Fiscal Policy

Trump tax cut is sack of coal for foreign banks

29 Dec 2017

The U.S. president says reduced corporate taxes are a Christmas present. But a levy on interest payments to overseas companies could hit lenders with U.S. subsidiaries. The provision, the base erosion and anti-abuse tax, might even cancel out the benefit of a lower headline rate.

China pulls disappearing debt trick

20 Dec 2017

Beijing talked up better-quality growth and risk management in its latest annual economic preview. But reducing the country’s $30 trln debt load, last year’s “top priority,” was barely mentioned. It’s a worrying sign if China’s leaders can’t kick the country’s credit addiction.

How to know if America’s big tax bet pays off

20 Dec 2017

Republican lawmakers have passed revised tax cuts that give even more breaks to companies and the wealthy. They are banking on those benefits trickling down to average workers. It could come back to haunt them. Breakingviews notes a few ways to measure the policy’s success.

Best thing Trump and Xi can do in 2018 is nothing

20 Dec 2017

The two leaders command half of the planet’s expected GDP growth. The biggest risks are more trade barriers, a Chinese housing market collapse, and armed conflict. All can be avoided if the U.S. president fails to use his powers and his Chinese counterpart opts not to use his.

Modi’s shrunken home-state win may slow reform

18 Dec 2017

The Indian premier’s BJP won in Gujarat, but with a reduced margin. That could signal a tougher-than-expected fight in the 2019 general election and prompt Narendra Modi to put his bigger, more disruptive initiatives on the back-burner for now in favour of more populist policies.

People vs. companies tax bill shafts U.S. expats

14 Dec 2017

Businesses are awash in riches in the Republican plan. Besides cutting the corporate rate, GOP lawmakers want to impose taxes based on where income is earned. But some 9 mln Americans working overseas won’t get that benefit. It’s another instance of corporations trumping humans.

Portugal beats Italy in bond market pecking order

15 Dec 2017

The country that needed a bailout in 2011 can borrow for less than its larger peer. Investors’ preference for Portuguese debt reflects its more vibrant economy, and messy Italian politics. Lisbon can keep outshining Rome, so long as lax bond markets don’t encourage bad habits.

Japan’s creative pay push contains mismatch flaw

15 Dec 2017

A fresh tax-rate cut rate gives employers an incentive to raise worker wages and invest in factories. The link recognises the folly of trusting companies to use a windfall to spread the wealth. One big hitch in the plan is that the corporate cost will far outlast the benefit.

Hadas: U.S. fails life, liberty, happiness test

14 Dec 2017

The country’s Declaration of Independence offers a pretty good way of measuring economic success, and failure. Life expectancy is stagnating. Liberty suffers from too-strong companies and too-weak government. And rising inequality undermines the pursuit of economic happiness.

The Exchange: NY Deputy Mayor Alicia Glen

13 Dec 2017

How bad will the Republican tax plan be for New York City? Alicia Glen, who looks after economic development for America's largest city, says it will hit 700,000 taxpayers and depress property values. But it won't make the Big Apple any less appetizing for the best and brightest.

Alabama voters put anger before economics

13 Dec 2017

Democrat Doug Jones won the state’s U.S. Senate race in a stunning upset. Rival Roy Moore has unique troubles, namely allegations of sexual misconduct. But Trump’s approval has also fallen, despite Alabama’s low jobless rate. The Republican economic-growth message isn’t a magic elixir.

Hadas: The mystery of lost competition

6 Dec 2017

The U.S. tax cut is expected to boost corporate earnings but not lower prices or raise wages. That implies there’s too much tacit collusion for basic economic theory to work as designed. Limited price competition is great for shareholder value, but bad for the economy.

Rushed U.S. tax bill rewards oil, real estate

4 Dec 2017

The Republican Senate plan snuck in tax breaks for oil and gas partnerships, real-estate investment trusts and other sectors. One hiccup puts the research tax credit favored by business at risk. But overall, corporate America and the wealthy may receive an early Christmas gift.

GOP casts principle aside in scramble for tax win

2 Dec 2017

Senate Republicans passed a tax cut plan after last-minute changes papering over deficit concerns and the bill’s tilt to the wealthy. Differences with the House must be reconciled. But an escalating Russian influence probe makes the party even more frantic to claim a victory.

Botched process leads to Frankenstein tax plan

30 Nov 2017

U.S. Senate Republicans are rushing into a vote on their tax-cut effort. Changes to appease GOP critics have yet to be settled, including a trigger to raise taxes if growth falls short. Lower-income Americans will also face higher bills. Lawmakers are creating a scary mess.

U.S. doesn’t even have a corporate tax problem

30 Nov 2017

Proposals in Congress would cut the levy on companies and, temporarily, on individuals. The move may give a late-cycle boost to the economy but add to the deficit and debt. The irony is that corporate profit is already plentiful while Uncle Sam's tax take is historically low.

Cox: Trump bump aside, U.S. stocks lag in 2017

30 Nov 2017

The president has unprecedentedly staked his political colors to the mast of rising equity prices, calling the S&P's rally a validation of his policies. Yet most other markets around the world have done even better. There are bigger forces at work than U.S. corporate tax rates.

Indian economy shaking off Modi’s shock therapy

30 Nov 2017

Growth of 6.3 pct last quarter suggests fallout from the premier's policy pileup is fading. He’s leading a bold drive to improve the way India is governed. Getting a few more things right, like the resolution of bad debt, is a precondition to turn this into a solid economic run.

UK’s post-Brexit industrial plan lacks ambition

27 Nov 2017

The government has promised to boost research spending, improve education and upgrade infrastructure. Leaving the EU makes this more important, but less affordable. Even if Britain was not breaking from its largest partner, however, the goals would be strangely short of oomph.

Review: Macron is a riddle wrapped in transparency

24 Nov 2017

A trio of books help explain how a political neophyte became the French president. One is a decent account of the election campaign, another delves deeper into his youth and family life. But even Emmanuel Macron’s own tome is short of detail on how he formulated his beliefs.