James Trescothick

With more than 20 years of experience in financial service industry, James is our Senior Global Strategist and the co-producer and presenter of easyMarkets educational videos. When he is not working on educational programs or preparing webinars, you can find him with the easyMarkets team giving seminars around the world.

It didn’t take long for President Trump’s proposed tax plan to run into its first major hurdle after GOP lawmakers from high-tax states signaled their disapproval of the framework. Like proposed legislation before it, the tax plan could face major hurdles in Congress as Republican infighting undermines the Trump administration.

House Republicans from high-tax states such as New York and New Jersey have publicly opposed the Trump tax plan over a proposed repeal of the individual deduction for state and local taxes.

“The members with concerns from high-tax states have to be accommodated. This has to be dealt with,”

said Illinois Republican Peter Roskam, who is a senior member of the House Ways and Means Committee.

“So, you can imagine a soft landing on this that creative people are putting much time and energy into.”

States with the largest deductions for state and local taxes include New York, New Jersey, Connecticut, California and Maryland. The top nine states for deduction, measured as a proportion of income, are represented by 33 House GOP members. That’s enough votes to kill the proposed legislation.

Trump’s tax overhaul promises a simpler tax code, a reduction in corporate taxes and relief for both middle- and high-income earners. However, repealing the tax code is no simple endeavor. An overhaul of the magnitude proposed by Trump hasn’t succeeded in 30 years.

Tax reform is just one of several policies the Trump administration says will stimulate economic growth. The White House is also eyeing a massive infrastructure plan to rebuild American roads, airports and other public transportation arteries. It also plans to cut regulation in the financial and energy sectors.

Amid the tax debate, President Trump was busy vetting potential candidates for the job of Federal Reserve Chair. Last week, the president met with Fed governor Jerome Powell and former governor Kevin Warsh about their possible nomination to run the all-powerful Fed once Janet Yellen’s term expires in February.

Trump hasn’t ruled out bringing back Yellen, but is keen on exploring other options.

Under Yellen, the Fed fully tapered its monthly bond purchase program and began the process of raising interest rates. Last month, policymakers announced their intention to begin normalizing the balance sheet in October.

 

The next Federal Open Market Committee (FOMC) meeting is scheduled for 31 October, with an official rate statement due the following afternoon.

Sample Link[1] Richard Rubin and Siobhan Hughes (28 September 2017). “Republican Tax Plan Quickly Hits First Hurdle.” The Wall Street Journal.

[2] Richard Rubin and Siobhan Hughes (28 September 2017). “Republican Tax Plan Quickly Hits First Hurdle.” The Wall Street Journal.

[3] Mchael C. Bender (29 September 2017). “Trump Met With Two Possible Candidates for Fed Chairman Job.” The Wall Street Journal.

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