Why Davos Is Wild About Trump’s Tax Cuts

Why Davos Is Wild About Trump’s Tax Cuts

Denis Balibouse

President Trump is headed to Davos Wednesday night as positive reviews of his tax cuts stream in from CEOs and financiers from around the globe. National Economic Council Director Gary Cohn claimed Tuesday that the administration’s economic agenda has "unleashed the U.S. economy" and it looks like the executive class gathered in the Swiss Alps largely agrees. Speaking at the World Economic Forum’s annual meeting this week, Credit Suisse CEO Tidjane Thiam proclaimed, "Tax reform in the U.S. has been exactly what we needed ... to give a new impetus to world growth.”

The positive spin on the tax cuts continued Wednesday, with Starbucks announcing pay hikes, stock grants and enhanced benefits that the company said were “accelerated by recent changes in the U.S. tax law.”

On Tuesday, JPMorgan Chase said it would be handing out raises and opening new branches in the wake of the tax overhaul, while the bank’s CEO, Jamie Dimon, told reporters in Davos that the tax cuts would spark an economic boom.

But not everybody among the global elite at Davos is cooing about the effects of the tax cuts. Bank of America CEO Brian Moynihan, while thrilled about the cuts, acknowledged that they don’t address “the fundamental problem” of productivity, and warned that the “reality of bringing a lot of jobs back is difficult.” (To wit: Walmart followed up its announcement of tax-cut-driven pay hikes with dozens of store closings, and Kimberly-Clark said that it will lay off more than 5,000 workers in a restructuring paid for in part by “cash flow benefits” produced by the new tax rules.)

“You can’t reduce tax rates if you have huge deficits,” said Frank Appel, chief executive of Deutsche Post DHL, according to The Washington Post. The tax cut “will be good for the short-term, but it doesn't fix the fundamental problems” in the U.S. economy.