President Donald Trump needs to hold his nerve and make good on his tax cuts and tax reform campaign pledges. This is not the time for him to backtrack and be weak, or as Shakespeare would have said, ‘lily-livered’.
The Washington Post reported Tuesday that “three people briefed on the discussions” said that “White House and GOP leaders are considering major changes to upcoming tax legislation.”
Specifically, and amongst other things, they are mulling over not lowering the corporation tax to 15% (one of Trump’s most cited reform vows), maintaining the top rate of tax for wealthy individuals, decreasing the benefits top earners would receive, and abandoning the objective of repealing the estate tax.
This shifting approach, it can be reasonably assumed, is a bid to try and win Democrat support in Congress.
The plan is set to be unveiled next week.
Worryingly, this possible Republican row-back is casting an ominous shadow over the fight to repeal the Obama-era Foreign Account Tax Compliance Act, or FATCA. There is the feeling: if he will go back on tax cuts, will his reform pledges, of which FATCA should be a part, be scrapped too?
This fatally flawed law is making the financial lives of the approximately 8 million U.S. citizens living abroad, ‘accidental Americans’, Green Card holders and American businesses doing business overseas hugely and unnecessarily difficult.
In addition, FATCA violates their Fourth Amendment rights, it violates other countries’ sovereignty, it has wreaked havoc across the global financial system, and to top it off, it fails in its objective to raise revenue for the government – as the costs of implementing it outweigh what is being ‘recovered’.
This is why FATCA must be repealed urgently and be part of Trump’s bold plans to reform America’s outdated and overly complicated tax regime.
There are two things Trump and his administration need to do now.
First, cut taxes as the 45th president vowed he would during his campaign and since he was elected. The GOP leadership should look back at modern history. Both Reagan and JFK unleashed tax cuts, which led to a burst of prosperity, job creation and revenue growth.
Second, build on the momentum these tax cuts would create to push for a reform agenda to modernize and simplify the U.S. tax regime in 2018/19, including the repeal of FATCA.
Trump has a golden opportunity to deliver on his promises and deliver steady economic growth to the U.S. The President himself has said he would unveil “the biggest tax cut since Reagan.”
Let’s hope he has the backbone to do so.
Nigel Green is founder and CEO of deVere Group. One of the world’s largest independent financial advisory organizations, de Vere does business in 100 countries and has more than $12 billion under advisement.
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