Trump Effectively Gave Carrier Corporation a Tax Cut for Sending 1,300 Jobs to Mexico

Donald Trump took credit for persuading the air conditioner manufacturer Carrier to keep more than 1,000 jobs in the U.S. But he effectively gave the company a tax cut for sending another 1,300 jobs to Mexico.

The Guardian reports:

Carrier will keep 1,100 jobs at the Indianapolis plant, although that includes 300 positions that never were scheduled to leave the country. But it still plans to send 1,300 jobs to Mexico and shutdown the factory in Huntington, Indiana. Trump’s boasting did not acknowledge that.

For him, however, it was low hanging fruit in PR terms before he even takes office. Washington Post columnist James Hohmann wrote: “The vast majority of Americans will see nothing more than the headline that just says Trump saved 1,000 jobs. For the president-elect, that is mission accomplished.”

Why did Carrier change its plan?

Officially because Indiana agreed to give the company $7m in tax incentives over 10 years, while the company has agreed to invest $16m in the state, where Pence remains governor until 20 January, when he becomes vice-president. Carrier said the deal depends on employment, job retention and capital investment.

… To critics, deals like the one at Carrier are unlikely to stem the job losses caused by automation and cheap foreign competition. They say the agreement is unsustainable on a big scale and could set a worrying precedent for companies looking for tax concessions.

Senator Bernie Sanders, of Vermont, who lost the Democratic nominating race to Hillary Clinton but won in Indiana, wrote scathingly in an op-ed for the Washington Post: “Trump has endangered the jobs of workers who were previously safe in the United States. Why? Because he has signaled to every corporation in America that they can threaten to offshore jobs in exchange for business-friendly tax benefits and incentives.”

James Pethokoukis, the DeWitt Wallace Fellow at the conservative thinktank American Enterprise Institute, wrote in The Week magazine: “This is all terrible for a nation’s economic vitality if businesses make decisions to please politicians rather than customers and shareholders. Yet America’s private sector has just been sent a strong signal that playing ball with Trump might be part of what it now means to run an American company.”

—Posted by Alexander Reed Kelly

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