July 20, 2012

Andrew Busch on the US Presidential Election

  • There are three areas of major concern for US businesses: the crisis in Europe, the slowdown in China, and the US fiscal cliff.
  • IMF research shows that tax hikes are 3-times more detrimental to real GDP growth than spending cuts.
  • Corporate tax rate cuts create jobs and keep US businesses competitive. The Kaufman Foundation concludes that “since 1980, nearly all net job creation in the US has occurred in firms less than 5 years old.”
  • Over 80% of the US federal governments tax receipts are from individuals.
  • Obama wants to lower statutory rates to 28%, have a minimum tax on foreign income, create tax penalty for outsourcing jobs, have a 45% tax on estates valued >$3.5 million.
  • Romney wants to lower statutory rates to 25%, eliminate the Alternative Minimum Tax, eliminate mortgage interest deduction for 2nd homes, repeal the estate tax but keep the gift tax at 35%.
  • Party conventions are in late August/early September and will provide additional clarity on policy.

Infrastructure

  • The Government of China will spend $70.3 billion on railway infrastructure and is investing $5 billion to renovate rural homes this year.
  • UK is planning to spend $80 billion on infrastructure and exports.

Tidbits

  • Canada’s June CPI rose 30 bps to 1.5% YoY, core inflation was up 20 bps to 2%. Electricity prices were up 5.9% YoY, with most of the increases in Ontario, Alberta and British Columbia.
  • Canadian Senate’s energy committee is backing efforts to ship western oil east to be refined in Ontario and Quebec.
  • China offered $20 billion in loans to African countries over the next 3 years, double the amount for the previous three year period.
  • Short sales on the NYSE have climbed to 5.35% of stock available, above the September 2011 peak.