Why Tax Needs a ‘Front-of-the-Line’ Technology Mindset
Tax leaders who want to optimize their supporting technology can get started by addressing a pervasive tail-end challenge.
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New research from the Federal Reserve Bank of San Francisco and other intergovernmental agencies sounds a cautionary note regarding the longer-term impacts of the U.S. tax cuts enacted late last year. The San Francisco Fed concludes that forecasts of significant increases in U.S. gross domestic product (GDP) growth as a result of tax reform “may be overly optimistic” because the “effects of fiscal stimulus on overall economic activity are much smaller during expansions than during downturns.”
The research appears at a time when daily headlines about tariffs and trade wars have some CFOs and tax leaders wondering how much caution they should apply to longer-term planning activities as a result. To be sure, relatively few, if any, economists expect a 21st Century replay of the Smoot-Hawley Tariff Act, which is widely viewed as exacerbating the Great Depression. However, although periodic trade re-alignment is ultimately beneficial to treaty partners, trade conflicts and disputes – whether or not they rise to the level of a full-blown “trade war” – can be highly disruptive to global economic stability, supply and value chains and even tax planning.
Here are three trade-conflict essentials to keep in mind:
Whether or not trade disputes progress into trade wars should be of secondary concern for CFOs and tax executives. It is more important to recognize that these types of trade problems often have been followed by fiscal policy challenges and tax policy adjustments, and then plan accordingly.
Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.
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