The Week in Numbers: US Tax Reform

This week, the US house of Congress passed the biggest change in the US tax code in more than 30 years, giving President Trump his first major legislative victory. The vote ended 224-201 in favour of the reform. The bill cuts corporate tax rate from 35% to just 21%. There are also tax breaks for other types of businesses and individuals. According to a report on Bloomberg, the average tax cut for the bottom 80% of earners would amount to around $675. The top 1%, however, stands to benefit substantially more, with average tax cut estimated at $50,000 per year. The changes will cut federal revenue by close to $1.5 trillion over the next decade.

US officials hope the change will also stop companies from accumulating profits overseas to avoid the high tax rate. It is estimated that US companies have stocked around US$2.5 trillion (S$3.36 trillion) overseas. Businesses, however, will have to make a one-time payment of 8% or 15.5% on repatriated foreign profits, depending on whether the assets are cash or investments.

With the new tax reform, many US companies have announced bonuses for their workers. Some companies are even giving a whopping US$1,000 bonus to their workers this year, while others have initiated more money for spending on workforce training and facility upgrades. A company also said that it is going to boost the minimum wage to US$15 an hour.

Meanwhile, Japan export growth accelerated last month to 16.2%, beating the 14.6% forecast and slightly ahead of October’s 14% gain. This was partly due to exports to China increasing by 25.1% year-on-year to 1.38 trillion yen (S$16.5 billion). Exports to Asia, grew 20.4%, while exports to the United States rose 13%. Despite this, core inflation remained low at just 0.8%.

It seems Bitcoin has overcome another hurdle as a Japanese company has reported that it will start paying employees in Bitcoin starting from February next year. According to The Straits Times, the company will offer to pay employees 100,000 yen (S$1,200) a month in Bitcoin. The offer is open to around 4,000 employees. This comes amidst a Bitcoin craze where Bitcoin price has grown 14 fold this year.

Lastly, a survey has found that Singapore’s consumer confidence has increased to 94, five points more than last quarter. The survey also concluded that worries over the economy fell by nine percentage points to 42%. Singapore also tops the region for spending on holidays with 53% of Singaporeans allocating spare cash to vacations, slightly ahead of Indonesia with 50%. The survey also found that 67% of Singaporeans are saving for retirement, putting us 4th in the world in this regard.

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