Land And Water U.S.A.




Friday, February 24, 2017

TRUMP TAX PLAN THREATENS GLOBAL COMMUNITY


By Mike McCune

Every political candidate offers promises that, on the surface, look good. It is when the rubber meets the road that we actually find out if there is any merit or not.

The countries those politicians represent often take a tack in the economic headwinds that may look good at first glance--just like the politicians themselves--but on closer inspection turn out not to be so much a pot of gold for the voter or investor but a pot with a rusted out bottom.

Last fall during the American presidential campaign, Donald Trump promised Americans he would make major adjustments to the income tax--for both the individual and for businesses.

Since he was trailing badly in the polls, most of the leaders of the rest of the world's economic engine ignored his goals. From Nov. 9 to January 19 they continued to dismiss the president-elect's rhetoric. But now the worm has turned. Trump, five weeks into his first term, seems intent on making some major changes to the way America approaches the rest of the world. That is scaring the socks off the other world leaders and they are scrambling to get counter measures into place.

In this, if nothing else, Trump has indeed shown the global community America--while not yet being great again--does indeed matter.

To recap some of Trump's tax reform ideas, he wants to: Reduce corporate tax rates from 35% to 20%, eliminate the corporate Alternative Minimum Tax, allow an indefinite carry forward of operating losses, eliminate the deduction currently allowed for (future) loans, and allow American multinational companies to bring home foreign cash holdings under a modest 8.75% tax. But the biggest bananas in his bag are an immediate, 100% deduction for capital investment expenditures and exemption of foreign-paid subsidies from taxation.

As you can see, all of these proposals benefit business which makes sense as Trump battled these provisions as a businessman. What is missing is the individual and household alterations. Maybe Trump figures the business boon will "trickle down" to the low lifes like you and me because we are still the world's largest consumer.

Trump is focusing on producing goods here and exporting them overseas--a reversal of America's government approach to business philosophy since the advent of the "Great Society." But this alteration of the status quo globally on taxation is going to have a major impact on other nations' economic fortunes. Since the dollar is currently the strongest national currency, the other nations are going to have to do a lot of catching up in order to blunt the corporate location changes Trump proposal requires.

To that end, the smart money has been watching intently the interest rates being paid around the globe.

In London, according to bankrate.com, Barclay's recently announced a full 1% rate on its online savings accounts--almost 1200% more than you can get in America. The pound is floundering against the dollar since the Brexit vote last June and the English need a cash infusion very badly to stagger onwards in the divorce proceedings which will be at least two years in the making.

But now we find out that Abenomics in Japan is really in trouble. From San Francisco-based MUFG Union Bank through a brand-new entity named PurePoint Financial comes a stunning offer for 1.25% interest on savings deposits of $10,000 and a gut-churning 1.4% offer for a 1-year CD of $10,000 or more. That's nearly 17 times what one can get from an American bank.

Remember: If the offer looks too good to be true, it probably is.

For all their promises, since Congress abrogated its Constitutional authority to "regulate money" to the Federal Reserve in 1964, the average taxpayer has been stuck in the economic mud while businesses and the financial institutions have been greedily sucking up the new provisions of things like the Consumer Financial Protection Bill to enrich themselves at our expense.

Now, because of Trump, other countries are facing the prospect of complete, overnight economic ruin, not just American households.

Want some proof? The Japanese bank mentioned above, MUFG Union's, parent company is Mitsubishi UFJ Financial Group. In Japan it is paying a microscopic one one-hundredth of a percent on 10-year, fixed-term deposits. That means for a Japanese investor to get an equal amount to what is being offered in San Francisco by the same financial entity would take 140 years!!!

The rest of the world, just like November's defeated snowflakes and even the Republican Establishment here, cannot figure Trump out or even get a little advantage. They are running for cover and trying their best to adjust to a new world order where the American President doesn't apologize for America's economic engine but wants to remove the rust accumulated for the past 53 years and let the new model run on the world stage--just like it did post-WWII.

But now, just like our Federal Reserve and Washington have done in the past, the target of every nation is the American consumer. We are the fattest cats on the block by far and every country would like to be America. But they were not, are not and will not be America ever because we have resources others can only dream of.

If Trump succeeds in bringing America's exported business capability back home, the rest of the global community will have to come here to do business on his terms. They are trying desperately to salvage something before those companies come home and the only thing they have going is to entice the individual American to invest overseas so they can use those dollars to entice some into staying put.

The proof is in the pudding and PurePoint Financial, in announcing the new rates, even went so far as to make a pledge to you and me--a non-campaign campaign promise if you like. In a press release yesterday is stated it "pledges to help grow America's personal savings rate."

That sounds an awful lot like every candidate for every political office in every campaign in my lifetime, how about yours? The only thing missing from the PurePoint campaign-like press release was the requisite attachment "to Make America Great Again."
"I have sworn on the altar of God eternal hostility to every form of tyranny over the mind of man."--Thomas Jefferson

No comments:

Post a Comment

Followers