The plan could shift trillions of dollars of wealth from Americans to foreigners; set off an emerging markets financial crisis; wreak havoc in global oil markets;<br />and cause sustained harm to the American higher education and tourism industries (including, as it happens, luxury hotels with President Trump’s name on them).<br />But economists believe the change in the tax code would lead to shifts in the currency markets<br />that offset those moves, namely to a sharp rise in the value of the dollar compared with other currencies.<br />Perhaps the most irony-rich consequence of such a tax overhaul — which would, presumably, be signed<br />by President Trump — would be the damage to the tourism and education sectors in the United States.<br />The United States might well have a better, more efficient tax code today if, starting a century ago, lawmakers had designed it so<br />that businesses were taxed on where their sales and expenses take place, as the Republicans’ plan calls for.<br />Supporters think the dollar will rise that much if the plan is enacted — indeed, it must<br />happen, to avoid sticking Americans with much higher prices for imported consumer goods.<br />But according to calculations by Michael J. Graetz, a Columbia law professor, a currency shift of<br />that scale implies that Americans who hold foreign assets would lose $6.1 trillion, and foreign holders of assets in the United States would gain as much as $8.1 trillion.<br />Given all that, any fundamental change in the corporate tax code will create powerful ripples<br />— some quite predictable, others less so — across the business and financial landscape.
