Trump cites Ireland in pledge to cut corporate tax rate to 15%

US president vows to address gaping trade surplus with Ireland and other countries

US president Donald Trump announces he still wants to see the American corporate tax rate drop to 15%, saying cutting it is essential for the nation to regain its competitive edge. Video: The White House

 

Ireland’s gaping trade surplus with the United States has again been cited by Donald Trump as the US president vowed to address the trade imbalances between America and its trading partners.

In a much-anticipated speech on tax reform in Springfield, Missouri, Mr Trump said that the strategy of America’s economic rivals “has worked.”

“They made their taxes lower – and far lower, in many cases, than ours – and jobs left our country. Large corporations changed their business models by exporting jobs to other countries and then shipping their goods back to the United States, where they’d make massive profits, and they wouldn’t be paying tax to us either.”

Mr Trump singled out several countries, including Ireland, as he pledged to cut America’s corporate tax rate to 15 per cent. “Today, we are still taxing our businesses at 35 per cent . . . in some cases, way above 40 per cent when you include state and local taxes . . . The United States is now behind France, behind Germany, behind Canada, Ireland, Japan, Mexico, South Korea, and many other nations. Also, with these countries and almost every country, we have massive trade deficits -numbers that you would not believe. But this administration is going to fix that.”

Though short on detail, Mr Trump’s speech marks a new effort by the US administration to agree a tax reform package. The speech is one of several the president is expected to deliver across the country in the coming weeks and months in a bid to shore up support for a Republican plan to reform the US tax code.

Pharmaceutical exports

Ireland registered a a $36 billion trade surplus in goods with the US last year, most of which reflected the high volume of pharmaceutical and medical device exports that are made in Ireland by American and Irish companies and shipped to the United States.

Wednesday’s speech marks the second time the US president has accused Ireland of luring US companies out of the United States through its tax regime.

In a speech in New York earlier this month he said that the United States was “losing companies every single day” to Ireland and other countries because of their tax rates.

With Congress due to return next week after the August recess, focus is turning to tax reform. Republicans are keen to secure a major legislative victory before the end of the year, following the collapse of the healthcare reform proposal.

While Mr Trump has touted a corporate tax rate of 15 per cent, a tax rate of between 20 and 25 per cent is seen as more likely. A proposal to encourage companies to repatriate the trillions of dollars that are resting offshore is also up for discussion between the White House and Republicans on Capitol Hill.