IMF Staff Photograph/Stephen Jaffe

Maurice Obstfeld, Economic Counselor and Director of Research at the IMF, says that “the impact of Trump Administration tax reform remains unclear.”

Maurice Obstfeld, Economic Counselor and Director of Research at the IMF, said at the Annual Meetings press briefing on October 10, 2017,  in Washington D.C. that “the impact of Trump Administration tax reform in the U.S. remains unclear.”

Obstfeld was openly hesitant to share with the press corps his personal impression of the Trump administration tax plan justifying his reluctance by the fact that there is a lot yet that needs to be determined.  “These may seem like details to some, but they are actually quite crucial to how the things will work and what kind of deficit or surplus in the government budget will lead to. So we are looking forward to further details as the plan is negotiated,” he explained.

Instead, Obstfeld offered to discuss the tax plan in terms of general principles, stating that simplification is a good thing. “If it brings a sharp reduction in exemptions, loopholes, special giveaways, which allow a reduction in rates, that is also a good thing”, he added.

Sharing the findings of the IMF on the global economic outlook, he said that that “the global recovery is continuing and at a faster pace”. Obstfeld stressed that policymakers should seize the moment by calling them to take advantage of stronger economic conditions to adopt policies that will support growth and raise economic resilience in the future.

“What happens with government revenue is important as well. Do you invest in productive infrastructure, do you invest in people? How do you structure the spending side? In general, given where the U.S. is, in terms of its overall debt level and the off-the-balance-sheet obligations going out into the future as population ages, we feel that whatever the tax reform plan looks like, it should not increase the deficit. Over the medium term, as our article IV advice made clear, tax reform should be revenue enhancing,” concluded  Maurice Obstfeld.