Trump unveils 'most significant tax reforms since 1986', but experts sceptical --as it happened
US president's team outlines 'massive' tax cuts and reforms, but won't say whether Donald Trump pay more or less under the plan
- Latest: Announcement highlights start here
- Cohn: Most significant tax reforms since 1986
- Plan will deliver growth and jobs, advisors claim
- But there's not much detail - just one sheet of paper!
- Mnuchin: Trump won't release tax returns
- Tax brackets to be cut to three, Death Tax to go
- Corporation tax would be cut to 15%
- ActionAid: It's a race to the bottom
8.26pm BST
That's all from us; thanks for reading and commenting! GW
8.17pm BST
Steven Mnuchin's claim that faster economic growth would help fund these tax cuts (see here) has been rubbished by one former White House staffer.
"This idea that growth can pay for these kinds of huge tax cuts is operating in fairyland," former Clinton administration budget director Leon Panetta told MSNBC on Wednesday.
"That just doesn't work, so if you're going to do a tax cut, then show how you're paying for it."
8.02pm BST
Here's our US business editor Dominic Rushe on today's tax announcement (with links to the key points in this liveblog)
"This is about growing the economy, creating jobs."
Related: Trump's 'huge tax cut for the rich' would slash taxes for businesses and wealthy
7.55pm BST
The US stock market has greeted the plan with a shrug.
Stocks pared gains, sliding as the 'details' were announced, while the dollar also handed back gains.
For all the hype, this just wasn't quite enough to send everything skyward....
7.49pm BST
Economics professor Justin Wolfers is also sceptical that this plan can get approved.
That's because it doesn't appear to pay for itself or appeal to Democrats on Capitol Hill.
One interpretation: What we've just witnessed is Trump throwing in the towel on tax reform. [1/3]
The only way to pass tax reform is by getting D's to vote for it, or thru reconciliation, which has to be long-run budget neutral [2/3]
This "plan" can't meet either test. It's not even taking these constraints seriously. Ergo, it's not taking the idea of tax reform seriously
7.38pm BST
Analysts at Capital Economics are sceptical that the House and the Senate will approve this plan:
The "new" tax plan that the White House unveiled today looks a lot like President Donald Trump's old economic plan from the election campaign, with deep cuts to corporate and individual tax rates.
Even with dynamic scoring, however, the old plan was expected to increase the Federal budget deficit by $7trn over the next decade. For that reason alone, this plan is never getting approved by Congress, particularly not through a budget reconciliation that requires ten-year revenue neutrality.
7.34pm BST
Donald Trump's historic tax reform plan actually fits on a single sheet of paper, with just a dozen key bullet points:
The #tax plan summary distributed by the #WhiteHouse #economy #markets #taxes #taxreform @realDonaldTrump -#growth pic.twitter.com/lbY0R7G3tu
7.31pm BST
Notable missing element of White House tax plan = not a peep about border adjustment or reciprocal tax. https://t.co/6wtU2gImYM
Notable missing element of White House tax plan is a plan, sounds like. https://t.co/PPOSJOebFJ
Given others have released returns, how can Secretary Mnuchin say, "The president has given more financial disclosure than anybody else"? https://t.co/aWNIpfmluo
7.24pm BST
Here's a video clip of Steven Mnuchin being quizzed about Donald Trump's elusive tax returns:
This is an exchange to watch. Secretary Mnuchin re-confirms that "the president has no intention" to release his tax returns. -via @MSNBC pic.twitter.com/ka4pLaHsLv
7.22pm BST
Q: Analysis of Donald Trump's tax returns from 2005 show that without the Alternative Minimum Tax (AMT) he would have only paid 5.3m of tax..
So doesn't that show that these tax reforms will benefit the president and his companies?
7.15pm BST
Q: Will these plans mean president Trump pays more or less tax?
7.11pm BST
Q: What does this proposal mean for American families watching from home?
It means a tax cut, national economics director Gary Cohn promises.
Q: How much?
We'll let you know as soon as the final details are agreed, Cohn promises.
7.08pm BST
The elephant in the room rears its trunk...
Q: Will the president release his tax returns?
Trump has "no intention" of releasing his tax returns, Mnuchin replies.
7.05pm BST
Q: This is just one page - just a statement of principles. When do we see full details?
We're working as fast as we can, Mnuchin replies.
7.04pm BST
Q: When would the Death Tax be repealed?
Our initial proposal is to phase it out immediately, as son as this new tax package is passed into law, Cohn replies.
7.03pm BST
Q: Is there a danger that Republicans won't support this package, as with Trump's healthcare reforms?
