Commerce Secretary Wilbur Ross said America’s economy could get a 1% boost if tax reform is done right.
Speaking Tuesday on CNBC’s “Squawk Box,” Ross said revamping the tax system is now the “single-most important thing” on the legislative agenda, and that if done effectively, it could cause the U.S. GDP to grow by 100 basis points, or 1%, amounting to “$10 trillion more GDP, $3 trillion more revenues to the federal government” over the next decade.
“Those are gigantic numbers even for a country the size of the U.S.,” Ross said, “so the tax changes could be transformative events.”
Ross also called the repatriation of U.S. companies’ foreign cash — in which cash from foreign sales brought back to the U.S. would be taxed at a lower rate — “a very important objective.”
“We believe that there’ll be a vast amount of it brought back if the president’s notion of a very reduced rate on the immediate repatriation goes through,” he said.
Companies such as Apple Inc. AAPL, +1.72% , Microsoft Corp. MSFT, +0.00% , and Cisco Systems Inc. CSCO, +0.12% and Alphabet Inc. GOOG, +0.42% GOOGL, +0.34% combined have hundreds of billions of dollars in cash overseas. A repatriation holiday won’t necessarily benefit the economy though; the most recent one, instituted under President George W. Bush in 2004, resulted in gains mostly for shareholders, increased layoffs and $3.3 billion in lost tax revenues, according to a 2011 report.
President Donald Trump is expected to lay out the Republican tax plan Wednesday during a speech in Indiana. The plan may include a new tax rate above 35% for the highest individual earners, according to a Wall Street Journal report, and is expected to drop corporate tax rates from 35% to 20%.
Ross also addressed China in his CNBC interview, on one hand praising it for promising to follow U.N. sanctions and crack down on Chinese companies doing business with North Korea, while on the other saying it no longer deserves preferential trade status.
“It’s very hard to say that China as world second largest economy needs the same sort of preferential treatment that it might be justified to have decades ago,” Ross said.