How Tax Reform Will Impact the Trade Deficit

The video discusses the US trade deficit, highlighting changes in its nominal value due to new profit booking systems. It explains how US companies manage overseas earnings to avoid taxes, affecting GDP and productivity. The new tax regime makes US investment more attractive, leading to increased productivity, wages, and exports.

What is the approximate annual value of the nominal trade deficit mentioned in the video?

• 100 billion

• 200 billion

• 500 billion

• 700 billion

Why do U.S. companies prefer to keep their earnings overseas?

• To avoid paying taxes on those earnings

• To increase their overseas market share

• To benefit from higher interest rates abroad

• To comply with international trade laws

How does the booking of economic activities in countries like Ireland affect U.S. GDP reporting?

• It increases U.S. GDP

• It decreases U.S. GDP

• It has no effect on U.S. GDP

• It doubles U.S. GDP

What is one of the immediate effects of the new tax regime on U.S. investment?

• Increased attractiveness of U.S. investment

• Decreased foreign investment

• Higher taxes on U.S. investments

• Lower wages in the U.S.

What advantage does the territorial tax system provide to U.S. companies?

• Reduced competition from foreign companies

• Higher domestic sales tax

• Exemption from U.S. taxable income for exports

• Increased import tariffs