There is a lot of desire from everyone to reform the tax system, Mnuchin replies.
7.01pm BST
Q: Will this package pay for itself?
We're working on the details, says Mnuchin, before promising:
This will pay for itself with extra growth, and by reducing tax deductions and closing loopholes.
6.59pm BST
Q: You talked about repealing the 3.8% Obamacare rate that hits small businesses - is this the first attempt to start pulling Obamacare back?
We are trying to get rid of that tax so we can get more capital back into the economy and stimulate business investment, says Cohn.
6.57pm BST
Asked for more details about the plans, Cohn says the administration is still working with the House and the Senate to agree final details.
The goal is to simplify the tax system, lower rates, and make the system fairer, he adds.
6.53pm BST
Now Treasury secretary Steven Mnuchin speaks, confirming that the US corporation tax rate will fall to 15%.
Small and medium-sized firms will benefit, he pledges, not just big business.
6.51pm BST
Gary Cohn: "We are going to cut taxes for businesses to make them competitive and we are going to cut taxes for the American people." pic.twitter.com/q3YE4tuyFr
6.50pm BST
Cohn predicts that the Trump administration will be attacked from both sides, but he wouldn't bet against the president getting this plan through.
6.49pm BST
As rumoured, the plan cuts the number of tax brackets to three, from seven.
Gary Cohn says they'll reduce current tax brackets to three -- 10%, 20%, and 35%.
Cohn: Trump tax plan lowers top individual rate to 35% from 39.5%; returns top capital gains rate to 20%
6.47pm BST
We will repeal the Death Tax on American's estates, says Cohn -- something West Wing fans will be familiar with.
6.46pm BST
Trump is creating a new zero-rate tax band, Cohn says, that means married couples won't pay tax on the first $24,000 they earn.
"We're going to double the standard deduction," - essentially a zero rate for first $24,000 a couple earns.
6.43pm BST
Cohn outlines how complicated the US tax code has become - it now comes with 211 pages of instructions.
Americans spend 7 billion hours complying with tax codes each year, he declares - and almost everyone needs some help filling the form in.
6.42pm BST
Gary Cohn speaks first.
This is a historic day, he says - a once in a generation opportunity.
6.39pm BST
The session is underway - press secretary Sean Spicer jokes that he didn't expect such a big audience for an announcement about the Antiquities Act (tee hee....)
6.36pm BST
I think this live feed should let you watch Mnuchin and Cohn in action....
6.34pm BST
Some Republicans are already concerned that Trump's plan is all about tax cuts, and not really about reforms at all.
CNN has the details:
House Speaker Paul Ryan put a positive spin on things during his own news conference Wednesday, but things are far from great behind the scenes. The Trump administration has ruffled GOP feathers on Capitol Hill, by getting in the way of legislators efforts to fix the tax system.
"It's not tax reform," said one senior GOP aide. "Not even close."
Even House Repubs are pushing back on Trump's tax plan: "It's not tax reform. Not even close." https://t.co/Sq4hkF9sUl by @Phil_Mattingly
6.30pm BST
We're expecting to hear details of the tax reform plan very shortly....
The White House is expected to unveil the Trump tax plan around 1:30 p.m. ET.
6.20pm BST
While we wait to hear from Steven Mnuchin (and Gary Cohn) here's a video clip of him speaking earlier today:
.@stevenmnuchin1: "This is going to be the biggest tax cut and largest tax reform in the history of this country." https://t.co/Xsvz4qTYxC pic.twitter.com/qKAM6EkZWW
6.19pm BST
CNBC's Eamon Javers has heard that Trump's plan might eliminate some tax exemptions (which allow people to lower their overall bill)
Adm official tells me Trump tax plan will make big changes to deductions. Many will go away. Kept: Charity, mortgage interest + retirement
5.57pm BST
It was not a convincing display, but this week's market rally which began with Emmanuel Macron's victory in the first round of the French election and was then fuelled by the prospect of Donald Trump's tax cuts, has continued for another day. Ahead of the confirmation of the US president's plans European markets ended higher, helped by a positive morning on Wall Street. There was still some caution in Europe, as investors awaited Thursday's meeting of the European Central Bank, which will be carefully scrutinised for any hints that the bank might begin withdrawing its economic stimulus measures. The final scores showed:
5.54pm BST
Not everyone is upbeat about Trump's corporation tax reform. ActionAid head of policy Anna Thomas said:
President Trump's plan to slash the corporate tax rate risks triggering a global race to the bottom, which could see companies paying minimal taxes around the world. Despite public outrage at corporate tax scandals involving the likes of Google and Amazon, big companies look set to benefit from historically low rates.
