Trump Economics – Tax Reform SWOT Analysis By George Mentz
Strengths and Opportunities – With a new tax system that applies to C-Corporations in the USA, many things can be affected. If you lower the progressive Corporate taxes, the company will have more revenue in their hands to spend.
At this time, corporate profits are taxed up to 39% before they can pay dividends or retain earnings.
If you lower that rate to 15-20 percent, you would make the USA a corporate tax haven which levels the playing field for many companies worldwide.
If a company has more money due to less taxes, what will the company do? Here are some options
- Hire People
- Pay employees more money.
- Spend it
- Invest in People Innovation Technology etc.
- Buy and Build things
- Buy other companies.
- Pay HIGHer dividends
- Grant more stock options
- Invest more in the community
- Provide greater benefits to employees.
- Retain more earnings for security.
- Grow, take risks, invest more money locally
- Repatriate more money from abroad.
- Move your headquarters or nerve center from another country into the USA.
- Compete better internationally.
- and many other ideas.
Many ideas come from thinking about these dynamic shifts. One option is that investors will hold onto great blue chip stocks knowing that they may be able to pay greater dividends too.
Weaknesses – Since the USA has the worst Corporate Tax Rates, the only weakness is that people will pay less corporate tax. However, that should be offset by money circulation and sales/personal taxation revenues being boosted greatly.
Threats – A potential tax war around the world where countries compete to have the best business environment 🙂
Citations
Deloitte Corporate Rates Worldwide https://www2.deloitte.com/content/dam/Deloitte/…/Tax/dttl-tax–corporate–tax–rates.pdf
Trading Economics http://www.tradingeconomics.com/country-list/corporate-tax-rate
https://www.linkedin.com/today/posts/georgementz