Radio Shows Taxes

America to be globally competitive again

I was on the Bill Martinez Radio Show talking about Trump’s corporate tax plan. Starts at 126.1 mark.

Transcript:

Bill Martinez
Sometimes I think it would be helpful if we just stopped, if we could hit the pause button like right now as we have a president leaving office, which scares me every time there is news coming out of the White House and the Beltway. Even though the president is on vacation, he’s not going away quietly into the night.  I guess maybe he’s trying to save a legacy, I don’t know, and I’m in as much of a quandary about this as you are, ladies and gentleman.  We’ll continue to bring the facts as best we know and keep enlightened because this still is a government for and by we the people, but that means we need to be engaged and this is what we’re seeing more than ever.

Gayle Trotter is with us.  Gayle is a tax attorney, political analyst, senior fellow with the Independent Women’s Forum, co-founder of Shafer and Trotter, PLC (it’s a law firm in metropolitan Washington, D.C., and advises entrepreneurs and small businesses).  I’ve got to imagine, Gayle, your office is quite busy if what I’m hearing from officials from Wells Fargo and Bank of America — they say their small business activity has grown exponentially since the election of Donald Trump.

Gayle Trotter

That’s right.  It’s so great to be with you, Bill.  Just think about the fact that Donald Trump isn’t even in office yet, and there is so much more enthusiasm.  People are more optimistic about the economy and the state of the nation, the direction that we’re going in, just from him being elected and he hasn’t even taken the oath of office yet or been able to put any of his policies into practice.  My expertise is tax law, which might seem somewhat out of most people’s experience other than filing your tax return at the end of the year, but corporate tax policy in particular has really strong effects.  Not only on the corporations themselves, but also on workers and Main Street businesses.  Those are the small businesses that are the backbone of our economy and the people who work for these small businesses on Main Street.  Donald Trump has a great corporate tax reform plan that people who are excited about the state of America coming back and being globally competitive again, they know that his tax plan is going to really kick-start this renaissance of growth of the United States.

BM

Exactly.  Well we’re talking about a revival of every day Americans, the forgotten man and woman.  The pent up, I say, production, that has just been hamstrung and handcuffed over these last eight years, particularly.  Gayle, what’s astounding to me is empirically we go back and you look at history and you see when the government is smaller and out of the way and it promotes this engine, these key moving parts of what makes America go round.  We do well, but when we hamper the process, we get what we’ve gotten in the last eight years, not one quarter above 3 percent of GDP, the first time, I think, in modern history that this happened.

GT

Right.  You look at the really successful American companies right now; a lot of them were started out of someone’s garage or in their basements.  You have to have the ability for people to innovate, to have new ideas, to bring ideas to products, to markets, and unfortunately during the Obama administration, we saw that there were more deaths of businesses than new businesses being started.  Part of that, and I think it’s very important to understand this, is because of the incentives of things like our corporate tax rate.  Right now, we have an all-in corporate tax rate of 39.1 percent if you include federal corporate tax, state and local taxes and that’s the highest rate of any of the members of the Organization for Economic Cooperation and Development.  So you have 35 democratic countries with market economies that we compete for every day.  Our workers compete every day with these other countries’ companies, and we have the highest tax rate of all these 35 countries.  So it’s no wonder that we are at a competitive disadvantage in the global market.

BM

Exactly.

GT

Donald Trump understands that.

BM

Well, Donald Trump understands it, but the Democrats and Barrack Obama have not.  This has happened on their watch, and the evidence is resoundingly clear and irrefutable.  Just as you say, at the mere hope – I mean he hasn’t even moved into the Oval Office yet – but at the mere hope of Donald Trump coming in and the changes that he is proposing; people are getting excited.  Now, they see the leveling of the playing field to where it can be a win-win proposition for those American businesses.

GT

That’s right.  That’s real hope and change that Americans can believe in, and if we look at the rhetoric of the Democratic Party and the Left, they’re out there saying all the time that we just need redistribution of wealth.  We need to sock it to the rich.  But the truth is that these high corporate tax rates hurt American workers, because American workers bear as much as 25 percent of the cost of the corporate tax and that’s according to the Congressional Budget Office, which would go light on those types of statistics anyway.  So it’s probably even more than 25 percent if you really look at it. That harms everybody from the gas station to the mall to anything that you want to do in your life; you are paying for that.  The Republicans and the Democrats, many leading Republicans and Democrats, wanted to come together and change the corporate tax rate, but the Obama Administration opposed that and they were not able to come to a bipartisan agreement to fix this, which is just common sense.  It’s easy to see that anybody who has any understanding of economics understands just like you have New Yorkers, who when they live in that state, they face very high tax rates, but when they retire and they’re not bound to living in New York anymore –

BM

Exactly, they’re down in Florida.

