Trump expected to provide details of his tax plan at the end of the month - BBH

Analysts at BBH note that the US President Trump is expected to provide details of his tax plan when he addresses both houses of Congress at the end of the month.   

Key Quotes

“Remember, many economists has argued that the border adjustment would "automatically" send the dollar sharply higher.  Also, lowering corporate tax schedules may get the headlines, but it is the effective tax rate that is key.  Will loopholes by closed?  Will it be revenue neutral, as scored by nonpartisans such as the Congressional Budget Office (CBO)?  Will debt servicing remain tax deductible?”

“We are persuaded that the reason that capital expenditures are not more robust is not that interest rates are too high or that businesses do not have access to capital.  Therefore, even if tax reform boosted after-tax profits, it would not necessarily boost investment or growth or employment. It would more likely boost returns to shareholders by funding share buyback programs and dividend payouts.”

“The US President bemoans the poor economy he inherited.  The New York Fed's GDP tracker see Q1 growth a little more than 3%, while the Atlanta Fed's model is a little below 2.5%.  The point is that after a little disappointment in Q4 16, when the US economy appears to have grown at what the Fed regards as the sustainable pace (~1.8%), the economy appears to have re-accelerated.  Practically every economic report last week, including consumer prices, retail sales, and industrial production, and the Empire and Philly February surveys, were above expectations.”