Balance of Power: Trump’s Overseas Tax GrabBy and
Welcome to Balance of Power, Bloomberg's new daily newsletter on global politics. We took a hiatus after the U.S. presidential election and now aim to pull the lens back for a broader look at the people and the forces that shape our world. The stories here will take us from Washington to London to Beijing, and all points in between.
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-- John Fraher and Craig Gordon (executive editors of global and U.S. political coverage)
Trump’s Overseas Tax Grab
For U.S. presidents, the $2.6 trillion in profits held offshore by American companies has always been a tantalizing prize that's stayed just out of reach.
Now Donald Trump has a plan to get his hands on that stash with an offer to let companies like Microsoft and Apple bring it home at a tax rate of just 10 percent, a source tells Bloomberg's Jennifer Jacobs. What's more, the idea could help his much-anticipated tax plan coming Wednesday to overcome resistance among Republicans in Congress.
Repatriation could bring his lopsided overhaul closer to balance by financing tax cuts for corporations, high-earners and the middle class -- cheering conservatives. He also could sink the money into popular bipartisan programs like infrastructure spending -- cheering Democrats, who see lots of well-paying jobs for construction unions.
But there's a big note of caution. President Barack Obama and Speaker Paul Ryan both dreamed of a repatriation-for-infrastructure deal and could never get it off the ground. Because the tricky part of a comprehensive tax reform plan is the word “comprehensive” -- meaning that you make just as many enemies as you do friends by changing every part of the tax code.
So Trump is still a long way from getting his plan through Congress, but tapping overseas cash is sure to help.
Trump Also Wants to Cut Business Taxes | Trump will call for a reduction in the top income tax rate on pass-through businesses -- a category that includes Mom-and-Pop grocers, hedge funds and Trump’s own empire -- to 15 percent, down from 39.6 percent. Trump’s team sounded upbeat about getting Republican lawmakers on board, but some are still stinging after Trump rejected a border adjusted tax favored by Speaker Ryan.
Elsewhere Around the Globe
Seoul Is Still Defenseless Against Kim's Missiles | After weeks of saber rattling by Trump, the South Korean capital is still vulnerable to a missile attack from its northern neighbor. While the U.S. military started installing its new Thaad missile defense system overnight, it won't be ready until later this year. As Tony Capaccio reports, it also turns out that Trump's “armada” won't be able to help defend Seoul because the aircraft carrier strike group doesn't have the capability to shoot down North Korea's ballistic rockets.
China Launches a New Aircraft Carrier | China is celebrating the launch of its first domestically built aircraft carrier and only the second in its fleet. While still years away from deployment and no match for the U.S.'s nuclear-powered supercarriers, it gives President Xi Jinping a historic milestone ahead of a reshuffle at the top of the Communist Party late this year.
Obamacare Repeal Gets New Lease on Life | Trump’s effort got a boost when several conservative holdouts said they’d sign on to a revised bill giving states more flexibility. Moderate Republicans still don’t love the plan, but all sides are proceeding cautiously, realizing they can’t afford to fall short again on such a key campaign promise after the first effort collapsed.
Macron Takes Aim at Le Pen Country | Macron campaigns at a Whirlpool factory on Wednesday that's moving to Poland. It's a bold move: Hollande's presidency was tarnished after he once climbed on top of a union truck and vowed to defend workers at a blast furnace plant, only for it to be later shut down. But Macron's lead is solid, and Le Pen's only hope might hinge on a low turnout on May 7.
Trump's Foreign Policy Doctrine | Based on his missile strike in Syria, Trump has staked out an approach that sets boundaries for foreign leaders but avoids prolonged combat, according to his chief of staff, Reince Priebus. The president demonstrated the doctrine's first component last week when he intervened to toughen language in a State Department letter on Iran's nuclear program, an administration official said. The test will be how he handles countries with greater military capability than Syria.
Will U.K. Pollsters Fail Again? | France's political forecasters got it right on Sunday, but in the U.K. pollsters are bracing for another test of their forecasting after misfires on Brexit and the two elections before that. With polls currently suggesting a landslide for Theresa May on June 8, Rob Hutton looks at the pitfalls they'll have to avoid this time.
And Finally... The Trump trade isn’t an anomaly. It turns out that populists are good for stocks. Researchers at the University of Bonn examined 27 comparable market rallies in the past century and found that stocks tend to benefit, along with bonds to a lesser extent.