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…

Comment

TOMMY Robinson (real name Stephen Yaxley-Lennon) was arrested by the Metropolitan and City Police on Sunday, and was later released where he will be...

Entertainment

I’M A CELEBRITY star Josie Gibson once posted a video of Tommy Robinson’s speech to the Oxford Union – where she praised the controversial...

Comment

TOMMY Robinson’s, (real name Stephen Yaxley Lennon) return to X (formally known as Twitter), has set social media alight, he has been trending every...

KHAN'S LONDON

POLICE officers were  “surrounded” by demonstrators and prevented from leaving making two arrests at a pro-Palestine march in London, the Met Police said, a week...

Royal Family

PIERS Morgan has reportedly left the royal family considering legal action against Omid Scobie by naming the two senior royals, King Charles and Princess...

Entertainment

WILL Mellor wants to find a new home for ‘Two Pints of Lager and a Packet of Crisps’ after the out of touch BBC...

Latest

OMID Scobie is being branded a “liar” for insisting he had nothing to do with identifying two senior members of the royal family in...

Latest

GREATER Manchester Police arrested and then de-arrested a pro-Hamas protester in Manchester City Centre yesterday after a violent mob demanded he was released from...

Celebs

PETE Doherty listens to his late friend Amy Winehouse’s music “most days”. The Libertines singer – who has had his own well-documented struggle with...

Royals

OMID Scobie has declared he isn’t ‘friends’ with Meghan, Duchess of Sussex and insisted he wasn’t briefed by the royal or her husband Prince...

Entertainment

BAZ Luhrmann is open to making an expanded version of ‘Elvis’. The 61-year-old filmmaker has created an extended edition of his 2008 film ‘Australia’...

GAMING

Online casinos have become a popular activity for many people. It’s not simply a luxury habit for high rollers; anyone can sign up and...

Entertainment

PETE Doherty has revealed Shane MacGowan stole his crack pipe and told him his drugs were rubbish. The recovering heroin addict, 44, told the...

MUSIC

POGUES frontman Shane MacGowan – who is best known for his Christmas smash-hit classic ‘Fairytale of New York’ – has passed away at the...

GREATER MANCHESTER

GREATER Manchester Police has responded to the incident in Manchester Centre on Saturday that saw a detainee pro-Hamas protester released and de-arrested after a...

GAMES

ROCKSTAR Games will drop the highly anticipated trailer for Grand Theft Auto 6 (GTA6) in December 5th, the British company said as the franchise...

History

JOHN Lennon’s last words were “I’m shot”, according to a new documentary.  The Beatles icon was shot dead aged 40 by obsessed fan Mark...

GAMES

ROCKSTAR Games dropped the first trailer for GTA6 in the early hours sending the gaming community into overdrive with excitement. It’s been a whopping...

Latest

CHER has a major regret about one of the biggest hits of her career and fears she “missed out” on “a lot of money”....

Christmas

‘Tis the season of magic, love, and giving—Christmas is just around the corner! As we wrap up another incredible year, there’s something truly special...

Advertisement