I have a couple of points. I agree with you, of course.
There are at least five or six significant tax reform plans being proffered about Congress right now. Mr. Grassley has one and Mr. Brady has another. Obviously, Mr. Ryan has been out early with his proposals. It's too soon to tell where this is going, but the Americans have a problem. Their tax system only affords the federal government five or six sources of money. They have corporate and individual income tax, payroll tax, estate taxes, and tariffs. There's not a hell of a lot else.
They've already pledged to get rid of the estate tax, which is 4% of gross tax revenue right there. Any significant saving on corporate tax, and some individual tax reductions as well, will put them into a gigantic deficit. They can't bring legislation to the Congress that proposes such a massive deficit, so they have to construct some sort of argument that they will make up the money somewhere else; hence, the word “adjustment” in the border-adjustment tax that Mr. Ryan put forward.
I think there's every chance that they will try to raise revenues at the borders, but I think this is all posturing at this point. I don't think any of the plans that I've seen really make a lot of enduring sense. Yes, you will get a lot of money in the first year when you put a huge tariff in place; then there's nothing in the second year. How is that going to affect them? How fast can Americans repatriate money, build new facilities, and drive up the payroll tax revenues for the government? This is a very tricky situation for them.
I don't want to waste your time, but during this administration's mandate, I think there will be some push-back from Americans, because protectionism is very expensive. It's expensive to the producers. They are trying to export their products. They have to use higher cost inputs and it's expensive for the consumer.
At a certain point, probably at some annual meeting of some megacorporation, I do think that investors are going to stand up and ask, why exactly are we moving the facility into a high-wage jurisdiction when we were in a low-wage jurisdiction and still getting a very fine product? I don't think they're going to be immune to that debate.