The Real Trump

Here's a look at Trump's statements on what's ailing big U.S. companies, and his proposed fixes: ___ MOVING HEADQUARTERS ABROAD Trump vowed after his Super Tuesday victories, "we're not going to be losing our companies," 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. Pfizer's plan is known as a "tax inversion," a maneuver that 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 both in America and in other countries. By contrast, companies based elsewhere generally pay taxes only on profits made in each country where they operate. 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. Either way, those rates are far above those in some other countries. Ireland's rate, for example, is 12 percent, according to the Americans for Tax Fairness consumer group. 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. "The movement of company headquarters overseas is a symptom," not the disease, said Mark Vitner, senior economist at Wells Fargo Securities. "The disease is we have an outdated tax code." Pfizer declined to comment. ___ OVERSEAS PROFITS 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. 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. 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 "repatriated." Trump's frustration is shared by Apple CEO Tim Cook, who lambasted the U.S. tax code as something "made for the industrial age, not the digital age." "It's awful for America," Cook told "60 Minutes" during an interview aired in December. As the world's most profitable company, Apple has accumulated by far the largest hoard of foreign cash — $200 billion. That's enough to pay for a new iPhone 6S for more than 300 million people, or nearly the entire U.S. population. 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. ___ OVERSEAS PRODUCTION Trump pledged to give up Oreos after Nabisco's parent, Mondelez International, said it would replace nine production lines in Chicago with four in Mexico. He said he would demand that United Technologies reverse a decision to move two of its Carrier heating and ventilating 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. Other candidates have criticized the trade deals that facilitate some of these corporate moves, but Trump has gone further. He's threatened to slap a 45 percent tariff on Chinese imports. He's threatened to tax auto parts and other equipment made in Mexico. He also wants to scrap the North American Free Trade Agreement struck with Mexico and Canada in 1994. His view: The U.S. hasn't gotten enough concessions in negotiations, and American jobs have been lost and wages hammered as a result. "We're being killed on trade — absolutely destroyed," Trump says. 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 increasing use of machines to replace workers have had a far bigger impact. What's more, Trump's 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's the U.S. that pushed for open trade over the years. United Technologies declined to comment on Trump's 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 "deeply invested in the U.S. and has been for more than a century." 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's worried about rewriting any trade deals, noting that Americans benefit, among other things, from low prices on goods made abroad. "When you scrutinize trade agreements, are we really getting killed?" Kotok said. "Do you want to take the price increase and force it on U.S. consumers?" ___ Liedtke reported from San Francisco. AP business writers Dee-Ann Durbin in Detroit and Candice Choi in New York contributed to this report. FILE - In this Monday, Nov. 23, 2015, file photo, a man enters Pfizer's world headquarters, in New York. U.S. Republican presidential candidate Donald Trump is railing about what’s wrong in corporate America as he woos voters fed up with the status quo. He is blasting drugmaker Pfizer’s tax-saving plan to move its headquarters overseas, refusing to eat Oreo cookies made in Mexico and vowing to get Apple to make iPhones in the U.S. His tirades about unfair competition, tax evasion and lost jobs trumpet a familiar tune, but going further than many others running for president have dared.FILE - In this Feb. 9, 2011, file photo, a shopper selects Oreo cookies by Nabisco, which is part of the Kraft Foods Inc. family of brands and products, at a supermarket in Los Angeles. U.S. Republican presidential candidate Donald Trump is railing about what’s wrong in corporate America as he woos voters fed up with the status quo. He is blasting drugmaker Pfizer’s tax-saving plan to move its headquarters overseas, refusing to eat Oreo cookies made in Mexico and vowing to get Apple to make iPhones in the U.S. His tirades about unfair competition, tax evasion and lost jobs trumpet a familiar tune, but going further than many others running for president have dared.FILE - In this Friday, Sept. 25, 2015, file photo, an Apple iPhone 6s Plus smartphone is displayed at the Apple store at The Grove in Los Angeles. U.S. Republican presidential candidate Donald Trump is railing about what’s wrong in corporate America as he woos voters fed up with the status quo. He is blasting drugmaker Pfizer’s tax-saving plan to move its headquarters overseas, refusing to eat Oreo cookies made in Mexico and vowing to get Apple to make iPhones in the U.S. His tirades about unfair competition, tax evasion and lost jobs trumpet a familiar tune, but going further than many others running for president have dared. Previous SlideNext Slide 1/3 SLIDES © AP Photo/Mark Lennihan, File FILE - In this Monday, Nov. 23, 2015, file photo, a man enters Pfizer's world headquarters, in New York. U.S. Republican presidential candidate Donald Trump is railing about what’s wrong in corporate America as he woos voters fed up with the status quo. He is blasting drugmaker Pfizer’s tax-saving plan to move its headquarters overseas, refusing to eat Oreo cookies made in Mexico and vowing to get Apple to make iPhones in the U.S. His tirades about unfair competition, tax evasion and lost jobs trumpet a familiar tune, but going further than many others running for president have dared. crosoft