by Michael Keane
As we continue to analyze the results of the tax cut, a curious thing happened. The Wall Street Journal put out conflicting articles on the subject. In one recent article this week written by Richard Rubin and Theo Francis (link here), the amount of money that has been repatriated by US corporations due to the changing tax law is currently at about 20% of the Trump Administration's expectations. This is presenting (or compounding) a higher risk for the US deficit in the next few years. But in an Opinion piece (link here) by Stephen Moore, the analysis is that the corporate tax cut is quickly and assuredly going to pay for itself and then some through GDP growth.
One of the areas that the US government expected to help nullify the hike in the deficit was corporate profit repatriation. If you follow the evidence presented in the first article, and current levels of repatriation continue, the government will not be able to deal with the deficit.If you follow the second article, the rise in GDP will do more than enough to cover the deficit initially created by the cut and overtake the issue of repatriation.
Because the opinion piece came after the repatriation article, and filled with scattered non-evidence based data points, it might lead one to believe it was written as a rebut. But as always, time will tell where the Trump administration's economic decisions lead. In a thankful way, the decisions and moves have been big, so the results continue to be clearer.
KeaneVCC continues to follow this topic. Previous posts can be found here.
** This blog is used for opinions and ideas and should not be used as a direction to act without doing your due diligence.**
