Presidential aspirant Andrew Yang on Monday offered another testament to the Democratic Party’s new favorite campaign pledge: destroying the crown jewels of the U.S. economy.
Yang argued that the U.S. government should impose punitive new taxes on technology giants such as Amazon, Google, and Microsoft, and then use the revenue to give Americans a $1,000 per year handout. While that might seem like a good idea (we all want more money, right?!), Yang’s taxes would drive the most innovative, investment-centric companies out of America and onto friendlier shores.
All other things being equal, why would a technology company stay in a high-tax domicile if it can achieve its business interests somewhere else more easily? It’s no coincidence, for example, that so many international corporations have established a presence in the low-corporate tax Republic of Ireland in recent years.
Now this isn’t to say that companies should be able to deduct their way out of taxation. But while Yang asserts that these companies don’t pay enough taxes (he ignores the sales tax revenue that these companies generate), he focuses on the wrong solution to this challenge. Rather than tax companies at punitive rates, we should reform the tax code in a way that incentivizes investment and reduces tax avoidance.
Unfortunately, Yang isn’t the only Democrat holding to this narrative. Sen. Elizabeth Warren, D-Mass., for example, wants to break up the big technology companies. Again, familiar rebukes follow: Why would they not relocate abroad? And how on Earth does it make economic sense to break up capital pools?
All of this leads me to the same conclusion. If Democrats keep up this far-left rhetoric, they’ll only strengthen President Trump’s chance of re-election.
