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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The stock market is getting off to a mixed start as drops in real estate and utilities offset gains in other sectors, including healthcare.
Struggling drugmaker Valeant jumped 9% early Tuesday after saying it will sell more than $2 billion in assets.
Ascena Retail Group plunged 14% after cutting its profit forecast because holiday season sales fell for most of its brands, including Ann Taylor, Lane Bryant and Dressbarn.
The Dow Jones industrial average fell 41 points, or 0.2%, to 19,844.
The Standard & Poor’s 500 index was little changed at 2,267. The Nasdaq also was flat at 5,531.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.37%.
Tonight, President Obama returns to Chicago to give a prime-time farewell address. Attorney general nominee Sen. Jeff Sessions is in the hot seat today. A storm that hit Northern California toppled the Pioneer Cabin Tree. Who should discipline police officers?
Raw video of an attempted murder suspect leading police on a chase on the 405 Freeway Monday night.
Rescue crews were searching the Dominguez Channel in the Gardena area Monday morning after a woman reported her boyfriend had been washed away after entering the channel.
Meryl Streep accepted the Cecil B. DeMille award at the 2017 Golden Globes Sunday Jan. 8.
«La La Land» was the big winner at the Golden Globes , what values does Hollywood promote? , storms have slammed Northern California , Thomas Barrack’s latest gig is planning the president-elect’s inauguration .
«La La Land» was the big winner at the Golden Globes , what values does Hollywood promote? , storms have slammed Northern California , Thomas Barrack’s latest gig is planning the president-elect’s inauguration .

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The boost in the stock market and the dollar on optimism about the economy since Donald Trump was elected president won’t last, former Clinton Treasury Secretary Larry Summers predicted Tuesday.
«When regimes that were in some ways similar — highly nationalist, highly interventionist with a bit of an authoritarian aspect — have come to power in Latin America, it was often a very good economic period with a strong currency before the thing fell apart,» the economist said on CNBC’s «Squawk Box. »
Summers, a former Obama economic advisor, refused to elaborate on the metaphor. «There is no single person. But there is a tendency in a nationalist, populist economic policy… [that] everything felt terrific and then things were undone. »
In the interview, Summers wrote off the Trump rally since Election Day as a «sugar high,» saying he’s not sure when it will end, but admitting it could «last for a while. «

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Phone companies led the major U. S. stock indexes higher in morning trading Tuesday, as the market recouped some of its losses from the day before. Industrial and bank stocks also rose, while real estate companies were the biggest laggard. Crude oil prices headed lower, pulling down energy stocks.
KEEPING SCORE: The Dow Jones industrial average rose 55 points, or 0.3 percent, to 19,942 as of 11:15 a.m. Eastern Time. The Standard & Poor’s 500 index added 6 points, or 0.3 percent, to 2,275. The Nasdaq composite index gained 23 points, or 0.4 percent, to 5,555. The Nasdaq closed at an all-time high on Monday.
IN THE GENES: Illumina jumped 15.6 percent after it reported better-than-anticipated fourth quarter sales. The company also launched a new genetic sequencing system called NovaSeq. The stock led the gainers in the S&P 500, adding $22.08 to $163.62.
BIG SALE: Struggling drugmaker Valeant Pharmaceuticals climbed 6.7 percent after saying it will sell more than $2 billion in assets. The stock rose $1.04 to $16.39.
HEALTHIER OUTLOOK: Zimmer Biomet added 5.7 percent after the medical device maker projected better-than-expected fourth-quarter sales. The stock rose $6.05 to $113.10.
BANK DEAL: Pacific Continental vaulted 25.5 percent on news that the holding company for Pacific Continental Bank will be bought by Columbia Banking System for $664 million. Pacific Continental shares added $5.30 to $26.10. Columbia shares slid 97 cents, or 2.3 percent, to $42.33.
HIGH FLYER: Alaska Air Group rose 5.2 percent after the airline, which bought Virgin America in December, reported strong monthly results. The stock gained $4.47 to $91.95.
IN TRANSITION: Yahoo rose 2.1 percent after the internet pioneer said it plans to change its name to Altaba and announced that six of its 11 directors will resign from the board, including CEO Marissa Mayer and co-founder David Filo. The moves assume the sale of Yahoo’s internet business to Verizon will go through and reflect how the rest of Yahoo will become a holding company for investments in Alibaba Group and Yahoo Japan. Yahoo shares gained 87 cents to $42.21.
BAH HUMBUG: Ascena Retail Group slid 8.7 percent after the company slashed its profit forecast, citing holiday season sales, which fell for most of its brands, including Ann Taylor, Lane Bryant and Dressbarn. The stock lost 52 cents to $5.49.
BIG DECLINER: Natural gas company Williams Cos. was down the most among stocks in the S&P 500 index, sliding $3.13, or 9.8 percent, to $28.80.
MARKETS OVERSEAS: In Europe, Germany’s DAX was up 0.2 percent, while the CAC40 of France was 0.1 percent higher. Britain’s FTSE 100 was up 0.5 percent, pushing further into record territory as it benefits from a drop in the pound. In Asia, Japan’s Nikkei 225 index dropped 0.8 percent, while the Kospi in South Korea slipped 0.2 percent. Hong Kong’s Hang Seng added 0.8 percent.
ENERGY: U. S. benchmark crude oil was down 49 cents at $51.47 a barrel in New York. Brent crude, which is used to price oil sold internationally, was down 84 cents, or 1.5 percent, at $54.11 a barrel in London.
BONDS: Bond prices were little changed. The yield on the 10-year Treasury note held steady at 2.37 percent.
CURRENCIES: The pound rose to $1.2183 from $1.2163 amid signs the British government may opt for a full break away from the European Union’s single market. The dollar fell to 115.44 yen from 116.06 in late trading Monday. The euro rose to $1.0589 from $1.0577.

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