{"id":28124,"date":"2016-03-18T08:01:53","date_gmt":"2016-03-18T15:01:53","guid":{"rendered":"http:\/\/spijue.wpengine.com\/news\/trump-faces-obstacles-in-bid-to-shake-up-corporate-america\/"},"modified":"2016-03-18T08:01:53","modified_gmt":"2016-03-18T15:01:53","slug":"trump-faces-obstacles-in-bid-to-shake-up-corporate-america","status":"publish","type":"post","link":"https:\/\/www.juneauempire.com\/news\/trump-faces-obstacles-in-bid-to-shake-up-corporate-america\/","title":{"rendered":"Trump faces obstacles in bid to shake up corporate America"},"content":{"rendered":"

NEW YORK \u2014<\/strong> Donald Trump\u2019s railing about what\u2019s wrong in corporate America goes further than the typical political populism: He vows to rewrite trade deals, tax imports and punish U.S. companies. And he\u2019s naming names.<\/p>\n

He is blasting Ford for beefing up operations abroad. He\u2019s refusing to eat Oreo cookies that may soon be made in Mexico and is vowing to get Apple to make iPhones in the U.S.<\/p>\n

\u201cYou know, our companies are leaving our country rapidly,\u201d the GOP front-runner said in Palm Beach, Florida, after winning the state\u2019s Republican primary on Tuesday. \u201cAnd frankly, I\u2019m disgusted.\u201d<\/p>\n

Politicians and others have long laid into U.S. companies for shifting headquarters and production abroad and for stockpiling cash in foreign subsidiaries. But changing some of the trade and taxes rules behind such corporate moves are beyond the authority of the president and, experts say, are not so easy to do \u2014 at least not without big consequences.<\/p>\n

Here\u2019s a look at Trump\u2019s statements on what\u2019s ailing big U.S. companies, and his proposed fixes:<\/p>\n

\n

Moving headquarters abroad<\/strong><\/p>\n

Trump vowed after his Super Tuesday victories, \u201cwe\u2019re not going to be losing our companies,\u201d if he becomes president. He criticized politicians for not fixing a tax code that he says drives companies abroad and mentioned drugmaker Pfizer, which plans to move its headquarters to Ireland after merging with Allergan, a company based there.<\/p>\n

Pfizer\u2019s plan is known as a \u201ctax inversion,\u201d which allows a company to change its tax jurisdiction to a country where rates are lower. U.S.-based companies claim they are at a disadvantage because the U.S. taxes their profits made in America and in other countries. By contrast, companies based elsewhere generally pay taxes only on profits made in the country where they operate.<\/p>\n

Trump has proposed lowering the nominal top corporate rate in the U.S. to 15 percent from its current rate of about 35 percent. Most companies pay less than the top rate because of various credits and deductions. The drug industry, for example, pays a tax rate of about 20 percent, according to experts.<\/p>\n

Either way, those rates are far above those in some other countries. Ireland\u2019s rate, for example, is 12 percent, according to the Americans for Tax Fairness consumer group.<\/p>\n

The Obama administration has tried to slow the pace of inversions by tightening foreign-ownership requirements, but the administration has said that only Congress, not the president, can change the tax code to put an end to practice.<\/p>\n

\u201cThe movement of company headquarters overseas is a symptom,\u201d not the disease, said Mark Vitner, senior economist at Wells Fargo Securities. \u201cThe disease is we have an outdated tax code.\u201d<\/p>\n

\n

Overseas profits<\/strong><\/p>\n

Trump has vented at U.S. lawmakers for not providing corporate America with incentives to bring home more of their enormous and growing amount of cash held abroad.<\/p>\n

By the end of last year, the 500 largest U.S. companies had stashed about $2.4 trillion in foreign subsidiaries and bank accounts, according to an analysis of corporate financial statements by the research group Citizens for Tax Justice.<\/p>\n

The report estimated that the companies would be facing a collective tax bill of nearly $700 billion if all the money were pulled out of the foreign accounts and brought back to the U.S., or \u201crepatriated.\u201d<\/p>\n

