If America’s competitors intentionally tried designing a tax system to destroy the American economy, they probably couldn’t come up with a better plan than the way the United States currently taxes its own businesses.
To fully appreciate the stupidity of the American corporate tax, consider this simple example: If you are an American company making cars in Michigan, you have to pay a 35 percent profits tax on the car made here. Then if the car is sold across the border to Mexico, the Mexican government slaps on a 16 percent value-added tax. So the car is taxed on both sides of the border. Almost all countries tax goods produced in the United States this way.
Now let us say that the auto factory is moved from Michigan to Mexico City. The car produced in the factory in Mexico is not taxed by the Mexican government if the car is sold in the United States.
Even more amazing: The U. S. imposes no tax on the imported car. To summarize, the car is taxed twice if it is built in America and then sold abroad and never taxed if it is built abroad and sold here in the U. S. And we wonder why companies are moving out in droves to China, India, Ireland, Mexico and the like.
Donald Trump is right. What we have in America is not free trade. It is stupid trade, with the deck stacked against American producers and workers. Our federal tax is effectively a 35 percent tariff imposed on our own goods and services.
It doesn’t help matters that our 35 percent rate is the highest in the industrial world. Yet the corporate tax — despite being onerous and complex — raises very little revenue for the government. In 2015 the U. S. corporate tax raised $300 billion, or 2 percent of GDP. This was one of the lowest percentages among almost all industrial nations.
What is the point of a tax that extracts high costs from the economy for very little revenue reward?
To create a level playing field, the U. S. has to reconstitute our tax system. This can be accomplished by lowering the tax rate and then turning the tax on its head so we are taxing our imports but not our exports. In other words, we should tax activities based on where they are consumed, not where they are produced.
This is called a border-adjustable tax system. Here are the reasons we need it:
In exchange for a border-adjustable tax, the U. S. should eliminate all existing tariffs and duties, which now range from 2 percent on shoes to 25 percent on toys. This would eliminate all special-interest favoritism — the worst feature of trade protectionism.
Retailers such as Wal-Mart will complain that this tax will raise prices for imported products from China, Mexico and other low-wage nations. But domestically produced goods will be cheaper. And people can’t buy products at Wal-Mart if they don’t have a job in the first place. And not everyone in America can work at Wal-Mart.
We have to make things in America in order to make America great again. Tax reform is the key to making that happen.
Stephen Moore is a distinguished visiting fellow at The Heritage Foundation, economics contributor to FreedomWorks and author of “Who’s the Fairest of Them All? ” To find out more about Stephen Moore and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.

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NEW YORK, Jan. 10 (UPI) — Crude oil prices notched only modest gains before trading opened in New York, even as Russia said it was trimming oil output as obligated under an OPEC deal.
Crude oil prices lost major ground in Monday trading following a report on December exploration and production activity from oilfield services company Baker Hughes. The December rig count, which serves as an indicator of the appetite to spend on exploration and production, showed dramatic increases in North America.
Oil prices have reached a point where some companies are coming off the U. S. shale oil sidelines to resume work. Operations were curbed in early 2016 after crude oil prices dropped below $30 per barrel.
“The continuous rise in U. S. rig counts is bound to have a positive impact on domestic oil production,” Tamas Varga, an analyst at broker PVM, said in a note published early Tuesday.
Crude oil prices have stayed above $50 per barrel more or less since members of the Organization of Petroleum Exporting Countries agreed in November to limit output. Russia, which contributes most of the cuts from non-OPEC members, said it was meeting its obligations.
Brent crude oil prices about an hour before the start of trading in New York were up a modest 0.3 percent to $55.10 per barrel. West Texas Intermediate, the U. S. benchmark for the price of oil, in the February contract was up 0.25 percent to $52.09 per barrel.
Supply-side strains pulled down oil prices last year and additional U. S. pressure may come with the sale of around 8 million barrels from the Strategic Petroleum Reserve in the coming months. That’s about a half-day’s worth of U. S. demand and any impact on crude oil prices would be short-lived .
Crude oil prices started 2017 at an 18-month high, but have since failed to sustain that rally. The morning movement for crude oil prices may be subdued as investors await the next short-term market report from the U. S. Energy Information Administration, which comes out later Tuesday.
The last EIA report found U. S. shale oil was more resilient to lower crude oil prices than initially expected. Last month, EIA said it expected total U. S. crude oil production for 2017 would by about 200,000 bpd less than last year, a drop not as severe as previous estimates.

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Credit card delinquencies increased to 2.74 percent of all accounts in the third quarter, the ABA said, though that’s still below the 15-year average of 3.68 percent.
“There has been more credit being extended, and we’ll see whether this is the start of a movement upward,” Chessen said, referring to the increase in delinquencies. Still, “these types of fluctuations don’t come as a surprise amid a six-year period in which bank card delinquencies have been so far below their long-term average,” he said.
Auto loan delinquencies were also higher, up to 0.87 percent in the most recent quarter from 0.82 percent in the previous quarter, according to the ABA.

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