Connect with us

Hi, what are you looking for?

Exclusive

RICHARD STRICKLAND: Why Trump’s Tax Reforms together with his moves on NAFTA and China could result in a BUMPER 2018

NEW YORK, NY - AUGUST 15: US President Donald Trump delivers remarks following a meeting on infrastructure at Trump Tower, August 15, 2017 in New York City. He fielded questions from reporters about his comments on the events in Charlottesville, Virginia and white supremacists. (Photo by Drew Angerer/Getty Images)

THERE is a constant whining from many on the left about how little legislation Trump and the GOP have managed to pass through Congress. This obsession with legislation ignores the fact that so many of Trump’s promises to his electorate do not require legislative changes.

One exception to this is the tax bill that is due to pass and be signed off by the President before Christmas. This bill generally delivers many of the key changes that Trump promised, while at the same time being in-effect a repeal of ObamaCare, by abolishing the mandate which penalises anyone who decides to drop out of the system.

The tax bill will achieve some key Trump objectives: It lowers tax rates for many working people, with reductions in rates and improved thresholds. It simplifies the system, so that many will be able to submit their tax returns on a single sheet of paper. It makes the corporate tax rate more competitive by reducing it from 35% down to 21% (the lowest since 1939).

Advertisement. Scroll to continue reading.

These will all have an impact, but many commentators have missed two of the most important changes. Firstly companies will be able to bring their foreign cash piles back to the US and pay a tax rate of just 15.5% on these transfers. As well as being a boost to the economy, it could also bring in a few hundred billion dollars of tax revenues – the cash pile is estimated to be between $2.6-$4 trillion.

The other big change is the fact that up until 2023 businesses will be able to invest in new equipment and deduct that as a cost in one year, instead of depreciating it over several years. This will be a massive incentive for investments into factories, manufacturing and other facilities that will boost the economy and create jobs.

But it’s the impact of these tax changes in conjunction with some other moves that Trump may make that could send the economy into a boom.

Generally, Trump seems to try and keep his promises. Quite often when he is prevented from doing so, it’s because the GOP fails in Congress, such as with the Obamacare Repeal & Replace earlier this year, or because the courts do their best to thwart Trumps executive orders.

Advertisement. Scroll to continue reading.

Many of his promises were regarding international trade, and that is one area where he has a great amount of power to do as he wishes without Congress or the Courts getting in the way.

Throughout the campaign, Trump promised again and again that he would renegotiate NAFTA, as it has caused way too many manufacturing jobs to move abroad – mainly Mexico. This re-negotiation has been going on behind the scenes, but rumours persist that they have not made much headway.

If these NAFTA talks fail it is very likely that Trump will pull the US out of NAFTA and then place tariffs on imports from Mexico and Canada. These tariffs could target specific industries (eg. manufacturing) or be a general tariff that is placed on all imports. He may also use a high tariff on Mexico as a technique to pressure them to pay for his wall – maybe in return for the tariff then being reduced a little.

The other issue that Trump talked about throughout his whole campaign was China and how the US deficit with China is running at $485 billion dollars while at the same time China is stealing intellectual property and unfairly subsidising key strategic industries such as steel, microchips, robotics and motorcar production.

Advertisement. Scroll to continue reading.

Trump has held off on any talk of Chinese tariffs because he was hoping that China would help him with North Korea, but they have failed to make an impact. It bought them some time but with 2018 just ahead of us and the U.S. Midterm Elections only a year away, it is a perfect time for Trump to deliver on some more of his promises.

If Trump places tariffs on Mexico and China, and their manufactured goods, it will make many businesses calculate that they could be better off moving production back to the US. With the tax incentives on equipment investments and the 15.5% rate on profits moved back to the US, it will be the perfect recipe to create a manufacturing boom in the US. It will also create jobs and wealth in those states that won him his Presidency, the same ones he will need to win again if he wants a second term.

Advertisement. Scroll to continue reading.

DON’T MISS…

Big Brother

BIG Brother bosses have revealed that they have cast housemates for the upcoming ITV2 reboot who want to take part in the iconic reality...

MUSIC

TROYE Sivan, the South African-born Australian singer, songwriter, and actor, has made waves in the UK music industry with his smash-hit single Rush –...

Entertainment

FRESH off his headline Wembley Stadium performance at Capital’s 2023 Summertime Ball, British rapper ArrDee has made his feature film acting debut in the...

CELEBITE

KEVIN Costner and Christine Baumgartner have agreed the terms to settle their divorce. The ‘Yellowstone’ actor has been locked in a bitter dispute with...

CELEBITE

BOBBY Brazier has split from his girlfriend Liberty Love as the couple become another tale of the curse of Strictly Come Dancing, Politicalite can...

CELEBITE

BRITNEY Spears has hit out at the “enemy right in front” of her in a cryptic Instagram post following a brief break from the...

Royals

MIKE Tindall believes men find it particularly “hard” to open up about the “challenges” they face and is encouraging guys to speak out more...

Entertainment

ALAN Fletcher has revealed that he felt “quite nervous” about the return of ‘Neighbours’ on Amazon’s freevee as the show returned to UK television...

Latest

A MONTHS-WORTH of rain could fall across parts of the UK by the end of Monday after the South-West was hit by flash floods...

Weather

HURRICANE Lee will bring “heavy and persistent” showers to western areas of the UK on Tuesday after storms brought heavy rains, thunder and lightning...

MUSIC

QUEEN of pop Kylie Minogue has dropped her critically acclaimed 16th studio album, ‘Tension’. The Western pop icon from Australia, 55, has followed up...

Entertainment

A MAN who was jailed following a sting by an undercover News of the World journalist has claimed that he was drugged by the...

Latest

CBD oils, “top-of-the-range” marijuana, THC-infused drinks… We take a look at the cannabis brands launched by celebrities. After wine (Sarah Jessica Parker, Brad Pitt...

Entertainment

ONE of the most recognisable voices in top flight football, commentator Guy Mowbray will be calling all the thrilling action on Gladiators, the most...

Exclusive

SIR MICK Jagger still misses late Rolling Stones bandmate Charlie Watts as the legendary rockers released their new single “Angry” – to a new...

CELEBITE

MIRIAM Margolyes has revealed she is living with spinal stenosis, osteoporosis, asthma and a leaky bladder. The ‘Call The Midwife’ and This Morning agony...

Royal Family

ACTIVISTS against the monarchy and King Charles have staged the first-ever protest inside Buckingham Palace. The group of local campaigners from different parts of the...

Media

RUPERT Murdoch is to step back from his global media empire after decades of pioneering the news industry. The Australian business mogul – and...

Entertainment

AL Murray says his next stand-up show will be about the way artificial intelligence is going to replace humans. The 55-year-old comedian is taking...

Armed Forces

Sir Michael Caine thinks every man should be forced to do National Service – and hates ‘wokery’.  The 90-year-old was 12 when World War...

Advertisement