The Prospects Of The Proposed Tax Reforms By President Trump (Essay Sample)

THE PROSPECTS OF THE PROPOSED TAX REFORMS BY PRESIDENT TRUMP
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The prospects of the proposed tax reforms by President Trump
Task 1
The investors in the U.S stock markets had anticipated enhancement of the financial markets during the proposed reforms of the healthcare system in the U.S.A. Failure to realize this goal presented the bad news to the people who expected an improvement in the economic policies of the nation. Despite these setbacks, the stock markets have remained resilient as they anticipate the next potential reforms: tax reforms. The success of this reform will benefit the financial markets and attract investors. Many economists hope for a better economic status should the tax changes occur successfully.
The financial institutions are the primary beneficiaries of these reforms aimed to lower the corporate taxes occurred. The current 30% mean effective tax of financial firms should benefit from a 20% reduction. They will be excluded from corporate interest deductions and will surely benefit from the growth of the U.S economy. The regulations imposed on these firms after the 2007 recession has hindered their growth for a long time. The provisions of the Dodd-Frank Act proposed some complicated rules which await implementation due to their complexities. However, these regulations restrained the growth of financial institutions. They only became utilities (Heppenstall 2017).
On the other hand, the infrastructural prospects of a trillion dollar boost will encourage economic growth in the U.S, Then enhancement of transportation, energy efficiency, employment, and communication will increase consumer spending as well as borrowing. Consequently, financial firms are likely to benefit. However, these massive projects will result in further Treasury debts. They will have to borrow and satisfy this goal. Consequently, interest rates are likely to increase along with a steeper yield curve. Thus the net interest earnings of the bank will increase.
Although tax reductions promise a better economy with expectations of economic growth, history indicates that these policies have been used before. The previous presidents used this strategy before the recession and realized some growth. The 1964 tax cuts resulted in a 6.6% economic growth. However, this growth does not warrant compensatory payments. Research from Urban Institute asserted that, for each one dollar tax reductions, there is an increase of about 10 to 40 cents on the Gross Domestic Product (Gale 2010). In another analysis, every dollar cut yields about twenty-nine to forty-eight cents returns (Zandi 2008). Consequently, they assert that tax reductions result in monetary loss. Therefore, the achievements of the proposed tax cuts are uncertain. The investors remain hopeful and anticipate the best outcomes.
Task 2
The proposals in this news support the removal of the tax advantage on the use of debts to finance a business. Since the corporate and personal taxes are so high in the U.S, the investment situation worsens when corporations pay tax from their profits. Consequently, they have ...