Trump tax policy announcement may struggle to gain traction - AmpGFX
|The research team at Amplifying Global FX Capital suggests that Trump has said he plans to announce tax policy this week, but the market is beginning to focus on how policy will be passed in Congress and is less influenced by shiny baubles of big tax cuts.
Key Quotes
“At issue will be how tax cuts will be funded. Trump’s own Treasury Secretary Mnuchin has downplayed the prospect of a tax reform package passing the Senate by August.”
“Mnuchin told IMF MD Lagarde during an aired interview last week that tax reform would be long-term deficit neutral. But this is expected to rely on stronger economic growth forecasts and involve a near-term rise in the fiscal deficit. Passage of a tax plan that results in a bigger deficit, and relies on optimistic growth forecasts to be budget neutral over the long term is going to struggle to find support from deficit hawks, mostly in the Republican party.”
“Will the tax plan include a border tax? The size of tax cuts may depend on including of a border tax. Many will doubt a tax plan will find sufficient support if it includes a border tax.”
“Without a healthcare bill, the size of tax cuts and passage of tax cuts is also in question.”
“So it is hard to see much detail in any tax plan announcement this week, and the announcement, if there is one, may raise more questions than it answers.”
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