Trump? 2017?
Conditions are ripe, waiting for an East wind?
Other than manchâs anything related to Trump, may be anything related to Fed? California has a referendum on whether to leave the USA?
How about Thiel?
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Either Trump does something crazy (totally probable) or the Fed raises rates enough to pop the bubble. CA wonât leave the USA. My bet is that the Republicans make a disaster out of the Obamacare repeal and tides swing back to Democrat in 2020. If Trump doesnât prevent a recession and boost the economy in middle America, he will be out if he hasnât already been impeached.
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Hmmm, looks to me that many Californians are hurt by Trump initiative. It is a survival initiative, some kind of protection to local industries/manufacturing. Trump is not trying win against the world, but trying to help US Local people by twisting the corporate tax. He is trying to stop exodus of jobs, cash from America. He hits the right target at right time !
In many ways, I disagree (for example repealing Obamacare) with Trump, but corp tax reduction to 15% is a major break through for USA, so far none addressed such issue (AFAIK), discouraging imports and encouraging exports is a great way improve the US Local Job opportunities. This is one of the negligence of previous red and blue governments (many years ever since globalization happened) that spoiled US jobs.
This will attract worldwide businesses to invest in America, Bring back heavy jobs to local population. Now, US becomes tax haven with 15% corp rate !
Next 2 years, I really do not see any major correction if Trump policies are implemented (but yet to see the detailed actual implementation).
All the American exports need to be imported by some other countries. Who will take American exports if the US openly subsidize exports in blatant violation of WTO rules? EU, China, Japan, Australia, Southeast Asia, every county in the world really, can slap punishing tariffs on US exports. So we are back to equilibrium, but at a much lower level of both imports and exports.
We havenât talked about its effect on dollars. The last row on your chart assumes a 25% rise in dollars. Supporters of the border tax claim importers will be fine, because after the dollar rose 25% they can buy more imports, thus neutralize the bite of the border tax. So the steep rise of the dollar will be a feature of the border tax plan not a bug.
But 25% rise of dollar just means all the foreign sales of American companies will be 25% less after conversion, and about 45% of S&P 500 companiesâ sales are foreign. So right off the bat S&P500 revenue will drop by 12%. Tourism will take a big hit. How many tourists will want to visit Disneyland if price is 25% higher? Not to mention it also hurts our exports extremely badly. And thatâs the one spot this plan is supposed to help.
I can see the US easily falls into recession if this crazy plan goes through.
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IMHO, the 35% tariff threat is targeting at the auto manufacturing sector where the midwest depends on. Many auto manufacturers have already announced creating jobs in USA.
Corporate bosses just bullshit some random headcount numbers to Trump who then uses it to fool his supporters. Remember the Carrier deal?
https://thinkprogress.org/carrier-automation-trump-deal-more-layoffs-db2554f46297#.ym29csbkh
As part of the deal President-elect Donald Trump and Vice President-elect Mike Pence struck with Carrier, the company has promised to make a $16 million investment in its Indianapolis facility â an investment management plans to use on developing technology that will allow them to replace human workers with robots.
The companyâs plans were confirmed by Greg Hayes, CEO of United Technologies, Carrierâs corporate parent, during a CNBC interview earlier this week.
âWeâre going to⌠automate to drive the cost down so that we can continue to be competitive,â Hayes said. âIs it as cheap as moving to Mexico with lower cost labor? No. But we will make that plant competitive just because weâll make the capital investments there. But what that ultimately means is there will be fewer jobs.â
With corporate tax reductions, there is no way to make this country into recession, as these are benefiting local economy and local manufacturing.
What Trump is hitting is the place no one dare to touch for so many years. Perhaps, he has personally learned the issue from his 5B or 10B private empire !
Trump also belongs to such Corporate BS member who took advantage of loopholes ! This is the main reason he is opening corporate tax reduction (and discouraging tax benefits for imports and encouraging tax for exports) so that all those Corporate bosses, by default, take those advantage instead of cheating with some headcounts. Corporate bosses can no way cheat, but directly take advantage of these benefits passed on to accumulate company wealth and personal wealth.
We are, presently world No 3 (One of the Highest) in worldwide corporate tax.
http://taxfoundation.org/article/corporate-income-tax-rates-around-world-2016
By reducing to 15%, he simply puts US less than âWorldwide Averageâ at 22.5%. When this changes to 15%, USA is going to be one of tax haven (One of the lowest) country status that attracts foreign corporate to consider moving money to USA. Same way, our biggest cash hoarders (appx 2.5 T) corporate behemoths may also transfer the funds from foreign to USA.
If his tax reduction (and exports and imports policy) is implemented for next 2-3 years, USA will unlikely enter into recession in near future - at least until Trumpâs First Presidency - in spite of repeated (slow) rate hikes two or three times/year.
