LONDON, Sep 8 (APM) - President Donald Trump promised to turn America's "crazy" high taxes around "very quickly" in his latest speech on reducing duties, with a goal of dropping business rates to 15%.
The news will be welcomed by the pharma industry, which has long called for cuts to U.S. business tax rates that currently sit at around 34% to 35% (headline federal rate) (APMHE 53976
"Our business tax rate is the highest in the developed world - 60% higher than our foreign competitors," Trump said in his briefing
on Thursday, noting this "puts us at a big disadvantage".
"We're behind France, behind Germany, behind Canada, Japan, Ireland, Mexico, behind South Korea. We're dead last."
Big pharma chiefs are among those to have called for tax cuts to business rates, including Johnson & Johnson's chief executive officer (CEO) Alex Gorsky and Pfizer's CEO Ian Read. In August, Read went as far as to say his firm will put off big M&A deals despite investor pressure, while it awaits clarity on U.S. tax reform (APMHE 54167
Trump's speech is the president's first nod in some time towards a near-term change.
In his briefing, Trump said: "We're here today to talk about our plan to create a new age of American prosperity by reducing the crushing tax burden on our companies and on our workers.
"The taxes are crazy - the highest-taxed nation in the world. We're going to turn that around very quickly," he said, later adding, "we need tax reform that is pro-growth, pro-jobs, pro-worker, pro-family, and, yes, pro-American".
Trump added: "By working together, we're going to restore America's competitive edge by passing tax cuts and reform that makes America the best place in the world to hire, invest, and to grow. We love our country, we love our people, and we want to create more jobs in America, for Americans."
The president went on to brand America's tax code as "outdated, complex and extremely burdensome" and a "massive barrier to America's economic comeback", noting that tax rates are pushing companies to do business in other countries.
Trump noted that in the past 10 years, the U.S. economy has grown at an average of only 2%, arguing that leaders of other countries are unhappy about seven or eight points' worth of growth in GDP.
He noted that last quarter, the U.S. hit 3% growth, attributing the improvement to the "cutting of regulation". Though he did not specifically cite the FDA, the regulation cuts Trump has made during his time in office include an executive order with a "one in, two out" policy on regulations there in January (APMHE 51567
A 3% growth level rather than 2% would mean 12 million new jobs and $10 trillion of new economic activity over the next decade, Trump said.
Four principles for reform
Trump gave four "basic principles" for tax reform, including a tax code that restores a "competitive edge" to create more jobs and higher wages for American workers. "Our plan will provide tax relief to businesses of all sizes. And we will cut the business tax rate as much as possible. Ideally, we would like to bring our business tax rate down to around 15%," he said.
"All told, it will be the greatest tax reduction in the history of our country. Greater than ever before. So that's going to be something. You'll see a rocket ship. You will see something happen like you've never seen."
Trump added that his administration will also dramatically reduce the tax rate for America's small businesses, which have created more than 60% of new private sector jobs in the recent past.
Other policies include a tax code that is "simple and fair", he said, noting that the complexity of the current system for all taxpayers "leads to massive frustration, wasted time and wasted money".
Finally, Trump said the U.S. system penalises companies bringing wealth earned overseas back into the U.S., noting "our tax plan will give these companies a chance to bring back these funds" which total something between $3.5 trillion and $5 trillion.
He said: "My administration is working with Congress to develop a plan that will deliver more jobs, higher pay, lower taxes for businesses of all sizes and middle-class families all across the nation. So it's not only business taxes, it's middle-income families, it's families at every level - every level, tax cuts."
Trump also possibly hinted about import taxes when he spoke about companies leaving the U.S., noting "they think they can sell the product right back into the USA. There is going to be a big price to pay, and there has been, and that's why you're seeing a big change."
The Trump administration strongly rejects the offshoring model, he said, noting it supports the "American model", which reduces the burdens of doing business for companies "as long as they do business in our country".
In his closing remarks, calling upon Congress to vote for the changes, Trump lamented its decisions over his failed healthcare reform attempts.
Though he did not cite the healthcare attempts by name, the the Better Care Act bill, which aimed to undo large parts of the Affordable Care Act, colloquially known as Obamacare, failed in Senate in July (APMHE 53960
Trump said: "Believe me, we haven't given up on healthcare. We haven't given up on healthcare. We never give up.
"One vote. One vote. Think of it - one vote. Terrible. A terrible situation took place that night. We can't let that happen again. We cannot let that happen again. But we'll get it done one way or the other. But only if you demand it, only if you, the American people, tell Congress to stop putting Party first and start putting America first. Only then will it happen."