How Will The Global Tax Reduction Boom Evolve?

Recently, a round of "tax cut tide" is being launched around the world. China's tax reduction is one of the core of the supply side reform.

1) the core view: the Trump administration announced the tax reform plan, which is known as "unprecedented."

The key contents include: 1. substantially reduce the corporate income tax rate (from 35% to 15%); the 2. personal income tax rate is reduced and reduced from seven to three; 3., a one-time tax on overseas cash repatriation of American enterprises, encouraging capital to flow back to the United States.

The bill is expected to be postponed until 2018.

Following the advent of health care reform, infrastructure and international trade plans, the announcement of the tax reform plan marks the completion of the "painting cake" stage of Trump economics. Next, it will enter a stage of solid and twists and turns of "cake making". The "Trump paction" will also be pformed from the 1 mode to the 2 mode: the paction is expected to turn to the expected paction error, the market sentiment sensitivity will be strengthened, and the market fluctuation will increase.

A round of "tax cut tide" is being launched around the world. Competition among major economies will take a long break from the historical bifurcation. At the critical moment, China should increase tax reduction. This is one of the core of the supply side reform, and it will take the initiative for the pformation and upgrading of the real economy.

A second tier real estate market and a strong financial system and a "bubble tax" are equivalent to "reducing the virtual tax". Although the short-term impact on financial markets and asset prices may be short-term, it will help to bridge the financial and physical return on investment in the medium term and is conducive to the healthy development of the economy.

2) the tax reform plan puts forward four major goals: 1., stimulating economic growth and creating employment; 2. simplifying the tax system; 3. reducing the tax burden on the American family (especially middle-class families); 4. reducing the corporate tax rate and enhancing the competitiveness of the US local enterprises.

3) the tax reform plan mainly includes two aspects:

A. tax reform: 1. simplify the tax system, reduce the personal income tax rate from seven to 35% (35%, 25%, 10%); 2. double the standard deduction amount; 3. increase tax relief for families with children; 4. abolition of the minimum tax; 5. abolition of estate duty.

B. enterprise tax reform: 1., the corporate tax rate will be reduced from 35% to 15%; 2., the establishment of territorial tax system; 3. of the trillions of dollars in cash held by American companies overseas.

And encourage the return of funds to the United States.

4) the announcement of the tax reform plan is a unilateral act of the White House. Trump's road to tax cuts has just begun.

The main purpose of the plan is to fulfil the campaign promise of Trump. The whole announcement of the plan is only less than a page, and also shows its haste from the side. In the future, we need to communicate with the various factions of the two parties in the Congress. After compromise, we will finally vote in the house of Representatives and the Senate, and go to the legislative process.

The final plan will be "discounted" on this plan.

5) whether tax cuts will lead to an increase in deficit? There is no detailed answer to the problem in the announced plan. The explanation given by the finance minister, Mr chin, is that tax reform can promote economic growth, thereby expanding the tax base and "paying for ourselves".

But our research shows that the expansion of the tax base is not enough to reduce the impact of low tax rates. Whether in the short run or in the long run, Trump's tax cuts will lead to an increase in the deficit.

6)

The plan does not include the "border adjustment tax" advocated by Trump in his campaign.

The border adjustment tax has been regarded as an important part of the Trump tax reduction, which can offset the increase in deficit caused by corporate tax cuts and personal tax cuts.

This time, the plan is not included in the plan, mainly because of the premature opportunity: Trump is taking measures to Mexico and Canada to consider withdrawing from the NAFTA, but the specific plan has not yet been determined. After the "Xi te Hui", Trump has temporarily cut back on China's trade protectionism.

In the future, border regulation tax is still likely to become one of the key elements of Trump's tax reform.

7) the tax reform bill will be passed or will be postponed until 2018.

The Trump administration originally planned to pass the tax reform bill in August this year, but Nouchine, the finance minister, said he had given up the timetable.

Taking into account July 31st -9 4 is the summer recess of Parliament, October 1st will enter a new fiscal year, when Congress will focus on raising the debt ceiling problem, and December 18th will enter the Christmas recess.

This means that the tax cuts bill is likely to be postponed until the mid-term elections in 2018.

8) a round of "tax cut tide" is being launched around the world, and China's tax reduction is one of the core of the supply side reform.

In addition to Trump's tax cut, in Britain, the Teresa mey government is pushing for a policy of lowering corporate income tax rates (20% to 17%). It is reported that if the European Union takes trade restrictions on Britain after the euro, then the Teresa mee government plans to further reduce the corporate income tax rate to 10%.

In India, the Modi Administration introduced tax cuts and tax cuts for individuals and small and medium enterprises.

In France, many presidential candidates also proposed tax cuts.

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In China, at the twenty-six session of the Standing Committee of the twelve National People's Congress in late February, "the motion of the State Council on the draft amendment to the enterprise income tax law" was deliberated, and the topic of lowering the corporate income tax rate was discussed.

In April, the executive session of the State Council passed six structural tax reduction measures, including the reduction of value-added tax rate and the purchase of commercial insurance into individual tax deduction.

On the one hand, several major economies discussed tax cuts at the same time. On the one hand, they showed that the cost of manufacturing industry and the intensity of international trade intensified among big powers. On the other hand, they also confirmed our early judgement again.

Competition in the world's major economies has once again taken a long road to history. At a critical moment, China should take the initiative to pform and upgrade the real economy in the global "tax cut".

9) financial supervision and bubble squeeze are equivalent to "reducing the virtual tax".

Since the end of last year, the regulatory consolidation, deleveraging and bubble climax of a second tier city's real estate market and financial system have also been interpreted as a tax reduction from another angle to reduce the virtual tax of the real economy.

Although the short-term impact on financial markets and asset prices may be in the short term, it helps to bridge the return on investment in the financial and physical sectors in the medium term, and is conducive to the healthy development of the economy.

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