Is the Flynn – Russia – Trump leaks – Russian missile ball of wax a distraction that is causing market agents to think more about other things than economic issues?
You bet.
When Congressman Kevin Brady (R-Texas) takes to doing interviews (CNN this morning) on national television and has to spend that time talking about the items listed above instead of about tax policy for US corporations and individuals, you know he’s being distracted. Brady is Chairman of the House Ways and Means Committee. The tax policy of the United States originates in his committee. The memo that outlines proposed tax strategies and rates is in the public domain only because he allowed it to be there (hat tip John Mauldin).
Read Bianco: Trump Will Bring More Inflation Than Real Growth
That memo suggests implementing an 8.75% repatriation tax that could bring one to two trillion foreign-housed dollars into the US (Cumberland Estimate). That money is owned by American corporations who park it abroad to avoid a 35% tax rate. Lower that rate to 8.75% and the impact is huge.
That memo also proposes a maximum personal tax rate of 33% and a lower tier of 25%. It further suggests a major revision in business taxation, with a top rate of 20%. The memo recommends altering capital investment treatment, reshaping the interest cost on debt, and preserving charitable deductions. It puts in place the framework for a large infrastructure expansion in the US, and it does NOT threaten the status of tax-free bonds that will be needed to finance the state and local government share of the infrastructure buildout.
This post was published at FinancialSense on 02/15/2017.
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