“Companies are not going to leave the United States anymore without consequences. Not going to happen. It’s not going to happen, I’ll tell you right now,” Trump said on Thursday at a rally in Indiana as he boasted about the job’s he’d saved at Carrier, a company that purportedly planned to go to move 2,100 jobs to Mexico.
For several years, US citizens have been expatriating at a rapidly increasing rate. The IRS has raised the fee to expatriate 422% twice in recent years.
Donald Trump promised during the election to keep Carrier jobs in the US, and yesterday boasted about his technically unfinished deal to keep 1,100 Carrier jobs in Indiana.
Thanks to a recent speech (what some have termed the worst economic speech by a US politician in decades), we now have a clearer vision of how President-elect Trump plans to “Make America Great Again.”
Instead of lowering business tax rates like some in his party – Sen. Rand Paul has floated a 15% tax rate for businesses – it seems Mr. Trump will take an authoritarian approach to ensuring U.S. business remain ‘Made in USA’ – at least to a degree.
Thus, US corporations shouldn’t be overly confident that Mr. Trump will create a good economic environment. Rather, punitive actions will be used to keep business in the US.
“I think that’s absolutely chilling,” conservative economic policy analyst Jimmy Pethokoukis told CNBC on Thursday.
In order to keep jobs in the US, Trump is pledging taxpayer money. His deal with United Technologies will include $7 million in financial incentives from Indiana so the 1,100 jobs will remain in the state at Carrier, a heating and air conditioning division. 1,300 jobs will go to Mexico. A different Carrier facility in India will close, also.
Trump’s move means taxpayer money will be transferred to a company with $7.5 billion in profits last year, $6 billion in defence contracts, awarded executives with $50 million, and save 1,000 of 2,100 jobs which were to be lost were the deal not struck. (some deal!)
This type of dealmaking to keep corporations in their jurisdiction is not uncommon in countries across the globe – especially Communist countries like China. But, it’s not the type of policy to inspire confidence for any business. Donald Trump can’t lend his ear to each US multinational, let alone all of the small and medium sized businesses across the country.
Trump’s plan to use incentives and tariffs are in no way in line with the free market economic model some conservatives and libertarians espouse.
“I think it sets a pretty bad precedent,” said Dan Ikenson, director of the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute, a libertarian think tank. “I don’t think we should be addressing issues like this on an ad hoc basis. It certainly incentivizes companies to make a stink and say, “We’re going to leave, too. What are you going to do for me?”
According to an anonymous adviser to major corporations, worried about angering the incoming administration, chief executives “are asking, ‘Who’s next?”