Roubini Thinks Trump Tax Reform to Implode

President Donald Trump’s first major legislative goal – to “repeal and replace” the 2010 Affordable Care Act (“Obamacare”) – has already imploded, owing to Trump and congressional Republicans’ naivety about the complexities of healthcare reform. Their attempt to replace an imperfect but popular law with a pseudo-reform that would deprive more than 24 million Americans of basic healthcare was bound to fail – or sink Republican members of Congress in the 2018 midterm elections if it had passed.

Now Trump and congressional Republicans are pursuing tax reform, starting with corporate taxes and then moving on to personal income taxes, as if this will be any easier. It won’t be, not least because the Republicans’ initial proposals would add trillions of dollars to budget deficits, and funnel more than 99% of the benefits to the top 1% of the income distribution.

A plan offered by Republicans in the House of Representatives to reduce the corporate tax rate from 35% to 15%, and to make up for the lost revenues with a border adjustment tax (BAT), is dead on arrival. The BAT does not have enough support even among Republicans, and it would violate World Trade Organisation rules. The Republicans’ proposed tax cuts would create a $2tn revenue shortfall over the next decade, and they cannot plug that hole with revenue savings from their healthcare reform plan or with the $1.2tn that could have been expected from a BAT.

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza