Junior Financial Analyst

Total Content 46

Articles 46

Secretary Munchin seeks Reconciliation with Congress, American Tax Negotiations Continue

By Patrick Higgins  |  27/10/2017 13:39
As negotiations for Trump's tax overhaul continue in Congress, Treasury Secretary Steve Mnuchin has sought to reassure the public that the President's feuds with dominant Republicans will not derail legislative collaboration.

Speaking from Jerusalem after high-level talks regarding the issue of terrorist financing with Israeli Prime Minister Benjamin Netanyahu, Secretary Mnuchin reiterated that crucial tenets of the tax overhaul would be preserved against all opposition, despite misgivings of tax raises for the middle class.

Mnuchin held firm on the corporate tax rate being cut to 20% but said that the administration could be open to suggestions regarding potential areas of saving, such as the tax-free threshold being lowered for 401k plans.

Though Trump has been aggressively against the passing of these proposals, they are being debated in Congress because they’re potentially huge money savers. Eliminating tax deduction alone would save the US government $1.3 trillion per year. Another proposal on the table is the raising of taxes for the wealthiest tax brackets, but this is not popular.

Most interestingly, Secretary Mnuchin praised Senator Corker, who has been entangled in a nasty public dispute with President Trump for the past few weeks.

Mnuchin's speech of reconciliation is significant, due to the increasing level of angry rhetoric and personal attacks emerging from the Trump White House. Mnuchin is seeking to mend the rifts between legislators and the President in order to advance Trump's agenda. The collaborative failure on health-care reform, which was such a fundamental campaign promise of Trump's, is most likely a key reason why Mnuchin is speaking out with praise and understanding to those Republicans who have been publicly feuding with Trump.

Investors, who are betting on negotiations to be fruitful, have been pricing in potential benefits of the tax overhaul, including the almost -15% reduction of corporate tax. The S&P 500 has grown nearly 6% in value since Trump's announcement of the overhaul in August, and many predict that much of the $2.6 trillion stored in corporate off-shore accounts would be brought back to the US. If the tax overhaul is to fail like health-care reform, declines in the S&P 500 of up to 5% could be seen.

Traders should carefully watch the playing-out of these congressional negotiations. The success or the failure of the tax overhaul could potentially have a huge impact on stock markets, as well as the levels of capital inflow and potential business to be done in the US.


Author's Other Opinion & Analysis

Show More Articles


Open a Demo Account Open A Live Account

Losses can exceed deposits


The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice.

If such information is acted upon by you then this should be solely at your discretion and GKFX will not be held accountable in any way.

  • ForexF
  • IndicesI
  • CommoditiesC

        Login to Market Insight Account

        Your Market Insight account gives you access to the tools that we offer our customers including our
        Technical Studies & Sentiment for your accounts.

        Forgot Password?

        Don't you have a Market Insight account? With a few easy steps you can easily register to Market Insight

        Create a Market Insight's Account

        Your Market Insight account gives you access to the tools that we offer our customers including our Technical Studies & Sentiment for your accounts.


        Thank you!

        Welcome to Market Insight family!

        You have succesfully completed the registration.
        We will send you an e-mail to give you some
        instructions and our Terms and Conditions!
        Our account representatives will be contacting you as
        soon as possible. If you have any further questions
        please do not hesitate to mail us via info@marketinsight.com