Five European finance ministers have objected to the GOP tax plan on the ground that it is too favorable to the United States:
Finance ministers from Germany, France, Britain, Italy and Spain say they have ‘significant concerns’ about some of the US President’s tax initiatives and fear they could harm the global economy.
In a letter to US Treasury Secretary Steven Mnuchin, the ministers said the tax overhaul could risk ‘seriously hampering genuine trade and investment flows’ between Europe and America.
Their warning mirrors fears among some European businesses that aspects of Mr Trump’s tax-reform bills may have been designed to give American companies an advantage over foreign rivals.
Whereas today, European companies have an advantage over their American rivals, due among other things to our irrationally high corporate tax rates.
One of Mr Trump’s proposals would see US companies forced to pay a 20 per cent tax on payments to foreign companies – effectively forcing them to spend money with American firms.
This, the ministers, said, ‘would impact on genuine commercial arrangements’.
Because it would only apply where payments are being made for foreign goods and services, this would discriminate and break WTO rules.
I have no idea whether this claim is true or not. I assume that those in Congress who drafted the tax reform act are aware of WTO rules. But in any event, “WTO rules” cannot freeze in place terrible tax policy forever. If our corporate tax system is irrational and places American companies and workers at a disadvantage–which it is, and does–it should be changed. If international arrangements need to be modified in the wake of tax reform, so be it.
I am just glad to see Europeans complaining that a U.S. administration is favoring American companies and workers. That certainly isn’t something we had to worry about during the Obama administration.