GT

– they go to states like Florida.  Exactly.

BM

They become my neighbors.

GT

They don’t have an income tax in Florida.  So people make decisions based on the structure that the government sets up, and the tax system is a very big incentive or disincentive to individuals making decisions about whether to start businesses, whether to invest in hiring new employees, whether to make investments in research and development and innovate things.  We see that this could have been easily fixed over the last eight years and it was not.  So now we have the promise of that in the first 100 days of the Trump Administration and he’s going to deliver on that promise.

BM

Well, Gayle, from time to time this kind of thinking and proposals they cycle back.  Whether it’s from Hillary Clinton, of course, Barack Obama, Nancy Pelosi, Elizabeth Warren, all these, it just keeps on cycling back and you go: Why does it do that when it’s clear the evidence, anyway, the fruit of these decisions and these, I say theories, because it’s not been proven.  If anything, what’s been proven is that it doesn’t work.  Here it is, it’s déjà vu one more time, which President Obama put on and along the way, you hear him say, “Well, we’re just not there yet.  We just haven’t given enough.  If you just hang in there a little bit longer.”  He’s been so bold to suggest if he had a third term that maybe his legacy would be certified.

GT

He might be certifiable saying that, but it definitely would not be certified.

BM

I mean if anything certified that it doesn’t, you know, once and for all.  To me, I just don’t – and Gayle, you know better than I do, and this is why we have you on as the expert, is there any measure of room or consideration that their plan would ever work in America?

GT

No, of course not.  They are just trying to feed into people’s emotion and promising the sky, but the truth is, if you look at people who are advocating these policies, like Warren Buffett, who is a billionaire, everybody tries to pay the least amount of tax possible.  So there is something called a tax inversion.

BM

Okay.  We’re going to pick up right on there as soon as we come back.  We got to go to break.  Gayle Trotter is with us.

Gayle Trotter continues with us.  Tax attorney, political analyst, Senior Fellow with the Independent Women’s Forum.  Gayle, before we went to break, you were talking about Warren Buffett and why the people who are the uber rich are so – this is a minor deal.  When you go back to when the whole tax, you know, get the whole tax, they always instituted, and it was all targeted toward the top one percent.  The government said all these elected officials said, “Look it.  We’ll go after those guys that got all the money.”  The rest of the people, we the people, “Yeah, yeah, let’s go after them.”  Then the next year, all the tables had been turned around.  The one percent was getting away with it and now the ninety-nine percent were blessed with the very thing that they thought they were putting on the one percent.  Irony of ironies, right?

GT

That’s right.  In our existing tax system, if you look at it, it’s really working against the American people.  It’s favoring special interest.  You think of the politicos who are in Washington D.C., they fund their own pet projects and they spend taxpayer dollars with abandon.  But particularly when you look at people like Warren Buffett who are out there pontificating about what tax policy should be, if you look at their words, you might think, oh, okay, well, if they think that tax rates should be higher and we should be having this kind of “spread the wealth” sort of policy.  But if you look at their actions, which is how you should really judge people, you realize even Warren Buffett, who is out there making the case all the time in the public sphere, that taxes should be higher and that the rich are not paying their fair share.

If you look at what he does, when he has businesses that are trying to avoid taxes or they’re trying to create these deals that allow his companies to pay the least amount of tax possible, it shows that it’s true.  Everybody does what they can to pay the least amount of tax possible, and Warren Buffett did this deal for Burger King where there is this legal device called a tax inversion.  You can change where your company is located for tax purposes in this inversion and, for example, Ireland and Canada; they have lower corporate tax rates.  So you don’t move your company, but you change the tax location of your company and Warren Buffett did this when he was doing this Burger King deal even though the Obama Administration was, at the same time, trying to limit the ability of American companies to do these tax inversions, which make a lot of economic sense.  But if you wanted to avoid tax inversions by American companies, the easy answer is lower the corporate tax rate so that it’s the same as the countries that Burger King is trying to change its tax situs.  So Warren Buffett, I mean, you don’t like calling people hypocrites, but you look at what they say, you look at what they do and what they do tells the true, true story behind what they really think.

BM

Well, the one thing about hypocrites, you don’t have to call them hypocrites, their actions speak louder than your indictment.  They self-indict themselves, right?

