Year after year, Trump finally made a beautiful turnaround.
Local time on the early morning of December 3, in the long-standing game between the parties, the Senate passed the Republican Party's more than 500-page tax reform plan with 51 votes in favor and 49 votes against it.
In the opinion of public opinion in the United States, this not only represents a major victory for Trump and the Republican Party, but also the largest adjustment to U.S. tax laws in more than 30 years. According to the latest tax reform act, the corporate tax rate in the United States will rise from 35% Down to 20%, personal income tax will have different grades of reduction.
The United States, the world's largest economy and the core hinterland of the global capital market, its drastic fiscal and tax reforms will undoubtedly have a huge spillover effect on the world economy.
policy
The United States tax reform, the most direct impact on the main, of course, is the U.S. economy.
As we all know, at the present stage, there are mainly two means for the state to carry out macro-control: one is fiscal policy, which can affect the amount of cash in the market by increasing / decreasing taxes so as to restrain overheating or stimulate economic development; secondly, monetary policy , Mainly because the central banks of various countries adjust their economic activity by raising / lowering the exchange rate of their own currencies and affecting the production costs of enterprises and so on.
In Japan, Europe and other countries long-term zero interest rates or even negative interest rates monetary policy, still difficult to stimulate economic development, the United States this fiscal reform, are high hopes.
The most direct understanding, tax reduction, which means that residents disposable income and business costs of production decline, which will undoubtedly stimulate consumer spending, while increasing corporate profits and promote business reinvestment and enhance economic viability.
The U.S. tax fund estimates that this plan will increase gross domestic product in the United States by more than 9%, increase real wages by 8%, and in addition create at least 2 million new permanent full-time jobs. Trump is even more assertive 'This is a Christmas gift for all Americans this year! Save an average of $ 1,182 on a yearly basis for each American family!'
Of course, the reform of the tax system is very complicated and non-trivial can be said in a clear light. To sum up, the tax reform in the United States has so many major points:
First of all, "personal system" has been replaced by "territorial system," meaning that as long as tax has been paid overseas, the return of U.S. enterprises to their home countries will be avoided. This is widely believed to stimulate the return of the profits of U.S. enterprises.
In addition, tax rates have been greatly simplified and several taxes have been abolished, including estate duty, alternative minimum tax ATM, etc. It is also possible to encourage more economic activity.
But at the same time, some voices, including some in the United States, also believe the tax cuts will bring huge fiscal deficits to the U.S. government, after the Independent Tax Policy Center estimated that the House version of the tax reform bill will be The United States increases its deficit by 1.3 trillion U.S. dollars. There is still a great deal of uncertainty about whether the U.S. government can handle this.
However, these are just some people's judgments. There are also many controversies surrounding these judgments. In fact, the current version is not the final version. There is still a certain difference between the bill passed by the Senate and the bill passed by the House of Representatives last month. What specific changes will be the future, when the implementation, still need to wait.
influences
It is very important that as the globalization of the world economy accelerates, no country can independently be controlled from the economic activities of other countries and the fiscal and monetary policies of a country will have a far-reaching impact on the economy of other countries. For a U.S.-owned country with a high degree of Open-ended financial markets and strong currency countries, the impact even more.
As the second largest economy in the world, China, which has as much as 3 trillion U.S. dollars of foreign exchange reserves and a high degree of dependence on the economy and trade, is undoubtedly one of the countries of greatest concern in the sphere of influence of the U.S. tax reform.
Mei Xinyu, a famous economist and researcher at the Institute of International Trade and Economic Cooperation of the Ministry of Commerce, believes that in theory, the tax reform policies of the United States mainly impact on China in two aspects. One is the impact of capital flow and the other is that monetary policy brings Follow-up effect.
First of all, according to its latest tax reform program, corporate income tax in the United States will be reduced from 35% to 20%, which means that the operating pressure of enterprises will drop drastically. This will largely drive the U.S. retention overseas The large-scale return of profits to China will stimulate the withdrawal of U.S. businesses from the Chinese market, which will have a great potential impact on China's balance of payments, foreign exchange reserves and the exchange rate of RMB.
Second, it must be pointed out that the tax reduction policy of the United States is based on the fiscal policy of the United States that "increases interest rates and shortens the scale." This combination of punches will undoubtedly affect the base currency of other countries. Understand the so-called rate hike, is to raise the dollar exchange rate, the dollar appreciation, then the devaluation of the yuan disguised thing Well shrinking principle is similar to the Federal Reserve to recover the excessive dollar on the market, in short, so that the already very strong dollar becomes Stronger, objective pressure on the renminbi has also been devalued.
