Davos Debates If Trump Tax Cut Means Gain Now, Pain Later
(Bloomberg) -- President Donald Trump’s $1.5 trillion tax overhaul drew praise and warnings from finance chiefs attending the World Economic Forum’s annual meeting.
A month since Trump slashed the corporate tax rate to 21 percent from 35 percent and cut individual levies across the board, Stephen Schwarzman, the chief executive officer of Blackstone Group LP, said such reductions would spark investment in the U.S.
“There are going to be a lot of flows into the United States, and this is an underestimated to forgotten aspect of the U.S. tax reform,” Schwarzman said on a panel in Davos, Switzerland. “There are companies all around the world now looking at U.S., saying this is the place to be in the developed world,”
Adena Friedman, the CEO of Nasdaq Inc., called the overhaul “a growth driver for the United States,” while Tidjane Thiam, chief executive of Credit Suisse Group AG, said it would encourage companies to invest. He’s noticed “a step up in interest” in the U.S., citing Ferrero’s acquisition of Nestle’s U.S. choclate business as an example.
“I’ve learned over time never to bet against the U.S. economy,” Thiam said.
Others in Davos were more lukewarm. Brian Moynihan, chief executive of Bank of America Corp., said a 4.1 percent unemployment rate meant the “reality of bringing a lot of jobs back is difficult. Where are the people to do the work?”
Frank Appel, the chief executive of Deutsche Post AG, predicted the tax cut would deliver a “limited short-term impact” but would swell the budget deficit and wouldn’t do anything to boost productivity.
The debate came a day after the International Monetary Fund cited the tax revamp as a reason it now expected stronger expansion globally this year and next. But it added the effect would wear off by 2022 as some of the individual cuts expire and the U.S. tries to curb its budget deficit.
Barclays Plc CEO Jes Staley said it would be interesting to see if other countries respond to the U.S.’s "bold move to dramatically cut corporate taxes,” while Michael Corbat of Citigroup Inc. said there could be a race to the bottom.
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