I’ve spent a few weeks defending President-elect Trump and Republican voters, but I promised our readers after the election that I was no partisan hack and I would call ’em as I see ’em.
So please, somebody tell me, where in the U.S. Constitution does the president have the authority to tell a business that they can’t move outside our country? Democratic societies have borders to keep people out. Tyrannies have borders to keep people in.
So when Trump bullies American businesses by saying there will be severe consequences if they leave the country, he comes dangerously close to acting like a dictator in a banana republic. We saw this policy on full display last week when Trump triumphantly visited the Carrier factory in Indiana to celebrate their decision to keep 1,100 jobs here in America rather than moving the factory to Mexico.
This begs the question: By what authority does Trump have to negotiate all sorts of tax incentives to keep the factory in Indianapolis? The deal, which was made with the state of Indiana, provides Carrier with a $7 million tax incentive if it invests $16 million in its Indianapolis facility, according to one report.
Certainly there is a reason to be happy that 1,100 Americans will be keeping their jobs, but the process by which this happened is crony capitalism at its worst. Republicans outraged over the Solyndra scandal, whereby the Obama Administration guaranteed a loan to the solar panel company that subsequently went bankrupt, should be equally appalled at the wheeling and dealing that just occurred between Trump and Carrier.
Obama’s justification was environmentalism and Trump’s justification was nationalism, but both deals represent cronyism.
Presidents and other politicians should not be negotiating with individual businesses and picking winners and losers. The one and only job of our political leaders is setting policy that is applied justly and equally throughout the land.
Carrier has good reason to move its factory overseas. The regulatory schemes of our vast federal government make it difficult for businesses, particularly manufacturers, to operate inside the United States. The Trump Administration should work to cut out harmful regulations and they should work with Congress to cut taxes so that it becomes easier for companies like Carrier to operate domestically.
As a small-business owner myself, I am flabbergasted by the way in which the state and federal governments make it more difficult for me to operate my own business. For example, while employees pay 7.65 percent for their FICA taxes (their contribution to Medicare and Social Security), employers must also pay 7.65 percent for each employee, for a combined total of 15.3 percent that the government receives from that employee’s salary.
Think about that for a second; businesses are punished for creating jobs. The employer’s contribution does not appear on the employee’s end-of-year W2 statement, basically hiding the penalty that a business pays to employ that individual.
The government also requires the business to act as a tax collector. The result is that employees go to their employers and ask what their “real” salary will be after all the paycheck deductions, thus turning the employer into the bad guy. Want to change tax policy in this country very quickly? Permit employers to give the full paycheck to employees and require employees to write the check to the federal government.
Locally, in addition to state income taxes, New York charges companies an annual filing fee for the privilege of conducting business in the state. This is even more onerous because the fee is based on gross revenue, not profits. So, even if a business operated at a loss and the owners don’t collect a dime of profit, the business must still pay a hefty fee.
The Trump Administration should be spending its time fixing these problems on the federal level rather than bullying businesses who are simply reacting to these taxes and regulations. In addition, we should all feel underwhelmed by Trump’s negotiating skills in his deal with Carrier. Basically, Trump just broadcast to every corporation in America that if they threaten to leave the country, they’ll be rewarded with a great tax break to stay.