Business Irish

Monday 24 July 2017

US tax cut will hurt our ability to attract business

Mr Trump has vowed to pursue a policy that will put American multinationals under pressure to keep their operations in the US, with the threat of heavy penalties weighing over those who are seen to send American jobs abroad. (AP Photo/Evan Vucci)
Mr Trump has vowed to pursue a policy that will put American multinationals under pressure to keep their operations in the US, with the threat of heavy penalties weighing over those who are seen to send American jobs abroad. (AP Photo/Evan Vucci)

Shona Murray

One of the central planks of Donald Trump's economic policy was his intention to slash the US corporate tax rate from 35pc to 15pc, which could hamper the attractiveness of Ireland's low corporate tax regime.

David Urban, Mr Trump's campaign director responsible for his win in the key state of Pennsylvania, says the president-elect intends to target companies in the US that decide to move away and resell products back into the US. It's these companies that will be subject to higher taxes, he said.

However, the new US administration is considering a border tax on goods made overseas which are imported to the United States, which Mr Urban admits is "controversial", and is another nod to Mr Trump's consistent rhetoric against global trade agreements.

A considerable block of Mr Trump's supporters blame the ill-winds of international trade for destruction of old industrial strongholds, in particular along the Rust Belt areas of the Midwest that have suffered economic decline as a result of changes to the industrial sectors. These changes include advancements in technology and productivity.

Mr Trump has vowed to pursue a policy that will put American multinationals under pressure to keep their operations in the US, with the threat of heavy penalties weighing over those who are seen to send American jobs abroad.

Last week, the president-elect said he'd be "the biggest jobs producer that God ever created".

He said "a lot of industries will be coming back" to the US as a result of the policies he intends to impose that will likely vilify and force manufacturers to remain in the US or face heavy taxes.

However, Mr Urban says the overall plan and the impact it will have on the many US multinationals has not yet been worked out.

He says issues like the determination of intellectual property have yet to be decided, but assured it's "not going to be as bad as Democrats fear or as great as Republicans hope".

"Those are things no-one has their head around yet - they'll be decided in the coming months," he said.

In spite of all of his promises, Mr Trump is also likely to have considerable opposition to his protectionist policies which will appear to involve state or federal interference in the market in order to prevent companies or the markets making their own decisions and rules - something that Mr Urban admits is the antithesis of "traditional Republican" ideology.

Traditional Republicans are "more free market folks" and "you'll see in the coming months and years a 'tug-of-war' in the party over ideology", Mr Urban said.

"The president is a pragmatic populist, whose views don't closely align with Mitt Romney or folks like that", including House speaker and Republican Party stalwart Paul Ryan, Mr Urban said.

He [Trump] "reached back in to these companies to try and forestall jobs going overseas" - a "really 'un-Republican' thing to do", he said.

"Stay tuned, it's going to be an exciting next six months in America," he said.

Meanwhile, Washington insider and former Bill Clinton aide and adviser Sidney Blumenthal told the Irish Independent that Mr Trump has an "extremely difficult relationship with the Republican congressional leadership", who he says regard him with "disdain bordering on contempt".

They will "use him to get their agenda on tax and deregulation and anything to help industry as they see it", Mr Blumenthal, who claims he's spoken to several congressional republicans on the matter, said.

The idea that they're going to support protectionism across the board "is very far-fetched", he believes.

Irish Independent

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