Lot of countries, depended on US imports, get a hit ! Lot of countries, where US corporate keep hoarding money, will get hit.
Corporate tax war brewing. Every nations are idiots that donât respond? Too egoistic right?
Really smart to reduce corporate tax rate. Lying media canât be trusted, you need to read the proposal itself if you really want to know the proposal.
A lazy way is to watch stock market. If the media report was accurate, stock market would have lost 50% value.
Trump is not perfect. Republicans are not perfect. But thereâs no incentive for them to pretend to be stupid and destroy the economy. They have incentive to make the economy good for both businesses and workers.
Itâs absurd to worry that republicans are destroying businesses and the world and the Wall Street is using its money to pump up market to lose their money.
Media lies are much much worse than the policy proposals.
If the purpose is political attack, no need to use your brain. If the goal is to find the accurate information, use your brain instead of relying on notorious media.
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Nobody is listening to each other, no wonder this thread just goes on and on.
Three issues here:
- Border adjustment policy
- Lower corporate tax
- Repatriation
Manch says 1. is silly but the reply is 2. & 3. are bullish. Then he says again 1. can cause havoc in the global economy. Then others say 2. & 3. are very beneficial to US economy. What kind of discussion is that?
Maybe I should talk about #2 and 3 more then. 
Because #1 is so stupid itâs hard to believe they are proposing this sort of garbage. But itâs Trump, so color me not surprised.
No companies pay the headline tax rate. There are so many loopholes and tricks companies like Apple employ armies of consultants and CPAâs whose only jobs is to optimize their taxes. I donât think our world beating companies are hurting for paying high taxes. But if we can simply the tax code by removing some loopholes and lower the rate, thatâs fine. I donât think a few percentage points will be that much of a big deal.
Repatriation is another non big deal. We already have too much capital with no good ways to invest it. Otherwise we wonât have so much share buyback. If we have a tsunami of money coming onshore, it will push up asset price like stock price and housing price, but very little real economic effect. Itâs just like another round of QE. We will have higher inflation, and the Fed will push up rates faster, neutralizing the effect.
Thatâs what I thought too. Many do share buyback because there is lack of worthwhile investment. Bringing more money back wonât help. Acquire a public company is deflationary⌠always end up laying off many workers⌠the kind we want is expand business and employ more workers. Employment picture? Ben says is nearly full employment, what kind of unemployment is Trump tackling? Those laid off auto workers⌠help is on its way. Who else?
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Companies avoid corporate tax or look for loopholesâŚWHY?
USA corp tax is 35% while tax haven states are having corp tax between 17% and 22% !
Trump understands the reason and reduces corp tax to 15%.
DEAL !
Corporate does not need any trick or Army of tax lawyers and consultants to look for loopholes ! Done with Trump deal !!
Trump is simple and straight forward !
Tax reform is really needed. Iâm surprised that it was not done yet.
GOP has a tax reform blueprint, there is not much details yet. All these reports are speculative so we need to take it with a grain of salt. Some reports are organic speculation, but some are corrupted political lies.
I think border adjustment is a valid policy tool to favor domestic manufacturing and protect manufacturing jobs. It provides an incentive to let consumers to consider domestic products first. Because our cost is higher than many developing countries, even with the border adjustment, our products could be still more expensive but hopefully our quality will be better.
Even if the import cost is totally disallowed in deductions, it just means that the import price is increased by 15% assuming corporate tax rate is reduced to 15%. A 15% increase of imports will only help some manufacturing business that are still competitive. If US price is 5 times of Vietnam, a border adjustment will be of very little help.
This policy can be helpful but its impact is very limited. There is no need to exaggerate its impact.
Walmart imports over 90% of its merchandise. I think this policy would simply mean that Walmart will increase prices by 15%, or even better, the manufacturer will have to squeeze their profit and absorb some of the 15% inflation.
USA has been pretty generous than other countries in terms of trade policies. Border adjustment is a tax policy that makes a tiny correction. Itâs a smart policy to get around of trade deal renegotiation.
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Yellen is so dovish I doubt they will raise rates to the point of bubble popping.
If Republicans pass any sort of fiscal stimulus, she will have no choice as it will push up inflation.
Weâve been desperately worrying about low inflation for many years. If high inflation indeed becomes a worry, we should be glad that the economy is doing well.
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âIn 2014, the United States exported $1.45T and imported $2.19Tâ
Exports are less than 10% of our economy. Most of what US companies sell in other counties is built outside the US. Just look at all the US tech thatâs built in China. iPhone is a China export not a US export. So itâd have far less negative impact on US companies than people think, because we donât export much thatâs made in the US.
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