President Donald Trump was ushered into power partly on the promises of tax cuts and reforms. The pledges that were made in this regard were crowd pleasers and vote winners.
But the highly anticipated tax program appears to have been pushed down the administration’s to-do list. Indeed, there have been reports that it may not come until late in the fall.
This needs to be addressed and rectified immediately - and brought forward. The ongoing delays and the apparent lack of urgency to push the tax agenda is now affecting the stock market as investors are anxious and impatient, especially as much of the predicted benefits of the tax cuts have already been priced in.
Markets loathe uncertainty and investors’ lack of confidence is going to start to adversely affect economic growth and jobs.
Tax cuts – including a lower flat business rate of 15 per cent – would give businesses and individuals considerably more money in their pocket, which would lead to more business investment together with more spending in an increasingly vital economy. In turn, this boosts growth, jobs and output.
Plus, of course, businesses would be more incentivized to keep their money onshore, rather than in lower tax jurisdictions, thereby boosting government coffers, capital and jobs.
The cuts should only form part of the tax plan. The other part are the reforms – which should include the repeal of Obama’s Foreign Account Tax Compliance Act, better known as FATCA.
FATCA is practically unheard of here in the States, yet it has been wreaking havoc with the global financial system outside the U.S. Touted as a weapon against "fat cat" tax evaders stashing funds offshore, FATCA is instead an indiscriminate information dragnet requiring all non-U.S. financial institutions (banks, credit unions, insurance companies, investment and pension funds, etc.) in every country in the world to report data on all specified U.S. accounts to the IRS.
If any country refuses to comply, FATCA ensures its financial sector will be hit with crippling penalties that will seriously hurt its economy.
As I was quoted as saying when I set-up the Campaign to Repeal FATCA with co-leader, Jim Jatras: “[FATCA] is an extraterritorial diktat that burdens other countries' financial institutions and their clients, which violates other countries' sovereignty, and which is detrimental to their consumers and taxpayers.”
President Trump needs to double down and refocus his administration and the nation on the tax agenda to halt the growth slowdown, allay market fears, and to start the anticipated benefits it will being the U.S. – and therefore much of the wider global economy.
There’s no reason why the Republicans can now not put this front and center, to make it their number one priority, except for a lack of willing to do so. Indeed, there’s been an historic precedent with Ronald Regan signing-in the largest tax cut package in American history in the summer of the year he come into power.
The country needs action on this issue. The time is now, Mr. President.
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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