And Then The Tariffs Came ...

[Billy_Kinetta]

What say, 30%?

China Offers Tax Incentives to Persuade U.S. Companies to Stay

 

[task0778]

The rest of the world has noticed that tax cut bill and what it means to them:

Germany: German economists are warning that the changes sought by President Donald Trump mean that significant amounts of new investment and jobs will shift from Europe to the United States.

“The tax competition will have a new dimension,” said Christoph Spengel, chairman of the corporate tax department at the University of Mannheim. Mr. Spengel, who is also a research associate at the Center for European Economic Research, and a group of tax experts at the university have done a detailed comparison of the two countries’ tax systems and published a report under the heading, “Germany loses out in US tax reform.”

Clemens Fuest, who heads the Ifo economic think tank, also said he believed German business would suffer. “Investments and jobs will migrate to the US,” he said.

Canada: Writing at CBC, Aaron Wudrick of the Canadian Taxpayers Federation argues that America’s neighbor to the north also needs to follow our lead, despite recent reductions in individual income taxes:

Previously, Canada could boast about lower business taxes: the Canadian average combined federal-provincial rate of 26.7 per cent, compared favourably to an American average combined federal-state rate of 39.1 per cent. That advantage is now history: with passage of the Tax Cuts and Jobs Act, the new average American rate is just 26 per cent.

Worse still, the Trudeau government is heading in the opposite direction on taxes generally: while it recently resurrected a promise to lower taxes for small business, the general rate is unchanged. It has promised a national carbon tax in 2018, scheduled a payroll tax hike beginning in 2019 to pay for higher Canada Pension Plan contributions, and even introduced an automatic tax escalator on alcohol.

Australia: The Guardian, drawing on reports in The Australian, quotes Australia’s treasurer raising the alarm:

The treasurer, Scott Morrison, has claimed Australia’s economy will be deprived of 1% growth in GDP if parliament does not follow the lead of the US president, Donald Trump, and slash Australia’s headline corporate tax rate. . . . He said Treasury analysis, which was handed to the government this week but not released publicly, has pointed out that Australia may experience a significant recessionary impact and a potential downgrade in revenues if it does not lower its corporate tax rate from 30% to 25% in coming years, in response to Trump’s cuts.

The Treasury analysis, which was given to Morrison’s office, was also given to the Australian, which wrote a story warning that Australia could be “marooned” with one of the highest company tax rates in the world. Morrison is quoted in the story as saying: “The Trump tax cuts are coming. If we fail to respond, they will take Australian jobs, investment and wages with them.”

U.K.: Theresa May signaled as far back as last November that she would try to match Trump’s expected direction on business tax cuts, and is still pressing to do so, although plans for passage have been complicated by the U.K.’s messy Brexit divorce from the EU. The U.K. has also joined with France, Germany, Italy, and Spain in complaining about some of the provisions of the tax bill that are seen as anti-free-trade tax preferences for U.S. business.

Japan: Japan’s government, which is already cutting its main corporate rate to 29.74%, is studying cutting the effective tax rate to as low as 20% for companies that follow certain pro-growth policies. The tax debate in Japan “responds to developments in the U.S. and Europe and is desirable from the viewpoint of competitiveness,” said Takeshi Niinami, chief executive of beverage maker Suntory Holdings.

Denmark: The Danes are also pressing in a supply-side tax direction. Reuters:

Denmark’s government has reached agreement with other parties to simplify one of the world’s most complex tax systems. . . . The growth package agreed between the government, its populist ally Danish People’s Party and the opposition party the Social-Liberals included reducing tax on equity investments to encourage more companies to list in Copenhagen, copying a Swedish and Norwegian model known as investment savings account.

Ireland: The Washington Post claims that Irish leaders are less worried, given their already-low rates. But the Irish Times sees concern:

Irish tax experts say that the US process is a major move to encourage US firms to invest at home. With the Irish government also facing tax threats from EU moves — including a proposed special tax on digital companies to be discussed by EU finance ministers on December 4th — it seems that the the Irish tax advantages to attract FDI here are facing significant challenges . . . said Feargal O’Rourke, managing partner at PwC in Dublin. “There is no doubt that the direction of travel will transform the landscape in the US in terms of corporate tax competitiveness.”

Olivia Buckley, communications director at the Irish Tax Institute, said . . . “US companies will have a lot more to weigh up in the future before making investment decisions outside the US.” . . . The Irish headline corporation tax rate of 12.5 per cent will still be about half the US rate, counting in the new 20 per cent federal rate and state taxes of about 5 per cent. Peter Vale, tax partner at Grant Thornton, said this meant the cut in the headline rate would not provide a major threat to Ireland.