Trump\u2019s frustration is shared by Apple CEO Tim Cook, who lambasted the U.S. tax code as something \u201cmade for the industrial age, not the digital age.\u201d<\/p>\n

As the world\u2019s most profitable company, Apple has accumulated by far the largest hoard of foreign cash \u2014 $200 billion. Cook has estimated that Apple would lose about 40 percent, or $80 billion, of its foreign cash to federal and state taxes if all that money were brought back into the U.S. To get companies to bring money back to the U.S., Trump has proposed lowering the tax rate on repatriated cash to a one-time 10 percent.<\/p>\n

\n

Overseas production<\/strong><\/p>\n

Trump pledged to give up Oreos after Nabisco\u2019s parent, Mondelez International, said it would replace production lines in Chicago with ones in Mexico. He said he would demand that United Technologies reverse a decision to move two of its parts plants in Indiana to Mexico, eliminating 2,100 U.S. jobs. He has criticized Ford since last summer after the company said it planned to invest $2.5 billion in engine and transmission plants in Mexico.<\/p>\n

Other candidates have criticized the trade deals that facilitate some of these corporate moves, but Trump has gone further. He\u2019s threatened to slap a 45 percent tariff on Chinese imports. He\u2019s threatened to tax auto parts and other equipment made in Mexico. He also wants to scrap the North American Free Trade Agreement. His view: The U.S. hasn\u2019t gotten enough concessions in negotiations, and American jobs have been lost and wages hammered as a result.<\/p>\n

\u201cWe\u2019re being killed on trade \u2014 absolutely destroyed,\u201d Trump says.<\/p>\n

The U.S. has long been open economy, and specific trade deals like NAFTA have not had a major effect on jobs, economists say. The huge wage gap between the U.S. and developing countries and the use of machines to replace workers have had a far bigger impact.<\/p>\n

What\u2019s more, Trump\u2019s threats could throw the international trading system into chaos. Levying tariffs would probably require congressional approval and could set off a tit-for-tat trade war, an ironic development since it\u2019s the U.S. that pushed for open trade over the years.<\/p>\n

United Technologies declined to comment on Trump\u2019s comments. Mondelez said it is investing in U.S. plants, as well as the new one in Mexico, and that Oreos will continue to be made in the U.S. Ford, which employs 6,000 people in Mexico compared to about 80,000 workers in the U.S., said in a statement that it is \u201cdeeply invested in the U.S. and has been for more than a century.\u201d<\/p>\n

David Kotok, chief executive at money management firm Cumberland Advisors, said he thinks Trump is right about the need overhaul the tax code to keep corporations from moving cash and headquarters abroad. But he\u2019s worried about rewriting any trade deals, noting that Americans benefit, among other things, from low prices on goods made abroad.<\/p>\n

\u201cWhen you scrutinize trade agreements, are we really getting killed?\u201d Kotok said. \u201cDo you want to take the price increase and force it on U.S. consumers?\u201d<\/p>\n

___<\/p>\n

Liedtke reported from San Francisco. AP business writers Dee-Ann Durbin in Detroit and Candice Choi in New York contributed to this report.<\/p>\n","protected":false},"excerpt":{"rendered":"

NEW YORK \u2014 Donald Trump\u2019s railing about what\u2019s wrong in corporate America goes further than the typical political populism: He vows to rewrite trade deals, tax imports and punish U.S. companies. And he\u2019s naming names. He is blasting Ford for beefing up operations abroad. He\u2019s refusing to eat Oreo cookies that may soon be made […]<\/p>\n","protected":false},"author":107,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_stopmodifiedupdate":false,"_modified_date":"","wds_primary_category":4,"footnotes":""},"categories":[4],"tags":[65],"yst_prominent_words":[],"class_list":["post-28124","post","type-post","status-publish","format-standard","hentry","category-news","tag-nation-world"],"_links":{"self":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts\/28124","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/users\/107"}],"replies":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/comments?post=28124"}],"version-history":[{"count":0,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts\/28124\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/media?parent=28124"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/categories?post=28124"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/tags?post=28124"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/yst_prominent_words?post=28124"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}