Trump’s new TCJA. What does the rest of the world think?
European Ministers send letter to US Treasury
The US Treasury Steven Mnuchin has received a letter from the finance ministers of Germany, France, Britain, Spain and Italy warning that the TCJA (Tax Cuts and Jobs Act) could potentially damage the world economy. The letter focused on how the US government 'exercises its rights' over domestic tax policy, mentioning that they must adhere to their international obligations. Also highlighted in the letter was the suggestion that the TCJA does not adhere to the World Trade Organisation rules, and that this could potentially result in legal challenges.
Trump’s new taxes propose a number of changes to the way the US taxes multinationals and foreign companies. A proposed tax on foreign income from US based corporations could unfairly affect business relationships with European companies.
European ministers are not the only ones to voice their concerns. Chinese officials are preparing new guidelines to ensure the tax bill does not result in large losses of capital from the country. According to the Wall Street Journal, such changes could include more stringent capital controls, increased interest rates, and greater support for the country's currency. Meanwhile, work has begun to resolve the two differing versions of the TCJA between conference committees from both the House and Senate. The final bill needs to conform to strict Senate rules so it can be passed by a simple majority vote. GOP leaders are planning to hold a vote in both chambers on the bill by December 20, with the intention of sticking to a deadline of December 22nd to pass the final bill. Whether or not this deadline can be met remains to be seen.