Singapore: The Straits Times reports:

While the tax cut could boost investment flows into the US, the question for Singapore is whether American companies might now re-evaluate their investments here.

After all, as [Withers KhattarWong partner Eric] Roose noted, the difference between the US and Singapore’s corporate tax rates is now just 4 percentage points.

“The general effect overall will be that US companies will do more things in the US and bring their profits back. Companies will begin to reassess their global structures and whether they really need foreign operations, or as much as they have now,” he said.

The discussions going on in these countries will only spread. Also from the New York Times:

“There will be pressure for a new round of lowering corporate taxes,” said Stefano Micossi, the director general of Assonime, an Italian association of publicly listed companies.

Republicans have had a rough time in 2017 relearning how to operate as a governing party in Washington, but the tax bill’s cuts to business taxes are a win for America — and the best evidence of that is the scrambling underway in foreign capitals to match it.

GOP Business Tax Cuts Force Other Countries to Compete

 

[task0778]

I sincerely hope we don't get into a tariff war, nobody needs that. This is one area that I think Trump could be wrong on, it's okay to be trying to restructure our trade deals but we don't want to mess too much with what could be a more favorable trade position for us thanks to the just passed trade bill. I say that cuz our prices just got lowered somewhat, not only here at home but also abroad. OTOH, we can't be letting China or anyone else manipulate the exchange rates and screw u over either.

 

[william the wie]

I sincerely hope we don't get into a tariff war, nobody needs that. This is one area that I think Trump could be wrong on, it's okay to be trying to restructure our trade deals but we don't want to mess too much with what could be a more favorable trade position for us thanks to the just passed trade bill. I say that cuz our prices just got lowered somewhat, not only here at home but also abroad. OTOH, we can't be letting China or anyone else manipulate the exchange rates and screw u over either.

One boobytrap your sources may conceal is that the number of available workers in Japan and China is much smaller than the Labor Force Fraction because pension eligible workers in both countries are subject to mandatory retirement at age 55 for women and 60 for men and special exemptions are required for continued employment beyond that age. Also under Europe's refugee laws fiscal drag is increasing there quite rapidly. Your European sources are aware of that but may not have accounted for all the effects in all of the countries in the EU.

 

[Unkotare]

I sincerely hope we don't get into a tariff war, nobody needs that. This is one area that I think Trump could be wrong on, it's okay to be trying to restructure our trade deals but we don't want to mess too much with what could be a more favorable trade position for us thanks to the just passed trade bill. I say that cuz our prices just got lowered somewhat, not only here at home but also abroad. OTOH, we can't be letting China or anyone else manipulate the exchange rates and screw u over either.

One boobytrap your sources may conceal is that the number of available workers in Japan and China is much smaller than the Labor Force Fraction because pension eligible workers in both countries are subject to mandatory retirement at age 55 for women and 60 ...

This information ^^^^ is incorrect.

 

[sealybobo]

I sincerely hope we don't get into a tariff war, nobody needs that. This is one area that I think Trump could be wrong on, it's okay to be trying to restructure our trade deals but we don't want to mess too much with what could be a more favorable trade position for us thanks to the just passed trade bill. I say that cuz our prices just got lowered somewhat, not only here at home but also abroad. OTOH, we can't be letting China or anyone else manipulate the exchange rates and screw u over either.

One boobytrap your sources may conceal is that the number of available workers in Japan and China is much smaller than the Labor Force Fraction because pension eligible workers in both countries are subject to mandatory retirement at age 55 for women and 60 ...

This information ^^^^ is incorrect.

You're such an expert on asians.

 

[waltky]

Granny says, "Dat's right - the Donald knows how to haggle with dem Chinamens...

CHINA BLINKS: Trump’s Hardline on Trade Forces China’s Xi to lower tariffs this year, open economy further
April 9, 2018 - Chinese President Xi Jinping on Tuesday (Monday night in the U.S.) promised to open the country’s economy further and lower import tariffs on products including cars, in a speech that comes amid rising trade tensions between China and the United States.

Xi also said China would raise the foreign ownership limit in the automobile sector “as soon as possible” and push previously announced measures to open the financial sector. “This year, we will considerably reduce auto import tariffs, and at the same time reduce import tariffs on some other products,” Xi said at the Chinese Boao Forum for Asia in Hainan province.

The comments sent U.S. stock futures, the dollar and Asian shares higher. They come amid rising trade tensions between China and the United States following a week of escalating tariff threats sparked by U.S. frustration with China’s trade and intellectual property policies.

CHINA BLINKS: Trump's Hardline on Trade Forces China's Xi to lower tariffs this year, open economy further – True Pundit