Will US Tax Reform Bring Wage Growth?

Forex News

US President Donald Trump signed a law on making changes to the Tax Code on Friday, which he called the largest in the history of the country. The tax reform has been the most ambitious since 1986 and provides for the reduction of the profit tax to 21% from 35% starting from 2018. It is expected, that the reform will stimulate the growth of the American economy in the next year.

The US President expects that the American economy will accelerate growth as a result of tax measures to 4.5-6%. Economists believe that the effect of the reform will be gradual and will turn out to be more muffled.

The largest US companies have promised to raise salaries for employees and increase investment after the adoption of the law on tax reform. According to the Finance Minister Steven Mnuchin, the growth of companies' profits will eventually lead to an increase in the salaries of employees. The American Payroll Association (APA) appealed to Congress in early December, arguing that it will be difficult to accomplish such large changes in such a short period of time.