The IMF has found that when countries try to undercut each other on tax, poorer countries suffer the most. They are particularly dependent on corporation tax and stand to lose the most as they come under pressure to offer ever-lower tax rates to big companies. Healthcare, schools and other key public services are left starved of resources as they are deprived of tax revenues, hitting women and girls hardest.
5.32pm BST
There are reported details of further US tax reforms, in addition to the cut to corporation tax. Individual tax bands of 10%, 25% and 35% are being proposed, apparently:
Having one rate of 25% would have been better" https://t.co/HwmhECmWJa
4.56pm BST
Here's a comparison of various countries' corporate tax rates:
Trump's plan would drop the US federal corporate tax rate from highest among OECD nations into a tie for 4th lowest https://t.co/eRYCuh3f5Z pic.twitter.com/ueRClNjsLJ
4.29pm BST
US markets have come to life ahead of the Trump tax announcement.
The Dow Jones Industrial Average is now up 67 points and is just 100 points shy of its record high of 21,169 hit on 1 March this year. If the market likes what it hears from Trump's administration, that barrier could soon be breached.
Global markets have continued in a buoyant mood today, thanks to optimism about the impending tax reforms in the US. Despite a significant degree of political uncertainty still evident in Europe, there is a feeling that worst is over, with markets instead focusing on the Trump trade coming back into play.
Unlike other more nuanced political and economic changes, a huge corporate tax cut would make a huge difference to the bottom line of US-based businesses. For investors, this impending shift in profitability is a huge attraction to invest in the US, and hence the outperformance of the American markets relative to Europe.
4.05pm BST
Over in Greece, as long-stalled bailout negotiations finally resume, prime minister Alexis Tsipras has been causing ripples warning that while parliament may legislate creditor-demanded reforms, the painful measures may never be implemented if the country isn't given debt relief. From Athens our correspondent Helena Smith reports:
With the timing of a maestro, Greece's leftist leader used the first day of reactivated bailout talks to deliver a stern message: without promised debt relief the pension cuts and tax hikes Athens has now agreed to as part of a bigger package to unlock further emergency loans will never be enforced.
In a live TV interview aired late Tuesday, Tsipras said it was Greece's right as "as sovereign government" to reverse the measures (the equivalent of 2 % of GDP and due to be enacted as of 1.1.2019) if lenders didn't also honour pledges to offer medium-term debt relief that would allow the economy to breathe.
Predicting that the progress review would be completed in time for the next eurogroup on May 22 - averting the prospect of crisis being replayed when Greece is called to meet a7.5bn of maturing debt in July - Tsipras argued that the review was no ordinary report card but part of a much broader agreement that would allow the country to finally recover from eight years of crisis.
While Athens had been forced to make concessions, it had also won the ability to enforce "counter measures" to offset losses when Greece hit budget targets and secured valuable labour rights that the IMF had wanted to abolish. "We must not see this review as a review that only concerns the bailout programme. It is the most critical review. Why? Because we have a comprehensive agreement," he said in the interview.
3.44pm BST
Unlike the American Petroleum Institute figures out on Tuesday, the latest official figures on crude stocks show a surprise fall in inventories.
The API said stocks rose last week by 897,000 barrels but figures from the Energy Information Administration show a weekly fall of 3.64m barrels to 528.7m. This is higher than the forecast fall of 1.7m barrels.
3.20pm BST
Investors are awaiting more details on the Trump tax plan, hence the muted reaction in the markets so far, says Connor Campbell, financial analyst at Spreadex:
Financial Analyst Treasury Secretary Steve Mnuchin's confirmation that Donald Trump is seeking to cut corporation tax to just 15% did little for the markets this afternoon.
Mnuchin echoed the President in an interview on CNBC, promising the 'biggest tax cut' and 'largest tax reform in US history'. Yet this hyperbole was treated as just that by the Dow Jones, which nudged a mere 0.1% higher after the bell. Even the dollar was nonplussed, maintaining 0.3% and 0.5% rises against the euro and Japanese yen respectively while sitting flat against sterling.
3.07pm BST
Elsewhere oil prices are slipping back ahead of new official US crude inventory data from the Energy Information Administration.
Earlier in the week industry figures from the American Petroleum Institute showed crude stockpiles rose by 897,000 barrels last week, compared to expectations of a 1.7m fall. The report indicated the difficulty producers are having in reducing supplies despite cuts in output, which have been offset by growing production from US shale companies.
2.55pm BST
No huge surprise. But markets flat today after big rallies past two days. Earnings mostly good. But investors want more tax reform details.
