Could Trump's tax bill make U.S. more competitive?

Updated 2017-11-06 10:32:57 Xinhua

U.S. President Donald Trump is hell bent on passing a tax overhaul, in a bid to make U.S. companies more competitive and boost jobs, at a time when the economy has still not fully recovered from recession.

But the question remains, will it work?

"If you want to create jobs, you really have to have tax reform," Republican Strategist Ford O' Connell told Xinhua.

In 2014 the United States had the world's third highest corporate income tax rate, at 39.1 percent, and experts said that has stunted the nation's economic growth.

Trump wants to rectify this, but the stakes are high, as failure to pass tax legislation could cost his party control of Congress, and that would derail the businessman-turned-politician's presidency.

Trump is pushing a tax bill that will boost U.S. Gross Domestic Product (GDP) after years of sluggish growth, in which the economy simply slogged through and saw no robust recovery from the 2007-2008 economic nose dive.

While GDP growth has picked up somewhat in recent quarters, the president wants to push it higher. Trump would also like to provide incentive for U.S. corporations to return home, at a time when around 3 trillion U.S. dollars are overseas.

"The tax plan helps companies by lowering their taxes and simplifying their paperwork. It is likely to make firms more competitive internationally and put them in a stronger position to boost their revenues," Brookings Institution Senior Fellow Darrell West told Xinhua.

Still, there's an ongoing argument between Democrats and Republicans, with the former contending that the tax plan will only benefit the top tier and fail to boost employment, and the latter arguing the plan will be overall beneficial.

West said it's not sure whether the plan will boost jobs.

"It is not clear the increased savings will generate additional jobs. Many companies use excess money to increase dividends to stockholders, rather than boosting employment. A number of them likely will do that, which will not help middle class families," he said.

West said the plan is geared toward helping companies and the wealthy, rather than the working class folks who put Trump in the White House.

"The overall plan is heavily tilted towards companies and wealthy individuals. They get most of the financial benefits. The proposal doesn' t offer much assistance to the working class voters who elected Trump," West said.

Some hope Trump's tax plan will bring more companies back to the United States, at a time when many blue collar jobs have been shipped abroad, and working class people struggle to make ends meet.

On Thursday, the chief executive officer (CEO) of semi-conductor company Broadcom appeared with Trump at a press conference, announcing that the company is shifting its headquarters from Singapore back to the United States.

O' Connell said that with the right tax reforms, more companies will return, just as Broadcom has. However, West argued that "this move does not mean that other companies will do that."

WILL IT PASS?

There's much pressure on Trump to pass this legislation, as Republicans have not passed any major bills since Trump was inaugurated in January, despite controlling the White House and both houses of Congress. With Congressional elections coming up in 2018, failure to pass the bill could cause Republicans to lose their edge.

"Democrats think that if the GOP loses on this, Republicans will lose the House," O' Connell said, explaining that it's Democrats goal to derail everything Trump does, in a bid to ultimately doom his presidency.

"Battle lines are being drawn," he said.

The good news for Trump's team is that the bill may pass if Americans like it.

According to FiveThirtyEight, a U.S. publication well known for using data to predict elections, "what Republicans probably need is for some Americans to really like this tax plan - or at least for everyone not to hate it."

But at a time of bitter partisan rivalry, Democrats have blasted the bill, with Senator Chuck Schumer saying on Thursday that Americans will ultimately turn against the bill, opining "the more it' s in sunlight, the more it stinks."

Democrats are gathering around the message that the bill only benefits corporations, while leaving the middle class to foot the bill.

But at the same time, the Washington Post, which conservatives say usually sides with Democrats, this week reported that Democratic Senators are "falsely" claiming Trump's tax plan will raise taxes for the middle class.

Some experts believe the president's bill will ultimately pass, although Trump will have to do some wheeling and dealing with Democrats.

"It's going to pass, but the question is when and whether it will be a GOP-only will, and whether Democrats will join in," O' Connell said.

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