Can you say "Smoot-Hawley?"

The “stimulus” bill’s “Buy America” provisions are having negative effects on international trade. Our trading partners are suffering, as are we, through higher costs and lower efficiency.

Adding injury to insult, President Obama’s budget posits a massive tax increase on American corporations with foreign operations. As this Cato Institute video notes, the advantages foreign corporations already enjoy as a result of US tax policy will increase.

Tax increases cost jobs. A targeted American tax increase targets American jobs. Such jobs will not be “exported,” they will just disappear. The world only needs so many people who can assemble a computer or fasten a lugnut. These jobs will only be available where free employers can profitably provide them. Government, as a pseudo-employer, can only provide them by incurring ever increasing debt.

Given Obama’s demonstrated preference for union ownership of the means of production, his astounding ignorance of economics and his aforementioned protectionist tendencies, his tax increase will lead to demands for higher tariffs – to “level the playing field.”

These tariffs will have been unnecessary except for American policy. Remember that when your job disappears, or if you contemplate asking for a subsidy or tariff to preserve it.

1 thought on “Can you say "Smoot-Hawley?"”

  1. Oh,The removal of Subpart F (foreign deferral) will have a more significant impact. I can attest from my work background that this could have MAJOR ramifications.You will see a lot of mulitnationals perform “inversions” whereby the corporation is restructured with a U.S. group, but with a foreign parent in a lower tax jurisdiction. This will mean that only the US operations are subject to the US corporate income tax. It also means that its management and major functions would be done offshore – meaning that thousands of jobs would leave the US to the foreign parent.You will see Dublin, Hong Kong, Singapore, Zurich, and Luxembourg become the headquarters of a lot of multinationals if this happens. It will not bring in the money they think it will. People like me and a lot of attorneys will make sure of it.

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