2.45pm BST
Confirmation of at least one part of Donald Trump's US tax proposals - corporation tax cut to 15% - has done little for US markets, but at least they have opened higher rather than lower as originally expected.
The Dow Jones Industrial Average is up nearly 7 points while the S&P 500 is virtually flat and Nasdaq Composite is 1.45 points better.
2.21pm BST
Here's our first take on the proposed US tax reforms, with a corporation tax to 15% now confirmed by Treasury secretary Mnuchin:
Related: Trump to unveil proposal for slashing corporate tax rate to 15%
2.08pm BST
Here's more details of the Mnuchin interview, and some early reaction:
Treasury Secretary @stevenmnuchin1 says biggest surprise is Washington is not that different from biz world. Just different "shareholders" pic.twitter.com/8eSszGDH4x
CNBC: Mnuchin says real GDP growth of +3% is very achievable.
A month ago the objective was +4%.
Next month the estimate will be+2.5%.
Mnuchin says Trump has been "very involved" in tax reform and that Trump called him at 7:30am this morning to talk through final details
2.05pm BST
Nice work by The Hill and CNBC there, getting early confirmation from the Treasury secretary about Trump's tax reform plans.
Here's CNBC's early take:
Treasury Secretary Steven Mnuchin confirmed that the tax plan the Trump administration will outline Wednesday afternoon will call for a 15% corporate rate.
At an event hosted by The Hill, Mnuchin - who declined to go into many specifics about the proposal - contended it would be "the biggest tax cut and the largest tax reform in the history of our country."
Treasury Sec. Mnuchin says he believes 3% economic growth is very achievable https://t.co/VSrQrwUbJE pic.twitter.com/5RlCSCaw8A
1.56pm BST
Asked about the US debt ceiling, Steven Mnuchin says an agreement must be done in the fall (that's the autumn, UK readers) to create headroom for more borrowing.
He doesn't want to get into the details of any potential deal, though.
Mnuchin: We "fundamentally think we can get to 3% economic growth." (Notice that's lower than the 4% on the White House website)
1.48pm BST
Newsflash: America's treasury secretary has just confirmed that Donald Trump wants to cut business taxes to just 15%.
I can confirm that the business tax rate will be 15%.
Treasury Secretary @stevenmnuchin1 says tax proposal will be "biggest tax cut and largest tax reform" in history. pic.twitter.com/2bjK4HpbMd
Mnuchin on pass through: "What this is not going to be is a loophole that lets rich ppl who should be paying higher taxes pay 15%"
1.37pm BST
Today's Wall Street open will be more whimper than bang, with the Dow expected to open broadly unchanged.
US Opening Calls:#DOW 20997 -0.02%#SPX 2387 -0.06%#NASDAQ 5550 +0.02%#IGOpeningCall
1.02pm BST
The pound has taken the opportunity to claw back a little ground against the euro today, up 0.2% to a1.178.
Chris Saint, senior analyst at Hargreaves Lansdown, says:
Sterling has bounced off a two-week low of a1.1718 versus the euro to trade around half a cent higher at a1.1771 by noon, although euro strength is generally still being underpinned by ongoing expectations that Emmanuel Macron will defeat Eurosceptic candidate Marine Le Pen in the second round of the French presidential elections on 7 May.
12.17pm BST
Social networking site Twitter has defied its critics and posted better than expected financial result.
BREAKING: Twitter added 9 million users last quarter, far more than estimates. https://t.co/rd73eB1HEH pic.twitter.com/nqBDiQvMWh
Twitter reports revenue of $548.3M, higher than the $509M expected, but still its first quarterly revenue decline. Earnings beat. Shares up.
Twitter surges premarket as company beats first quarter estimates https://t.co/YQBwoUbhUO pic.twitter.com/gsv80cUmRZ
12.06pm BST
Former UK prime minister David Cameron apparently told friends recently it was time to "put some hay in the barn", after swapping Downing Street for the speaking circuit.
By that measure, Barack Obama may need a second barn - after agreeing to give a speech to Cantor Fitzgerald for $400,000....
Related: Barack Obama to be paid $400,000 for speech at Cantor Fitzgerald event
12.01pm BST
Newsflash: One of the employment agencies at the centre of the workplace problems at Sports Direct is preparing for insolvency.
My colleague Simon Goodley explains:
Transline, the temporary employment agency that became embroiled in the Sports Direct scandal, has submitted court documents preparing the company for insolvency.
The Guardian understands that the business has filed a "notice of intention of appointing administrators" at a court in Leeds, and has sounded out the accountancy firm Deloitte as a potential administrator.
