Donald Trump’s Worst Idea
By Ira Stoll | January 19, 2017, 18:00 EDT
Hillary Clinton didn’t just run such a bad campaign that she made Donald Trump president.
She ran such a bad campaign that it has effectively disarmed her party from its ability to challenge President-elect Trump’s worst idea.
My own current candidate for this dubious distinction is what President-elect Trump called in his recent press conference “a very large border tax…a major border tax.”
As Mr. Trump put it: “The word is now out, that when you want to move your plant to Mexico … it’s not going to happen that way anymore. … There will be a major border tax on these companies that are leaving and getting away with murder.”
If you missed the headlines about Democrats denouncing this idea of a “very large” tax on American companies moving jobs overseas, that’s because there were no such headlines, at least that I could find.
And if you missed the liberal newspaper editorials condemning that idea — well, there weren’t any such editorials, either.
And if you are looking for someone to blame for that deafening silence — well, look no farther than Hillary Clinton, whose “exit tax” proposal to stop jobs from moving overseas was a key plank of her own presidential campaign.
In fairness, there may be differences in the details between Mrs. Clinton’s exit tax, which aimed to prevent “inversions” in which companies moved their headquarters overseas for tax reasons, and Mr. Trump’s “border tax,” which seems aimed more directly at job and factory relocations. If Mr. Trump achieves even a fraction of his stated goals in terms of corporate and income tax reduction, any new border tax, “major” or not, will be immaterial relative to the overall improvements.
What matters here, though, isn’t so much the math but the principle. Rather than threatening to punish businesses that dare to leave, politicians might consider instead attempting to keep jobs in America by offering a business climate here that is superior to the alternatives elsewhere.
This column has been consistent on this point no matter who has been threatening the taxing. Back in 2012, when it was Senator Charles Schumer, a Democrat, and Speaker of the House John Boehner, a Republican, talking about a 30 percent tax on a Facebook founder who renounced his American citizenship, we quoted the president of Americans for Tax Reform, Grover Norquist, likening the proposal to the Reichsfluchsteuer, or Reich flight tax, that the Germans imposed on those trying to flee in the 1930s.
When Hillary Clinton floated the corporate exit tax idea anew as a presidential candidate in 2015, we wrote that politicians need to hear the signals that these flows are sending: “Running a country with sealed borders is like driving a car blindfolded and with sound-deadening headphones on.”
It was bad enough when Mr. Trump, as a presidential candidate, talked of potentially scaling back even legal immigration, making it harder for people to get into America. Now his “border tax” would make it harder for companies — which, after all, are just associations of people — to get out.
One might hope congressional Republicans would stand in the way of such a bad idea. Many of those politicians were sent to Washington by voters not to increase taxes but to reduce them.
Alas, the Speaker of the House, Paul Ryan, included as part of his “better way” tax policy released in June 2016 some language about “border adjustments,” a change so “products, services, and intangibles that are imported into the United States will be subject to U.S. tax regardless of where they are produced.” That sounds to us, as American consumers of imported goods, not like a “better way” but a “worse way” — a way to stick American taxes even on non-American products.
Leave it to Mr. Trump to translate Mr. Ryan’s “border adjustments” language into the plain English of “a major border tax.” At least Mr. Trump understands that he’s discussing a big tax increase and is allergic to communicating it to the American people euphemistically as a mere “adjustment.”
The natural group to try to stop a president-elect promising to impose a brand-new “very large … tax” would be the opposing political party. In this case, it’s the Democrats. But it was basically their idea to begin with. Nor does Speaker Ryan seem poised to stand in the way.
As Ed Morrissey astutely points out, some of the wiser voices in the Trump economic policy camp, including Larry Kudlow and Steve Forbes, are deeply skeptical of this border tax or downright opposed to it.
Mr. Forbes called it “a horrible new tax that will harm Trump and hurt the economy.” That’s an apt description of the danger looming. Whether it’s Clinton or Trump, Schumer or Boehner proposing it, an exit tax or a border tax is the kind of idea so bad that only a politician could be in favor of it. It’s precisely what the people and companies leaving are trying to escape.