If America’s competitors were intentionally trying to design a tax system to destroy the American economy, they probably couldn’t come up with a dumber tax system than the way the United States currently taxes our own businesses.
To fully appreciate the stupidity of the American corporate tax, consider this simple example:
If you are an American company making cars in Michigan, you have to pay a 35 percent profits tax on the car made here and then if the car is sold across the border to Mexico, the Mexicans slap a 16 percent value added tax on the car, so it is taxed on both sides of the border. Almost all countries tax goods produced in the United States this way.
Now let us say that the auto factory is moved from Michigan to Mexico City. Now the car produced in the factory in Mexico is not taxed by the Mexicans if the auto is sold in the United States.
Even more amazing: the U.S. imposes no tax on the imported car. To summarize, the car is taxed twice if it is built in America and then sold abroad and never taxed if it is built abroad and sold here in the U.S. And we wonder why companies are moving out in droves for China, India, Ireland, Mexico and the like.
Donald Trump is right. What we have in America is not free trade. It is stupid trade with the deck stacked against American producers and workers.