Sports Direct agency Transline preparing for insolvency https://t.co/el6a0bQxwr
11.56am BST
It's been one of those mornings...
You know it's a slow day when @5thrule identifies Canadian retail sales as one of the key things markets will be focusing on today.
10.40am BST
It's been a good morning for Yorkshire-based chemicals company Croda.
Shares in the FTSE-listed firm hit a record high this morning, up 4.8%, after it reported a blistering 19% jump in revenues in the last quarter.
10.03am BST
Is some UK economic data being leaked early, and is someone profiting from it?
The Wall Street Journal has examined how the pound performs around major data releases, and found that it typically starts to move before the news hits the wires. That's fuelling concerns that some people may be illicitly profiting from embargoed information.
During the hour before unexpectedly strong or weak U.K. data is made public, the pound moved 0.065% versus the dollar on average in the same direction it subsequently did after those numbers came out, according to an analysis prepared for The Wall Street Journal by Alexander Kurov, associate professor of finance at West Virginia University.
It showed that the average change in the pound's value one hour before and after such economic data announcements is 0.127%, meaning around half the shift associated with the statistics came ahead of their official release
9.26am BST
Kathleen Brooks of City Index has released a very useful note outlining the Trump tax proposals, and the likely political hurdles.
In theory this tax plan looks like it should extend the rally for US stocks. If taxes are slashed then some large US firms may re-base themselves back in the US to take advantage of the 15% rate, which might encourage them to engage in shareholder-friendly activities such as share buy-backs, larger dividends etc.
However, stocks may pause on Wednesday as the market waits for the reaction from Congress who actually has to pass the bill.
The problem for the Republican -controlled Congress is the debt ceiling, which was breached back in March but has been massaged by some accounting measures until the end of this month. Congress is trying to pass a budget that will fund the Federal Government from 28th April, however, an unfunded tax cut from the Trump administration could add to the pressure on the debt ceiling going forward.
Thus, Republicans have to balance their desire to reduce the Budget deficit, with their desire to boost the economy with a large cut to the corporate tax rate. If they do the latter, as many expect, then this could be a green light for US stock markets.
This makes Trump's infrastructure plan, which has been suspiciously absent from the coverage of the tax blueprint, very unlikely to go ahead. The Trump team is likely to focus on the fact a tax cut can pay for itself and create jobs, but can it do that at the same pace of a large government-spending programme?
On balance, we expect markets to outperform in the coming days if key members of Congress throw their weight behind Trump's tax proposals. But, if there are any signs that this won't get through the US legislature, then we could see big declines for US stocks.
9.04am BST
European stock markets will probably have closed before we hear details of Trump's tax proposals.
According to The Hill, an announcement is expected at 1.30pm Washington time, or 6.30pm BST.
8.52am BST
After two solid days, European stock markets are taking a little breather.
The UK, French and German indices have all dipped in early trading:
8.38am BST
Donald Trump's tax reforms plans are the number one issue in the City today, says Naeem Aslam of Think Markets.
He sounds a little sceptical about the whole thing, though:
Currently, one major aspect of his plan which everyone is talking about is the corporate rate tax cut to 15% from its current rate of 35%. He can certainly cut that to 15% but that would only be good enough to produce a mammoth headline on the newswire.
But, the question which you need to ask is how long it will take for that tax rate to become effective if it becomes effective at all. The market may go higher on the back of these flashy headlines but it will not take long before reality catches up with it.
8.25am BST
Last weekend's French elections continues to reassure traders, says Chris Weston of IG:
It's a good time to hold equity and credit and it seems a dark cloud in the form of the French elections has swiftly departed from the investment landscape, combining effectively with headlines on Trump tax reform and in turn providing fresh impetus to chase returns.
8.23am BST
The prospect of sweeping tax reforms in America has helped to drive Asian stock markets higher today.
Japan's Nikkei has closed 1% higher, and the other main indices are also gaining ground.
8.09am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Our European opening calls:$FTSE 7284 +0.11%
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$CAC 5286 +0.16%$IBEX 10793 +0.09%$MIB 20808 +0.01%
Related: US may avoid government shutdown as Trump softens demand for border wall
US equity markets continues their sharp jump higher in anticipation of the Trump administration's tax reform announcement, with the tech-focused Nasdaq trading above 6,000 for the very first time, while both the S&P500 and Dow Jones indices move closer to their respective all-time highs.
Strong Q1 earnings performances from Caterpillar, McDonald's and DuPont led the Dow over 200 points higher, while the Materials sector led the S&P to within 20 points of a fresh high.
Markets seem a lot more relaxed. Globally, we're seeing a lot of risk-on."
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