U.S. Secretary of State Mike Pompeo says Huawei CFO Meng Wanzhou, who is under house arrest in Canada and facing extradition to America, is not a bargaining chip in the trade...Technologyread more
Boris Johnson will be meeting President Donald Trump to discuss a potential post-Brexit trade deal just as he tries to court EU leaders for a new withdrawal agreement.World Politicsread more
Arturo Estrella has a message for recession naysayers: It could hit sooner than you think.Marketsread more
Accountants in Hong Kong took to the streets on Friday to call for the government to accept five demands of the people, including the complete withdrawal of a now-suspended...China Politicsread more
Recent trade friction between the two Asian powerhouses has morphed into a dispute with political implications that go far beyond the region.Asia Politicsread more
Fed Chairman Jerome Powell faces the tough challenge of presenting a unified voice on Fed policy from the most divided Fed in years.Market Insiderread more
Local governments commonly share single service providers, making many vulnerable at once. On top of this, ransomware has often been used to mask more targeted, malicious...Technologyread more
The unlikely alliance would in theory enjoy a relatively comfortable majority in the parliament's lower house but would rely on a handful of sympathetic but unaligned...Europe Politicsread more
Bank Indonesia on Thursday cut its key policy rate by 25 basis points to 5.5% to support growth amid an increasingly fragile global economy.Central Banksread more
Meanwhile, investors look ahead to Fed Chair Jerome Powell's speech at a yearly central banking symposium in Jackson Hole, Wyoming.Asia Marketsread more
The U.S Energy Information Administration (EIA) says Australia is on track to consistently export more LNG than Qatar.Oil and Gasread more
Talk of a "border adjusted" tax has gone from the sidelines to center stage in Washington, which has a lot of people asking: What is it exactly?
House Speaker Paul Ryan and members of President-elect Donald Trump's transition team met Monday night for 2 1/2 hours to discuss the House GOP's corporate tax reform plan — including a controversial provision that would essentially subsidize exports and tax imports.
Emerging from the meeting, Trump's Chief Strategist Stephen Bannon told Reuters that they discussed "border adjustability," which is one of the key provisions of Paul Ryan's tax blueprint.
Currently, U.S. corporations are taxed on their worldwide profits at 35 percent. The House GOP plan would change that radically.
The new tax formula would tax domestic revenue (minus domestic costs) at a much lower rate of 20 percent. The net effect would be one that favors exports over imports.
The change would convert the country's tax system to a "territorial" system rather than a worldwide tax system, making it similar to what all of America's major trading partners do.
It's meant to create incentives for domestic production, because companies also would no longer be able to reduce their taxable income by deducting their overseas expenditures. The plan would essentially subsidize exports, and lead to a 20 percent tax on imports for corporations.
That's why retailers are very opposed to border adjustability — a large percentage of the products they sell are imported.
But economists who support the tax say the policy would lead to a sharp rise in the value of the dollar — anywhere from 20 percent to 25 percent. As a result, retailers' costs will go down so much that it will be a wash to consumers, they say.
Many CEOs worry whether the economists are right in that assessment, however.
The authors of Ryan's tax blueprint, called "A Better Way," argue that U.S. trading partners subsidize exports through their taxation system, and the GOP changes would even the playing field for U.S. manufacturers.
America's major trading partners don't use an income-based tax system, but rather a sales-tax system known as a value added tax or a VAT.