McCarthy Doesn’t Wan’t A Trade War, Says Tax Reform Is Critical
House Majority Leader Kevin McCarthy said Monday he’s not in favor of implementing policies that would put the country at risk of a trade war and believes changes to the tax code will alleviate that possibility.
Critics of President-elect Donald Trump’s trade agenda are concerned about his proposal to place a 35 percent tariff on companies trying to leave the United States. McCarthy is confident reforms like lowering the corporate tax rate will incentivize businesses to stay.
without retribution or consequence, is WRONG! There will be a tax on our soon to be strong border of 35% for these companies ……
— Donald J. Trump (@realDonaldTrump) December 4, 2016
“I do not want a trade war, I do not believe in a trade war, I do not think trade wars are healthy and I think history has shown us trade wars are not healthy,” McCarthy told reporters. “We know that with the size of America and the population around the world that we need trade around the world. But we are currently at a disadvantage based upon the tax code system we have for companies to continue to stay America — from reappropriation, to the highest corporate tax rate — those are the ways we solve the problem and grow more jobs in America and not get into a trade war.”
He noted House Republicans’ “A Better Way” agenda on tax reform favors border adjustment, meaning it would not matter where a company is incorporated, as U.S. customers would be taxed and sales to foreign customers would be exempt.
Trump’s plan conflicts with the blueprint, calling for taxing certain imports from China and Mexico, but McCarthy noted differing opinions are nothing new, even within the same party.
“In our tax reform we dealt with that in numerous different ways like creating a better incentive to be here, we also did that border adjustment,” he said. “I think there are other ways to achieve what the president-elect is talking about, but the only way you can do any of this is you’ve got to have tax reform, which is why I think that will be the cornerstone of what we do.”
McCarthy said the best way to find a solution to inversions is to have a debate, adding the current 35 percent federal corporate tax rate is punishing companies trying to succeed in the U.S.
“The president-elect just tweeted something, he said there’s a challenge out there for doing business in America, which we both agreed upon, we both agreed upon that there needs to be tax reform — having predetermined what’s going come out of that tax reform — we both have ideas to solve the same problem. And I think the one thing we all agreed upon is this is a House for ideas and we need to let the ideas come up so we can determine the best way to move forward.”
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