The American tax cuts

The American tax cut plan has been unveiled and called as the largest tax cut in the American history. Steven Mnuchin, said that the plan would cut corporate taxes from 35 percent to 15 percent and simplify the individual taxes. I think that larger companies are more likely to benefit from this tax cut proposal, this may not be good news for small businesses.

This proposal contains one very important component that this proposal also contains tax cuts to induce companies to repatriate profits held overseas. Many Amercian multinational companies have the issues of transferring profits from overseas back to the US, including companies like Apple. Apple has held billions of profits in Europe; however, because the cost of transferring back to America is too high, Apple has not transferred its overseas profits back to the US. With this tax cut proposal, many companies like Apple may start to transfer some of their profits back to America, this can boost the tax incomes to some extent.

However, to small businesses, their costs of production may not significantly reduce much compared with the large companies, so the tax cut proposal gives more advantages to large businesses than it gives to small businesses, this will let small businesses be in even weaker positions than previous when competing with large businesses.

Even the Treasury secretary admitted that there was no guarantee that the tax cut proposal would be revenue neutral. This proposal will increase the gap between large businesses and small businesses, and this could further widen the social wealth gap in the US.