Donald Trump’s plans to slash corporate taxes in the United States have sparked concerns of a new global fiscal race to the bottom, possibly involving a wave of negative social consequences, experts say.
In what Trump’s economic advisor Gary Cohn described as “the most significant tax reform legislation since 1986, and one of the biggest tax cuts in American history,” the White House plans to dramatically cut taxes for US businesses and individuals, slashing the corporate rate from a top rate of 35 percent to 15 percent.
The aim, according to US Treasury Secretary Steven Mnuchin, is to “bring back trillions of dollars that are offshore to be invested here in the United States” and create jobs.
Trump’s goal is for the reforms to propel the US economy to three percent annual growth.
But the long-anticipated overhaul — details of which remained unclear beyond a handful of headline measures — could face stiff opposition in Congress, including from some Republicans, with lawmakers sharply divided over the prospect of fuelling already-rising deficits.
– ‘Enormous impact’ –
And the plans have also raised eyebrows at NGOs and non-profit organisations.
They could accelerate “the race to tax competition on an international level and all of us will pay the price,” Oxfam spokeswoman Manon Aubry told AFP.
“When the world’s most powerful country decides to slash tax revenues as much as this, a number of other countries may follow suit, bringing with it imbalances that will have enormous impacts on our societies,” she said.
Falling tax revenues would make it harder for governments to pay for welfare, healthcare and other benefits without going too deep into the red, she said.