US President Trump is now looking to reform America’s tax code, after his healthcare failure.
That’s how the Donald describes his tax plan for the US economy.
He thinks it’ll increase corporate investment, companies will hire more workers and they might even start to pay them more!
The cuts also support his America First policy: it encourages US corporations to stay home and not go overseas to do their manufacturing. That’ll help the country reverse its trade deficit.
Or for those non-Latin speakers: who benefits?
Whilst there’s widespread agreement that most taxpayers will benefit in year 1, the story changes if the plan is stuck to over the next decade.
One independent think tank predicts that the richest 1% are the biggest beneficiaries, over the long term. For instance, the estate tax (where an individual leaves behind $5mil+) will go.
Then there’s the cost
Like with anything tax cut, it’s going to mean the Treasury loses out.
And with Trump’s policy, it’ll do so to the tune of $2.4 trillion over the next 10 years.
But will it work?
Again, there’s a lack of consensus.
One Congressional report suggested that there would be no impact on economic growth.
However, a leading US think tank suggests that tax cuts, if they do have an impact, it will be minimal. And if the government doesn’t cut spending to finance them, it could lead to the federal deficit increasing and have negative connotations for saving and interest rates.