House Speaker Paul D. Ryan reaffirmed Tuesday Congressional Republicans’ intention to give the U.S. tax code a makeover. Among those listening with keen interest to Ryan’s announcement?
Taiwanese corporations and investors.
One-hundred forty Taiwanese business leaders attended the SelectUSA summit on foreign investment in the United States this week, the largest Taiwanese delegation in the summit’s history and the second-largest delegation from any nation this year.
The Taiwanese delegation spoke with state government officials and made visits to the White House and the Departments of State and Commerce to probe for information on investment incentives and changing tax structures that could facilitate Taiwanese investment here.
Many Taiwanese businesses and investors see a potential Republican tax code overhaul as a boon to their return on investment in the United States.
“In our visits to the summit and also in private visits, almost all the companies have expressed that if the [corporate] tax rate could be lowered to 15 percent that would be really ideal,” said Ho Mei-Yueh, the delegation’s leader and a national policy advisor to Taiwanese president Tsai Ing-Wen.
The “15 percent” corporate tax rate Ho mentioned was a frequent refrain on President Donald Trump’s 2016 campaign trail and the number his administration proposed to Congress in April.
Congressional Republicans, who hold majorities in both chambers, have seen their legislative agenda bogged down by internal debate over how to repeal and replace Obamacare, but Ryan said Tuesday Congress hoped to “fix this nation’s tax code, once and for all” by Thanksgiving.
The current corporate tax rate stands at 35 percent, Many business leaders in America and abroad believe it is too cumbersome and incentivizes companies to shift operations offshore, cutting American jobs.
“If we’re talking about U.S. fiscal policy … then the tax incentives that are about to be laid are of great interest to Taiwanese companies,” Ho said.
Trade and investment between the U.S. and Taiwan is robust: Taiwan was the 10th-largest U.S. trading partner in 2016, with the countries exchanging $65 billion of goods.
And the island nation of roughly 23 million people imports the seventh-largest sum of U.S. agricultural products of any country.
Taiwanese businesses and corporations have recently invested $26 billion in the U.S., concentrated mostly in the petrochemical industry, electronics, and textile manufacturing. These investments have at least partially created or sustained hundreds of thousands of U.S. jobs.
Taiwanese firms have announced an ambitious goal of pumping an additional $34 billion into the U.S., expressing particular interest in expanding investment in U.S. natural gas, according to the Taipei Economic and Cultural Representative Office in the United States (TECRO), Taiwan’s de facto embassy in Washington.
Taiwanese business leaders and administration officials met this week amid uneasy circumstances between the U.S. government and its partners and counterparts in East Asia.
Trump has taken Taiwan — a longtime friend of the U.S. but a country it does not officially recognize as independent from China — on a diplomatic seesaw ride since his election day victory last November.
On the campaign trail, Trump repeatedly blasted China for what he perceived as unfair trade practices, alleging that the country manipulated its currency to hurt U.S. businesses and had been given a pass by previous administrations on trade issues.
So it seemed a natural extension of Trump’s anti-China campaign message when shortly after his victory he accepted a congratulatory call from Tsai, the Taiwanese president, a break with U.S. foreign policy norms that marked the first such communication between leaders of the two nations since 1979.
But, not wanting to upset the Chinese government in Beijing, which views Taiwan as a province, the administration has retreated from the prospect of holding any conversations with Taiwan as North Korea has stepped up its nuclear and long range missile tests on the Korean peninsula.
Washington sees pressure from China, North Korea’s only ally in the region, as the key to undermining Pyongyang’s nuclear and long range missile programs.
Trump rejected Tsai’s suggestion in April that the two leaders speak over the phone again: Trump did not want to imperil Chinese efforts to curb the North Korean defense program by making formal overtures to Taiwan.
“Look, my problem is I have established a very good personal relationship with President Xi,” the president told Reuters in an April interview. “I really feel that he is doing everything in his power to help us with a big situation. … I wouldn’t want to be causing difficulty right now for him.”
But U.S.-Taiwanese business relations, for now, hinge more on domestic policy initiatives, like whether Republicans can hammer through corporate tax reform and change the tax rates levied on imported raw and intermediate goods.
Ryan said Tuesday that he hoped to get a Republican overhaul of the U.S. tax code completed in 2017.
“We cannot let this once-in-a-generation moment slip by,” Ryan said.
Taiwanese business leaders will be keeping a close eye on their progress, Ho indicated.
“We want to see firsthand,” she said, “what benefits or incentives that the federal government as well as some local governments could provide to the investors.”