil and natural gas, and fairer trade pacts. One item in his plan will do more than all the others to get the nation working again — cutting corporate taxes. Trump pledges that “under my plan, no American company will pay more than 15% of their business income in taxes.”
Immediately, Hillary Clinton pounced on Trump’s “tax breaks for big corporations.”
First the facts: the U.S. corporate tax rate is 35% — highest in the developed world. Even with deductions, companies here pay on average 27%, which is more than in most other countries. Since 2000, nearly every industrialized country has cut corporate taxes to compete for business — except the U.S.
Consider Ireland. It’s not just shamrocks making that country green. Money’s been pouring in from around the globe, since Ireland slashed its corporate tax rate to 12.5%, one of the lowest in Europe. In 2015 the country’s economy grew three times as fast as the United States. Companies from the U.S. and across Europe rushed to open operations there.
Closer to home, Canadians of all political stripes — Liberals, Conservatives, and Progressives — put their ideological differences aside and agreed to lower the country’s corporate tax rate from 42% to 26%. They figured fighting over a bigger economic pie beat arguing over how to divvy up a smaller one.
Now the Brits, rocked by Brexit, are preparing to lower corporate taxes, knowing it’s the fastest, most effective way to compete with the European Union.
But Hillary is stuck in the past. American corporate tax rates haven’t changed since her husband was president. Her business plan, which she will unveil in Detroit on Thursday, actually hikes business taxes. She’s obsessed with making corporations pay “their fair share.”
As Trump pointed out Monday, “the one common feature of every Hillary Clinton idea is that it punishes you for working and doing business in the United States.”
Clinton advisor Neera Tanden says it’s unnecessary to reduce corporate taxes because “the U.S. has been doing pretty well when it comes to competitiveness.” Huh? Indonesia, Spain, Poland, India, and China to name a few, are growing several times as fast as America’s anemic 1.2% growth.
Slashing the corporate tax rate is the fastest way to boost American competitiveness. Corporate taxes produce about 10 percent of federal revenue but have an oversized impact on business investment.
And the sooner the better. The U.S. could well be slipping into a business recession, warns economist Larry Kudlow. Business investment has dropped during each of the last three quarters, a dangerous sign. Businesses that don’t invest in more trucks and computers can’t hire more drivers and office personnel. Though the jobs report announced last Friday was hailed as a positive, declining investment makes future job growth shaky.
In the “Fair Growth” plan Clinton is set to unveil, there is no private sector growth. Nothing in her plan will promote business investment, according to Moody’s.
Her plan amounts to a $275 billion public works program — a throwback to the 1930’s — paid for by more business taxes. As we learned then, and endured again with Obama’s failed “shovel-ready” boondoggles — government can’t spend its way to prosperity.
Nothing demonstrates Clinton’s incapacity to produce economic growth more vividly than her sorry record as New York’s Senator. Running in 2000 for that job, she boasted that she would bring 200,000 jobs to the economically destitute upstate region. In fact, during her tenure, upstate job growth stagnated and manufacturing jobs plummeted 24%. A grim warning of what the nation can expect from a Hillary Clinton presidency.