GT

Exactly.  People don’t see that, because the mainstream media doesn’t report on it.  It’d be great if there were investigatory reports on that calling out people like Warren Buffett.  You say one thing to the American people and then when it comes to actions.  There is also a great video where reporter – I think it was Michelle Fields – walks up to Warren Buffett and others and gives them a chance, on an iPad to donate to the treasury.  “If you’re saying that people are not paying enough, and then do it.”

BM

Exactly, right.

GT

Not a single one of them did it.

BM

If you think it’s unfair and you think you’re not paying your fair share, well, there is a line item there in your documents, where you can gift money to the government, can’t you?

GT

Right.  Or you don’t have to take all the credits and deductions that you’re entitled to.  You can do it yourself.  None of these billionaires, who are testifying before Congress when presented with the opportunity, took advantage of it.

BM

Exactly.  Go figure.  Let’s talk about Trump’s corporate tax plan.  Will it make America great?

GT

It will, because the problem that the American economic system is facing right now is this $20 trillion debt that all of us owe a part of and we have these huge deficits that are happening every year that ramped up during the Obama Administration.  The only way that we can get through this problem and our problem with the entitlements, which in ten years, there will not be a dollar to spend towards education, the military, anything else that our federal government does, because everything will be going to pay for entitlements or the interest on that debt.

BM

The interest, exactly.  That’s the thing that’s so disgusting.  That interest is just accumulating exponentially here and everybody that we’re beholden to now is smiling all the way to the bank, aren’t they?

GT

They really are.  We can get out of this if our country starts growing at reasonable rate.  We’ve had this anemic growth rate under the last eight years of the Obama Administration.  If we can unleash our amazing entrepreneurs and inventors and everyone out there who wants to contribute to the economic success of our country in the global marketplace, we can work towards fixing the entitlement problem by having a really good economic growth rate.  That’s something that Donald Trump understands and went out there and campaigned on and he’s committed.  He is committed to changing the federal laws that are holding our economic growth back and the corporate tax is the top on that list.

BM

No question.  I’m predicting 3 to 5 percent GDP growth really quick, because he’s taking off the – just the mere suggestion of the handcuffs getting off.  You talk about exoneration.  President Obama can let everybody out of prison, whatever he wants to do and all that.  We’re freeing the labor force of America here with Donald Trump’s plan and I think it’s real exciting and I think that we’re going to see a 3 – I think it could be as high as 5 percent.  What kind of difference in today’s marketplace will a 3 percent GDP mean for American, Gayle?

GT

It would be huge.  I mean just think about all of the people that would be hired.  You look at the labor participation rate; it is the lowest that has been since the 1970s.  You look at people who want to have jobs.  Who want to, not have only low paying jobs, but they want to be on the road to success and there is roadblock after roadblock put up by federal policy and Donald Trump is committed.  I would say that’s one of his very top three things that he promised Americans that he would deliver.  Even those who didn’t vote for him, they’re going to benefit from the policies that he’s going to put in place.

BM

Without a doubt.  Well, Gayle, one of the things that I think is being overlooked, nobody wants to talk about it and you talk about it in terms of participation rate, I think that’s the perfect word for it, and participation means participating with the government, paying taxes.  So many people have found themselves, just for the sheer need of survival, that they basically have dropped out of the labor force, as we know it, and as it is defined.

GT

Right.

BM

But I think there is millions upon millions of dollars that are unaccounted for that are there that are being paid under the table right now and all that, eventually, has to come back home and be repatriated, doesn’t it?

GT

Absolutely.  And you think about that in regard to a lot of the policies that the Left is pushing, like, for example, on marijuana or illegal immigration.  They’re saying, “Oh, we need to bring this out of the shadows and we need to not have this going on.”  You raise a great point.  I’m sure there is a lot of stuff that’s going on under the table right now that if tax rates were reasonable, people would be more inclined to comply with the law.  It wouldn’t be this shadowy, second economy.

BM

Well, they will, outside of just the regulations and that sort of thing, it’s just the idea that is too much of America, Main Street America, has just been trying to survive, Gayle.

GT

Right.

BM

The government, as well, they’re just not looking for a job.  Well, come on, like, what, last time I checked, I think everybody is a human being, still has to eat every day.  How are they eating?  How are they feeding their families?  Yes, maybe a little bit of government support here and there, but a lot of under the table stuff that needs to be reconciled at some point and that’s going to be part of the process and I think some of the things that Donald Trump Administration will be dealing with.

Gayle Trotter has been with us.  Gayle, always great to have your insight.  Thank you so much.

GT

Great to be with you.

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