What to expect from President-Elect Donald Trump

Wednesday, 09 November 2016

Inauguration Day 2017 – the day Republican Donald Trump, the 45th President of the United States, is to take office – is set for January 20, 2017. The Republican party also won a majority in both the Senate and House of Representatives.

At his Gettysburg address in October, Trump presented a "Contract with the American Voter" setting out his 100-day plan for the country including his tax policy, which promises a "massive tax reduction and simplification".

What the Contract says on tax

The biggest tax cuts, Trump promises, are for the middle class and he further promises that the "current number of brackets will be reduced from seven to three, and tax forms will likewise be greatly simplified". For businesses he promises a reduced corporate tax rate that will be lowered from 35 percent to 15 percent also allowing "the trillions of dollars of American corporate money overseas" to be brought back at a 10 percent rate.

Law firm Dentons, which issued a comparative study of the US candidates election pledges, summarized Trump's tax proposals:

  • He proposes to eliminate estate and gift tax and to tax capital gains held until death with a USD5 million exemption (for an individual filer).
  • With regard to individual taxation, Trump proposes to have three income tax thresholds (as opposed to the existing seven). For incomes up to USD37,500, he proposes an applicable income tax rate of 12 percent, for incomes up to USD112,500 a tax rate of 25 percent and a tax rate of 33 percent for earnings above USD112,500.
  • He also proposes three tax rates for capital gains and dividends income: a 0 percent tax rate for capital gains and dividends of up to USD37,500; 15 percent for such income up to USD112,500; and a 20 percent rate for any earnings over USD112,500.
  • Businesses would see the corporate tax rate drop from 35 percent to 15 percent, and the corporate alternative minimum tax (AMT) would be eliminated. Moreover his tax plan "will provide a deemed repatriation of corporate profits held offshore at a one-time tax rate of 10 percent".
  • Trump also pledges to revise and update both the individual and corporate tax codes.

More controversial proposals

Trump is proposing to adopt a number of policies which have caused controversy. For example, he pledges that his administration will "fully fund" the construction of a wall on the US border with Mexico on "the full understanding that the country of Mexico will be reimbursing the United States for the full cost of such wall".

Commentators have also expressed concern that his election will mean "reversing LGBT people's progress toward equality." NY Daily News also claims that Trump's nominations to fill vacancies in the US Supreme Court oppose "abortion rights, same-sex marriage and more or less all types of federal regulations."

Reaction to Trump's election: go for gold

According to USA Today data from Google suggests searches for "move to Canada" spiked as Trump's lead in the election rose and several news providers reported that Canada's immigration website crashed. International news agencies suggest that the result of the election is behind the website crash and the Independent claims that this is "apparently because of the sheer number of people looking to emigrate to the country."

Henley & Partners, which describes itself as "the global leader in residence and citizenship planning" said: "[I]n the hours since Donald Trump was confirmed as the next President of the United States, there has been a sharp increase in the number of Americans enquiring about alternative residence and citizenship programs."

The markets have also reacted – the Asia Pacific stock market has dipped and the European market is recovering after an overnight drop. The markets are reportedly now levelling off after a "reassuring" victory speech by Trump.

According to reports, investors are now looking at precious metals "showing that investors are expecting safe-haven assets like gold and silver to remain popular […] And pharmaceuticals firms are also in demand" says the Guardian.

International Adviser agrees stating: "Some investors are likely to move around their assets away from US dollar and in to other currencies such as the Japanese yen, Swiss franc, as well as gold."

His supporters say, however, that "Trump swept America because his policies would improve the American economy and America's standing in the world."

Sources

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