http://www.wsj.com/articles/retailer...lan-1483698602
The TL : DR is that the GOP will cut corporate tax to 20% but "impose taxes on imported goods by making imports a nondeductible expense".
This is an obvious aim to get companies to use U.S products, with little insight into how industry works:The tax bills of six large retail companies combined would jump by about $15 billion, to about $28 billion under the Republican plan, according to analysis.
Some economists and advocates of the plan say currency-rate adjustments will offset the tax changes and mute retailers’ objections. They see the U.S. dollar strengthening, making imports cheaper.
Tax experts estimate a border-adjusted tax could raise as much as $1 trillion in revenue; without it, the Republican plan wouldn’t add up.
Mr. Ciccarelli estimates that a border-adjusted tax would increase Wal-Mart’s annual tax bill to $16 billion from $6.6 billion. The tax increase could lower its annual net income to $5.5 billion from Mr. Ciccarelli’s estimate of $14.2 billion now, he says. The analysis assumes that Wal-Mart imports directly 20% of its goods, while another 15% are foreign made and sold to Wal-Mart by domestic suppliers.
Costco’s tax bill could rise to $3.2 billion from $1.2 billion; earnings could fall to $720 million from an estimated $2.4 billion, assuming Costco imports 15% of its goods directly with another 10% being foreign-made from U.S. suppliers.
Best Buy’s tax bill could climb to $3.8 billion under the proposal from $600 million now. That would wipe out the company’s earnings this year of an estimated $1 billion, and turn it into a loss of $2.1 billion.
At the same time, the Republican plan would cut corporate tax rates to 20% from a top federal rate of 35%. The ability to immediately write off capital expenditures under the Republican proposal would also be positive for some retailers.
Those changes would help Home Depot Inc. offset the negative impact of the border-adjusted tax, analysts said. Although its tax bill would rise slightly, to $4.8 billion under the plan, its annual net income would rise to $8.5 billion from $7.8 billion after deducting capital expenditures immediately, according to Mr. Ciccarelli.
(on Fords Mexico plant)
(source)Now this is the scary part. I doubt that Trump nor many Americans understand the full implications of what he has said. He has stated repeatedly that he is going to impose a border tax on Mexican and Chinese made goods to force American companies to bring jobs back to the US, like GM and Ford. But the supply chains for this companies are huge, and they don't make a car from start to finish. No, they ship parts into these factories and have them put together at the factory. For example, the door frame on the Camaros are build in Kentucky and shipped to Lansing to be installed. I've seen trains filled with the front end of cars being moved, and I don't mean just bumpers. Why is the a problem? Because they have many small parts that are built in Mexico, like the gas tanks. These gas tanks are used in ford, GM, and Chrysler cars and built in Mexico. They aren't actually built there because it is cheaper, but because it is more efficient to build it there. There are a lot of automotive factories (that need gas tanks) in the sun belt, which is close to Mexico, there are also factories in Mexico that need these gas tanks. It's in a central location is what I'm getting at. And these companies have no say over where their gas tanks are made because its made by a separate, much smaller company. Trump is going to disrupt this, forcing american companies to either build new factories in the us, or these small companies like that gas tank supplier to go out of business because it can't afford to move those factories to the US, putting Americans out of work.
This is bad. While GM and Ford, are trying to find a new supplier for their tanks, building their own factories to supply tanks, or waiting for those other companies to build new factories, they need to slow or stop production for weeks on end. For example, a warehouse in Kentucky caught fire and destroy car parts, and as a result, GM shut down production for about a week and slowed production for another couple of weeks in Lansing. The part that caught on fire? Headlamps. The factory was fine, so the damage wasn't that bad, they just had to produce more headlamps, but imagine if they had to rebuild that factory. That's what Trump would cause.
And if that Tank supplier can't afford to build a new factory stateside, well he's going out of business, taking more jobs with them. You think that the tank supplier is only going to get rid of assembly line workers? Yea ok. We are talking about truckers, accountants, engineers, hell carrier companies could even go out of business. There is a multiplier on all business that illustrate how many jobs a company indirectly creates.