As a general rule, such "double killings" of monetary and fiscal policies will have a "tightening" effect on other countries, and this double contraction not only affects the primary product (unprocessed raw product) Quotes, resulting in great downward pressure, but will further bring pressure on capital flight, the balance of payments, foreign exchange reserves have a great impact.
We have to be on guard for this wave of shocks.
Lenovo
Here, everyone must have come up with an idea: in the late 1980s, the U.S.-led 'Plaza Accord' was considered by many as a shady conspiracy that led to the Japanese economy slumping for decades.
What protocol can be as legendary?
This has to be said back to the United States in the 1980s, when the United States faced the crisis of the excessive exchange rate of the U.S. dollar, the external trade deficit and the government budget deficit. The trade deficit once accounted for 3.6% of GDP and the economy was extremely unhealthy. To replace the United States as the world's largest creditor in 1985, the products it manufactured were flooding the globe and the capital was expanding wildly.
So, in order to boost exports, there was a voice in the United States that used administrative measures to reduce the exchange rate of the U.S. dollar and save U.S. exports. Things went smoothly unimaginably. In 1985, the United States, Japan, the former Federal Republic of Germany, France, the United Kingdom The finance ministers of the five nations gathered at the New York Plaza Hotel and reached an agreement that "the yen and the mark of the mark have risen sharply to restore the overvalued dollar price."
Since then we all know the history. The yen has risen sharply. From the first quarter of 1985 to the first quarter of 1988, it appreciated by 54%. After that, the huge economic bubble was punctured and the Japanese economy stagnated for decades. It is the famous 'lost decades' in economics textbooks.
So, is there any comparability between Japan's case and today's China? This time, a lot of people began to cry out when the U.S. tax reform news came out. 'Winter comes, the capital is in a shortage, and the end of the day is coming.' Really?
To some extent, as the world's second largest economy, the world's most important exporter of products, China's foreign exchange reserves have risen to No. 1 in the world and the renminbi faces a lot of pressure for upward revaluation. Japan in the mid-1980s was extremely similar.
But the question is, is this logical?
Not to mention that in today's more liberal market economy, it is totally unrealistic to create a heavy blow to the economy of other countries with only a single administrative force. Even in the case of the Plaza Accord, the greatest impact of exchange rate changes , But also not the output of products, input, but the flow of capital and the corresponding wealth effect.
Therefore, completely blaming Japan's' lost decades for the 'Plaza Accord' is, in the eyes of many economists, a far-fetched one and it is also wrong to regard the fiscal and tax policies of the United States as a mere scourge.
Thinking
Of course, we can not underestimate the U.S. tax reform policy. However, the situation is far from as bad as imagined.
Imagine if the United States cuts taxes sharply to further widen the tax burden gap with developing countries. Is it possible for other countries to make adjustments to other fiscal and taxation policies such as tax cuts under a series of pressures such as capital flight? In fact, Britain, France and other major developed countries have pushed for tax reduction legislation, and if this vision is truly achieved, this round of global tax relief campaign will undoubtedly reduce the policy effect of tax cuts in the United States to some extent.
In addition, it is very important that the analysis we have made before is based on the common economic judgments. However, the actual economic activities are far more complex and difficult to grasp than the theories.
From the United States domestic point of view, the United States tax cuts will really be one hundred percent to promote the return of multinational corporations do not necessarily. The tax rate is only one of the factors that affect the business investment, other macroeconomic policies, business conditions, personnel conditions, will have a great Impact.
In the opinion of Mei Xinyu, a single fiscal and taxation policy is also difficult to boost the U.S. economy, but also needs to be combined with a series of social reforms such as the following benefits in order to achieve the best possible effect. This is naturally also a matter of transnational capital Need careful consideration.
Mei Xinyu pointed out that it is very important to note that 'Trump's visit to China calls the Chinese government suitable for the Chinese people. To a series of recent moves, he prefers to reduce intervention in the outside world and focus on domestic economic reforms , Motivating the production of labor ... This idea is not a bad thing for China and the outside world. China and the United States are not enemies. The United States focuses on the domestic economic development and boosts its economy, nor is it a bad thing for our country.
In the opinion of Mei Xinyu, the most should be done now in China, or focus on their own series of reforms, not to be chaos by the outsider action.US tax reform may have some impact on our country, but this can also be transformed Opportunity for reform.
Current fiscal and taxation in China there are still some hidden issues, such as higher tax rates, transfer payments and relief too much, etc. If we can take this as an opportunity to reduce the project, transfer payment preferences to a certain extent, reducing unnecessary financial expenditure , While reducing the tax rate, then China's fiscal reform will also usher in a vast space.
In this process, it is only the current thinking of China that we should adhere to when we concentrate on our own feet, broaden the tax base, win more fair, secure and sustainable fiscal and taxation policies and revitalize the economic activities of our country and our community.