WASHINGTON – House Majority Leader Kevin McCarthy (R-Calif.) said Monday that tax incentives are the preferred way to keep jobs in the U.S., not tariffs as President-elect Donald Trump has suggested.
“The best way to make that change is through tax reform,” McCarthy told reporters. “It’s a punishment to live here with reconciliation, the highest corporate tax rate; so if you change that; that’s the best way to solve this problem.”
McCarthy made the declaration in response to successive questions from reporters about Trump’s recently reiterated promise to slap hefty trade tariffs on American companies that move jobs abroad.
On Sunday morning, Trump issued a series of tweets vowing economic retaliation against American companies that ship jobs abroad:
Since 1934, the President has had primary authority over tariff implementation, but Congress does have a degree of input and also has the power to reject trade agreements brokered by the executive branch.
The general consensus among many economists is that trade tariffs devastate world financial markets.
The U.S. Congress passed the Smoot-Hawley Tariff Act in 1930 as the country was mired in the Great Depression, and that legislation is believed by many to have prolonged economic stagnation and also to have increased unemployment.
McCarthy said he strongly supports the President-elect’s stated policy of keeping American jobs in the U.S., but showed his disagreement with policies Trump espoused in his Sunday morning tweets.
“I think there’s other ways to achieve what the President-elect is talking about,” McCarthy said. “But the only way you can do any of this is you got to have tax reform. And that’s why I think that will be a cornerstone of what we do.”
McCarthy said Congressional Republican proposals aimed at incentivizing businesses to remain in the U.S., such as lowering the corporate tax rate, could possibly negate the financial incentives derived from outsourcing jobs.
McCarthy reiterated his contention that he and Trump are largely in agreement on tax reform and suggested that those concerned about the possibility of tariffs should take a wait-and-see approach.
“We both agree upon that there has to be tax reform,” McCarthy said. “How do you pre-determine what’s going to come out within that tax reform? We both have ideas to solve the same problem.”
McCarthy dodged a question about how Congress would react if tariff legislation were proposed by the incoming administration.
“That’s a hypothetical question,” McCarthy said. “The answer would be, we’re gonna have tax reform.”
McCarthy said tariff proposals could possibly be included in the debate over tax reform but suggested that those proposals were not likely to advance beyond that stage.
McCarthy suggested to reporters that he disagrees with the President-elect’s previous contention that engaging in a trade war with China and other nations by slapping tariffs on products they ship to the U.S. might prove economically beneficial.
“I do not want a trade war… I do not believe in a trade war. I do not think trade wars are healthy. I think history has taught us trade wars are not healthy,” McCarthy said.
This article was reprinted with permission from Talk Media News
Bryan is an award-winning political journalist who has extensive experience covering Congress and Maryland state government.
His work includes coverage of the election of Donald Trump, the confirmation hearings of Supreme Court Justice Brett Kavanaugh and attorneys general William Barr and Jeff Sessions-as well as that of the Maryland General Assembly, Gov. Larry Hogan, and the COVID-19 pandemic.
Bryan has broken stories involving athletic and sexual assault scandals with the Baltimore Post-Examiner.
His original UMBC investigation gained international attention, was featured in People Magazine and he was interviewed by ABC’s “Good Morning America” and local radio stations. Bryan broke subsequent stories documenting UMBC’s omission of a sexual assault on their daily crime log and a federal investigation related to the university’s handling of an alleged sexual assault.