In view of the Greg Gibbs, Director at Amplifying Global FX Capital, there appears to be a lot riding on the tax plan promised by Trump.
Key Quotes
“US equities seem to have risen significantly in anticipation of a sizeable corporate tax overhaul that is expected to cut the corporate tax rate from 35% to 20%, or even to 15%, and apply border adjustment to remove tax payable on export revenue but also remove the tax deductibility of import expenses.”
“Trump said during his press conference with Japan PM Abe not quite two weeks ago that “what is happening with the tax structure is going along very well” and there will be “some very big news on tax structure over the next short period of time.”
“He also said that, “I think the US is going to be an even bigger player than it is right now, by a lot, when it comes to trade, a lot of that will have to do with our tax policy which you will be seeing in the not too distant future. We will have an incentive based policy much more than we have right now. Right now nobody even knows what policy we have, but we are going to have a very much incentive based policy, working with Congress, working with Paul Ryan, working with Mitch McConnell. And I think people are going to be very very impressed.”
“This seems to suggest the House Republican plan for a corporate tax cut with a border adjustment tax will be the basis for Trump’s tax policy.”
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