The American dollar has fallen in value on the forex market when compared with other currencies. This comes as the United States Congress has developed a tax cut plan. Investors are not necessarily positive about the proposed tax cut, thus leading to a drop in the value of the dollar.
The most prominent aspect of the tax cut would entail a cut in the corporate income tax rate. The details on the corporate tax cut were a problem for investors that led to the decline in the American dollar.
The dollar index went down by around 0.45 percent. It fell to 94.4 as it tracks against six other currencies. This was the lowest value for the dollar in nearly a week.
The tax cut is expected to be discussed among members of Congress. This is an important development that could directly influence how the forex market changes and what the value of the American dollar is.
Tax Cut Details
The American tax cut is being designed by Republicans in the United States Congress. This cut could impact the forex market in the future as it influences how larger businesses might handle money. But it could also impact the market due to how individual people, particularly those in the middle class, might be influenced by the tax cut.
The Senate particularly produced a bill that offers corporate rate cuts for larger businesses. But those cuts would be delayed until around 2019.
State and local taxes would also have new deductions. The specifics on those deductions might vary based on what is included in the final edition of the plan.
The inheritance tax would also be cut for the wealthiest Americans. Details on how much money would be involved for the tax to be cut have not been released at this moment.
The individual mandate from the Affordable Care Act or Obamacare as it is known would not be influenced by the tax cut. This would allow the program to continue to run in spite of President Trump’s ongoing desire to get rid of it.
What This Means
The tax cut means that wealthier Americans would benefit the most as they get better cuts on their debts. The cuts make it so the Americans involved could have an easier time with spending money and bolstering the economy. There have been some concerns among opponents about how middle class people will not get much of a benefit and that the trickle-down effect that might be planned would not necessarily move forward as well as it could.
This in turn is causing an impact on the forex market. There is the concern that the American economy might not get as much of a benefit off of the tax cut as people might hope. This in turn has led to the forex market cutting back on the value of the American dollar.
The United States Congress is expected to debate upon and eventually vote on the bill. Whether this will cause a greater impact on the American economy is unclear.