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German Companies Demand German Tax Cuts

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Merkel Confused

COMMENT: Mr. Armstrong; It is so clear you understand the basic human response that drives the economy. It is amazing why the entire world does not listen to you. Within 24 hours, German companies are demanding tax cuts to compete with the Trump tax cuts. They realize what you have been saying. The USA will suck in all the business with a low corporate tax rate and they cannot compete. As you say, this is not Noble Prize-winning analysis. Perhaps you should get the Noble Prize even if it is so basic an idiot should understand it.

KL from Germany

REPLY: Good point. I suppose what you are really saying is that common sense is actually rare. I am in Europe for the week and requests for meetings have suddenly skyrocketed. Following the approval in the US Senate for the Trump tax reform, alarm bells are blaring from the German economy. The industry association BDI has come out and already warned on Sunday no less that there will be massive disadvantages for European companies. It is fundamental. The more you raise taxes, the higher the unemployment, and the lower the economic growth. But if you are a politician, it puts more money in your pocket. So they act only in self-interest.

Those countries which do not engage in structural reforms in corporate taxation will watch their economies implode over time. It will be a very hard time ahead into 2021.