The President of the United States has threatened to raise taxes on a company that made a business decision he does not like.
Think about that for a moment.
The controversy involves Harley-Davidson, the Milwaukee-based maker of iconic motorcycles. Harley disclosed it was moving some manufacturing to Europe for production of bikes that would be sold in Europe. The reason: The trade war that President Trump set off last March by announcing new US tariffs on European exports of steel and aluminum.
In response, the European Union set its own tariffs on goods imported from the US, including big motorcycles such as Harleys. Thus, the firm’s made-in-America motorcycles would become substantially more expensive for European buyers. To remain competitive, Harley made the perfectly sensible choice to build the bikes closer to its European customers and at a local plant that would be exempt from the retaliatory tariffs.
"Taxed like never before."
That is when matters went off the rails. Trump, who has insisted that his trade war would be good for American workers, fired off a series of tweets. One said this:
“A Harley-Davidson should never be built in another country-never! Their employees and customers are already very angry at them. If they move, watch, it will be the beginning of the end - they surrendered, they quit! The Aura will be gone and they will be taxed like never before!”
Trump appears to be unaware that the firm already manufactures in Brazil, India, and Australia. Or that Harley decided to build another plant in Thailand after the president pulled the US out of the Trans Pacific Partnership trade agreement last year.
But what’s most troubling about Trump’s tweet is that last clause. It is, for now, impossible to know what the president means by ‘taxed like never before” but he’s only got a few choices, none very appealing.
He could ask Congress to pass a special new Harley-Davidson tax to be imposed only on one firm.
Tougher audits?
He might back a new business tax on all companies that move manufacturing overseas. If so, would he endorse a bill introduced earlier this year by Rep. Lloyd Doggett (D-TX) and Sen. Sheldon Whitehouse (D-RI), called the No Tax Breaks for Outsourcing Act?
Or, since the president is so strongly opposed to US business shifting manufacturing overseas, he could ask Congress to repeal provisions of the Tax Cuts and Jobs Act that perversely encourage US-based multinationals to locate some production overseas.
Most ominously, perhaps he means he’s going to ask the IRS to crack down on Harley-Davidson by toughening its audits of the company. He could, let us say, place the firm on a list of taxpayers that would be subject to harsh treatment by the IRS.
Nixon and the IRS
If this sounds familiar, it should. Among the articles of impeachment against President Richard Nixon that the House Judiciary Committee approved on July 27, 1974 was this:
He has, acting personally and through his subordinates and agents, endeavoured to obtain from the Internal Revenue Service, in violation of the constitutional rights of citizens, confidential information contained in income tax returns for purposed not authorized by law, and to cause, in violation of the constitutional rights of citizens, income tax audits or other income tax investigations to be initiated or conducted in a discriminatory manner.
Perhaps the president was merely blowing off steam, and we will never hear any more about this. But this is the second time in recent weeks that senior White House officials have at least hinted at using the IRS for explicitly political purposes. Trump’s tweet was inappropriate at best and dangerous at worst.
