I can think of someone who will love this

To operate on American soil, regulators require foreign banks to set up a US subsidiary. That unit must be funded by loans from the parent company that can be converted into capital in the event of the bank failing, so taxpayers do not end up on the hook for a bailout.

Under the new base erosion and anti-abuse tax (Beat), banks will no longer be able to deduct interest payments on those loans from their taxable income.

As a result, overseas lenders will pay a tax rate of 13.5% on a much larger slice of their income than previously, according to Richard Milnes, a banking tax partner at EY.

What’s not to like from a certain point of view? Interest payments not wholly deductible, banks pay more in tax. Ritchie will be pleasuring himself.

Except, of course, he didn’t think of it.

Oh, and, of course, it’s not a level playing field any more, is it?

3 comments on “I can think of someone who will love this

  1. Oh, and, of course, it’s not a level playing field any more, is it?

    True.

    The “America first” measure buried in the tax plan, which the president signed into law on Friday, will leave overseas banks facing US funding costs 25% higher than their American rivals, according to analysis by the consultancy EY.

    Blatant protectionism – any WTO rules broken?

    Trump is right on most things, but on trade he is mindbogglingly stupid.

    .
    From tax reform to military successes, here’s a look at President Trump’s achievements one year since taking office.
    https://www.youtube.com/watch?v=sxiGIAA2dic

  2. OT

    @Tim,

    https://www.adamsmith.org/blog/economics/explaining-part-of-the-uk-labour-productivity-puzzle

    There is no difference whatsoever in the output: but because of the odd way (through necessity) that we measure labour productivity in the public sector that productivity has just doubled.

    Informative and explains Labour & BBC/C4 attacking Gov’t on productivity not growing.

    Question: “through necessity” – why, it is absurd? What is alternative/better?

  3. “Oh, and, of course, it’s not a level playing field any more, is it?”

    I don’t know the detail but I think it probably is a level playing field (with US domestic banks). The US subs of foreign banks may not be able to deduct all the interest cost of funding from the ir parents, but I suspect they can deduct borrowings made in the US domestic markets against the security of a parent guarantee, which ensures that their interest costs are at arms length rates.

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