Trump's "tax cut plan" has just passed 10 sentences to understand it

Trump's "tax cut plan" has just passed 10 sentences to understand it. Related topics: Trump...

Related topics: Trump wins big! The U.S. Senate passed the largest tax reform bill in 30 years

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> Trump just won a big victory. The U.S. Senate passed the largest tax reform bill in 40 years

Trump tax reform was passed by the Senate, which may increase the deficit by 1.4 trillion US dollars in 10 years

The U.S. Senate passed the tax reform bill Congress revised the tax law for the first time in 31 years

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Source: Liu Xiaobo

Author: Liu Xiaobo

1. At around 3 pm on December 2, Beijing time, Trump’s tax reform plan was approved by the U.S. Senate. This is Trump's first major victory in nearly a year in office.

2. The tax reform plan received 51 votes in favor and 49 votes against in the Senate. Trump's Republican Party holds 52 seats in the Senate, and all 48 Democratic senators voted against it. That means one Republican voted against it.

3. On November 16, the U.S. House of Representatives passed the tax reform bill by a vote of 227 to 205. Therefore, Trump’s victory in the Senate today is decisive. Next, there is the matter of resolving differences between the House-passed version and the Senate version (such as when tax cuts begin). If nothing else happens, Trump is likely to sign the tax cut bill before New Year's Day.

4. According to Trump’s tax reduction plan, approximately US$1.4 trillion in taxes will be reduced in the next 10 years, which will have a significant stimulating effect on the US economy. Trump hopes to expand the economic pie through tax cuts and ultimately solve the problem of excessive deficits. Whether this can be achieved remains to be seen.

Above: U.S. President Trump tweeted, thanking Senate Majority Leader McConnell and Senate President Pro Tempore Hatch for their work during the vote on the tax reform bill, and expressed that he looked forward to signing the final version of the bill before Christmas.

5. This is the largest tax reform in the United States in 31 years. The corporate income tax will be reduced from 35% to 20%. The tax reform also encourages American companies to bring overseas profits back to the United States; in terms of reducing the burden on the middle class, the standard deduction for personal income tax has almost doubled. The personal income tax has been reduced from seven levels to four levels, which are 12%, 25%, 35% and 39.6% respectively.

6. If Trump’s tax cut plan can be implemented in time, it will have a stimulating effect on the economy. The Fed is expected to raise interest rates four times in 2018.

7. Tax cuts will have a global impact. In order to cope with competition from the United States, major economies will generally reduce corporate income tax and personal income tax, and China is no exception. Chinese Finance Minister Xiao Jie has previously mentioned the issue of "the international competitiveness of the tax system" many times.

8. The implementation of tax cuts will increase the number of interest rate hikes by the Federal Reserve, which will also affect the decision-making of banks in various countries. For example, the possibility that China's central bank will "passively raise interest rates" in the second half of next year will increase, and raising interest rates will be negative for China's property and stock markets.

9. It is worth noting that Trump is also preparing to abolish the estate tax. This move by the United States may have a profound impact on global inheritance taxes. In order to remain competitive, major countries will abolish inheritance taxes or reduce tax rates in the future. The possibility of China introducing an inheritance tax will be greatly reduced.

10. In short, the passage of Trump’s tax cut plan will be good for China’s real economy and slightly negative for the property and stock markets. This will continue China’s policy of “controlling the total currency.”