How Trump may come to Europe’s rescue
by Dan Hannan
Cutting corporate taxes won’t just make America
wealthier; it will stimulate the global economy.
The United States accounts for nearly a quarter
of all the economic activity on this planet:
What’s good for America is good for all of
Bringing down the rate from 35 to 15 percent,
as Donald Trump proposes, will put downward
pressure on other countries’ rates, to general
Business taxes are popular with a certain
kind of politician — and with a certain
kind of voter � because they sound like
a toll on someone else.
It is very easy to whip up anger against Starbucks
or Google or whoever the supposed tax dodger
of the moment is.
Who’s going to pay for our roads and our schools
and our military?
Why, those greedy corporations!
But think about it.
A corporation doesn’t pay corporate taxes
any more than your car pays the vehicle license
All taxes fall on human beings.
When a company is obliged to give the federal
government more than a third of what it makes,
it has to pass those costs on � to its employees,
to its suppliers and, above all, to its customers.
As Ronald Reagan put it, “Government just
uses businesses in a kind of sneaky way to
help collect the taxes.
They’re hidden in the price; we aren’t aware
of how much tax we actually pay.”
The best thing about Trump’s corporate tax
cut is that it makes his tariffs and import
restrictions wholly unnecessary.
Reduce the rate to 15 percent, and the problem
of offshoring � even if you insist on seeing
it as a problem � pretty much disappears.
More companies will choose to make things
in America, which enjoys high productivity,
advanced infrastructure, a reliable legal
system and a vast internal market.
And that will lead to another advantage: As
firms do more in America, they pay more to
So there is no reason to fear a dropoff in
revenues or, other than in the very short
term, a higher deficit.
Look at our experience in the United Kingdom,
where the corporate tax rate has fallen in
stages from 30 percent in 2008 to 19 percent
Most forecasters, with the exception of a
handful of free-market nuts, expected a commensurate
fall in the tax take.
In fact, after an initial drop coinciding
with the credit crunch, revenue quickly picked
Entrepreneurs found that it was worth their
while to extend their activities, to plough
more investment into their businesses, to
shift production to Britain.
During the last fiscal year, according to
official figures, our Treasury collected $72
billion in corporation tax � an incredible
21 percent rise on the previous year.
As an aside, the opposition Labour Party is
promising, among other things, to reverse
almost all of that cut.
But, despite the supposed populist appeal
of such a pledge, it is getting nowhere because
voters can see that the current policy is
Of course, it is.
It works every time.
Reduce rates, and, before long, you increase
Calvin Coolidge was one of the first to see
He cut federal income tax for those earning
over $100,000 from 73 percent to 24 percent.
Those top earners went from paying 30 percent
of a total tax yield of $700 million in 1921
to paying 65 percent of a total yield of more
than a billion dollars in 1929.
In other words, cutting rates doesn’t just
increase the tax take; it ensures that the
rich pay a bigger chunk of it.
Between 1980 and 2007, the U.S. cut taxes
at all income levels.
In consequence, the wealthiest 1 percent went
from paying 19.5 percent of all taxes to 40
Reagan, in short, did something that the American
Left has never managed to do: He made the
rich pay more.
So why not apply the same principle to business
Not everyone likes the idea, of course.
Tax cuts are always unpopular with people
who are immune to empirical evidence � and
with Democrats (but I repeat myself).
Foreign socialists resent competition.
Claude Bartolone, president of the French
National Assembly, frets that Trump’s plan
will lead “to the deterioration of our public
Au contraire, M Bartolone.
Trump’s plan might just force Emmanuel Macron
to follow suit, leading to general tax competition
and a commensurate rise in economic activity.
Without intending it, Donald Trump may become
the latest American president to come to Europe’s