Zero Hedge
Oct 3, 2017
One of the reason why the torrid dollar rally of the past few weeks appears to have plateaued, at least for the time being, is that just like earlier in the year, doubts have emerged about the viability of the “new and improved” tax plan, which according to the Tax Policy Center would mostly benefit the “Top 1”, even as it eventually pushes taxes for the upper middle class progressively higher. One catalyst is a Bloomberg report overnight, in which Bob Corker was quoted as saying that the White House is showing “softness” on ending the $1.3 trillion federal tax deduction filers get for their state and local taxes, warning that it raises questions about the GOP’s “intestinal fortitude” and could imperil a tax overhaul.
The framework that President Donald Trump and Republican leaders released Wednesday calls for deep rate cuts and would abolish existing tax breaks to help pay for them. Without such “pay-fors,” Congress might have to settle for only temporary tax cuts.
Needless to say, temporary tax cuts would have far less of an impact on both stocks and the dollar than if Trump’s “biggest ever” tax reform is permanent.
But it’s not only the suddenly shaky future of SALTaxes. As Goldman’s economists write overnight in a report looking at “what could possibly go wrong” with tax reform, they note that while “recent developments on tax reform have been positive” with the Senate’s “tentative budget agreement likely headed for passage in the Budget Committee this week” and the Big Six framework signaling narrower tax policy differences, there’s “plenty that could still go wrong.”
- A d v e r t i s e m e n t
Some of the notable hurdles that could lead to Trump’s first year to have zero major legislative victories are as follows:
- Revenue target hasn’t been finalized; Senate’s $1.5 trillion “tax cut instruction” is…