Congress has gotten its act together and made America competitive again. The recently-passed tax reduction package for families and corporations will have a lasting benefit for American workers, the middle class and the American economy for years to come. Some of the benefits are being seen immediately while others will take a little more time.
Even before H.R. 1, the “Tax Cuts and Jobs Act,” had been signed into law, workers were reaping the rewards. AT&T and Comcast immediately gave 200,000 workers a $1,000 bonus. Fifth Third Bancorp raised worker’s wages, while Boeing pledged a $300 million increase in charitable giving.
{mosads}There is no debate about it: None of this would have happened if the Republicans had not come together to pass the first major tax reform legislation since Ronald Reagan was president.
Perhaps more critically, however, is the response from our trade competitors across the globe. Economists at Germany’s Center for European Economic Research (ZEW) said the tax reform package and its reduction of the corporate tax rate will sharply improve incentives for foreigners to invest in America instead of havens like Germany.
High-tax countries across Europe have long-sought a unified European Union tax structure, commonly known as a “common tax policy.” Germany wants to harmonize European high-tax rates within the next five years. The thought of one country offering a lower tax rate than others is anathema to the prevailing socialist mentality of the European partnership.
Not surprisingly, the EU is claiming that the tax reform package breaks global trade rules. The reduction in corporate tax rates “unfairly disadvantages” inefficient and bloated foreign corporations, according to the finance ministers of France, Germany, Spain, Italy and Britain. Talk about making America great again.
It was not long ago the shoe was on the other foot. Decades of high corporate tax rates have given foreign countries the opportunity to take American jobs and companies. India, for example, has undertaken a campaign to lure U.S. companies to the Asian sub-continent.
The prime minister of India, Narendra Modi says his country’s “Make in India” campaign involves promises of low taxes, fewer regulations and a billion potential customers. Modi’s talk of “free market India” seems to be nothing more than broken promises, given the state of the domestic economy, but it is still a fallacy to which many American business succumbed.
After American companies invested billions by moving and building facilities in India, the Indian government appears to be reneging on its commitment. The government has taken a page from socialist regimes, implementing a host of policies anathema to free enterprise.
From demonetizing the existing 500 and 1,000 rupee notes to discussions of imposing taxes on currencies to new taxes on imports ranging from microwave ovens to Apple iPhones, the “Make in India” campaign is more theatrics and rhetoric than reality.
This week, however, the playing field shifted. Instead of risking everything by sheltering hundreds of billions of dollars abroad, American businesses will now bring the money back to the States for re-investment.
Instead of looking for low-tax havens to which to move their operation, those businesses can see that America has once again become one. Instead of us complaining about American jobs moving overseas, we now have foreign trade ministers complaining that their jobs might come here.
Passage of the tax reform bill was years in the making, but it is amazing how the world can change in just one day.
Andrew Langer is president of the Institute for Liberty, an organization that advocates for limited government and free-market economics.