referring to In addition to the standard risk posed by debt, bank leverage creates systemic risk for the economy, because of moral hazard.
But this regulation comes at an economic cost, because it can gum up the workings of the finance industry.
If big banks fail, the government will have to bail them out, and this gives them an incentive to take more risk in the first place.
The government can try to use regulation to minimize that risk, as with the recent Dodd-Frank financial reform or the safeguards put in place after the Great Depression.
As it stated in Automotive analysts anticipate that the average new car price could increase $2,000 to $2,500 if the Trump administration’s proposed border tax goes into effect, the Detroit Free Press reported.
Critics and consumer advocates have pointed out that the border tax would affect more than just automobiles: a wide range of goods, including alcohol, fresh produce, and shampoo , would see price hikes if the border tax becomes a reality.
That could mean a price tag of $2,500 higher if you’re in the market for the average car.
But there’s another reason new car prices could pop even higher in the near future, and it has nothing to do with the cars themselves.
In other words, even cars that are “made in the U.S.A.” would become more expensive because some of the parts would be hit with the border tax.
As it stated in Along with other proposed reforms, the BAT would turn the US corporate income tax into a tax on corporate cash flow (with border adjustment), implying far-reaching consequences for US companies’ competitiveness and profitability.
By Nouriel RoubiniThe United States may be about to implement a border adjustment tax.
Copyright: Project Syndicate: America’s Bad Border Tax—Follow us on Twitter @AzerNewsAz
Even if the BAT is rejected, the risk of a damaging global trade war triggered by the Trump administration will continue to loom large.
Meanwhile, sectors or firms that export, like those in manufacturing, would enjoy significant reductions in their tax burden.
collected by Emily Jack
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