Trump didn’t provide specifics. But observers say he could deliver a big blow to Canadian competitiveness if he follows through with plans he unveiled during his presidential campaign.
In his address, Trump said that American companies are “taxed at one of the highest rates anywhere in the world.”
He said his economic team was working on reforms that would “reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone.”
This cut, if it’s anything like what he announced during the campaign, could mean he’s set to slash U.S. corporate tax rates by 20 per cent, from 35 per cent to 15 per cent.
He has also floated plans to implement a 10 per cent repatriation tax on corporate profits that were being held in other countries.
The corporate tax cut alone would erode Canada’s competitive advantage, Charles Lammam, director of fiscal studies at the Fraser Institute, said in an op-ed last year.
Canada currently has an average combined corporate income tax rate of 26.8 per cent, according to the OECD. That’s lower than the U.S. rate of 38.92 per cent.
Trump’s plans would reduce the U.S. rate to below 20 per cent, “erasing Canada’s advantage completely,” Lammam noted.
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