US will cut corporate tax rate from 35% to 15%, Trump advisor says
America is threatening to lure US multinationals away from Ireland under President Trump.
Donald Trump's senior economic advisor Stephen Moore has warned they will drop their corporate tax rate to compete with us.
Speaking in a BBC interview yesterday, he said they would cut their headline tax rate for companies from 35% to just 15% to encourage them to locate in the States.
He said: "I believe that when we cut these tax rates – we’re going to cut our business tax rate from roughly 35% down to roughly 15%- 20% – if you do that you are going to see a flood of companies leaving Ireland and Canada and Germany and France and they are going to come back to the United States,” he said. “It is going to have a very high impact on jobs.”
However, Obama's former spokesperson Michael Czin said he believed the controversial policies may get watered-down.
"Donald Trump is legendary for totally walking away from positions he has espoused in the past," he said.
"Will he change his positions in the blink of an eye? It's hard to tell - we'll see that in the next couple of days."
Dr Declan Jordan in UCC's Department of Economics said the touted reduction in corporation tax is in fact unlikely to lead to the return of multinationals to the US, and would actually worsen the country's economic outlook.
He said that while the reduction to 15% "sounds vaguely reasonable, it ignores the manner in which multinationals avoid taxation.
"In Ireland we are especially worried about this proposal, as we fear it will undermine our taxation advantage. It doesn’t, and when we consider that large multinationals have effective taxation rates much lower than the nominal 12.5% it’s hard to see how it would.
"US multinationals will continue to benefit from differences in taxation regulations which are far more important for their tax avoidance schemes than tax rates, and so will retain overseas operations."
Speaking in general about Mr Trump's capacity to direct the US economy, Dr Jordan added it was "just nonsense" that because Mr Trump had been a successful businessman (which he said was itself "questionable"), he could manage the economy.
"An economy is not a society, and a political leader needs to devote as much time to ensuring society functions as well as an economy does.
"A business man (and they usually are men) can increase profits by treating workers poorly and he will lauded by his shareholders. A President that sacrifices social cohesion to and concern for all citizens to build an economy destroys a society."
