True Effect of US Tax Reform on FDI Remains Unclear
NKF Senior Managing Director, Gregg Wassmansdorf
, recently authored his fourth of six annual editorials for fDi Magazine, providing industry-leading insight into globalization and foreign direct investment (FDI). In this article, Mr. Wassmansdorf contemplates the outlook for FDI following US President Donald Trump’s polarizing tax reform which is arguably the most substantial reduction and restructuring of US personal and corporate taxes in a generation.
"In one bold move, this tax cut remedies the fact that for more than 20 years US corporate income taxes (combined federal and state) have been higher than the average for G20 countries. This has not stopped the US from being a primary beneficiary of FDI, however.
Analyses of the expected impact of these changes are in their early days, but the act may mean increased corporate investment at home.
Time will tell if the Congressional Budget Office is correct and the implemented tax changes will leave a legacy of more than $1500bn of additional debt. It is hoped, rather, that accelerated economic growth and the repatriation of corporate earnings will increase federal tax collections and reduce the fiscal harm. What is certain is that over the coming months and years there will be endless conflicting claims regarding the effectiveness of the tax reform to encourage new investment by domestic and foreign firms alike."
Read the full article, View from the Americas: too early to tell on Trump's tax revolution.