Economic Implications of Tax Reform

GST 2.0 is going to cut your hospital bills, medicine costs, and premiums by 15-20%. The new reform brings some questionable changes. But as a doctor, I can't deny that it's making healthcare more accessible to crores of people. Here’s everything you need to know: ▶︎ 33 life-saving drugs and diagnostic kits, including cancer and rare disease meds - are now fully tax-free (0% GST). ▶︎ All other medicines - from antibiotics to Ayurvedic remedies - have dropped from 12% to just 5%. ▶︎ Medical devices like oxygen cylinders, surgical tools, and dental kits - down from 18% to 5%. ▶︎ Spectacles, lenses, and other vision correction tools - down from 28% to 5%. ▶︎ Health and life insurance premiums - no GST at all (down from 18%). The result? Healthcare costs are expected to fall by 15–20% for medicines, and 8–10% for hospitalisations. - Families will save on both chronic illness management and emergency care. - Health and life insurance will become affordable to millions more. - Small clinics and pharmacies will thrive with lower input costs. - And startups will find it easier to scale patient-focused care models. As a doctor, I’ve seen far too many patients delay treatment because the medicine or insurance was “too expensive.” This reform won’t solve everything - but it’s a powerful step toward affordable care for all. I usually don’t talk about politics here, but I do believe this will make a real difference to crores of patients across India. So 🔁 repost this to help every Indian understand what’s changing - and why it matters to them. #healthandwellness #healthcare #taxation

GST Reform & Healthcare: A Step Toward Affordability? The revised GST framework effective September 22 simplifies rates to Nil, 5%, 18% and 40%. For healthcare, three changes stand out: 1️⃣ Medical essentials at lower rates – Thermometers, medical oxygen, test kits, devices, and spectacles now fall from 12–18% to 5%. This directly reduces the cost burden for patients. 2️⃣ Insurance at nil – Health and life insurance now attract no GST. This could accelerate penetration, especially in Tier II and Tier III cities where affordability has long been a barrier. 3️⃣ Compliance simplified – Streamlining into four slabs reduces administrative complexity for pharma and medtech companies. For an industry already navigating stringent GMP, GCP, and GDP regulations, this matters. But the bigger picture? Lower GST doesn’t just make products cheaper. It can improve adherence, drive wider insurance coverage, and ease compliance costs for the ecosystem. The real test will be in execution. Will lower device costs translate into deeper rural access? Will nil GST insurance drive mass adoption or remain urban centric? Will simplified slabs reduce disputes and bottlenecks for pharma manufacturers? For me, this reform is less about tax slabs and more about strengthening the affordability and access loop in healthcare. 📌 As we move forward, one thing is clear. Policy design and industry action must converge to make these benefits visible at the patient level. For pharma leaders and policymakers, how do you see GST shaping affordability and compliance over the next 2–3 years? (Reference: Ministry of Finance release, Angel One report, 2025)

The US fiscal situation is back in focus following the Moody’s downgrade and steady rise in longer-term Treasury yields. Our latest POTUS 47 report from Thomas Wacker, Kurt Reiman, and Leslie Falconio breaks down the impact going forward. The key summary points: -US budget #deficits should remain elevated for the foreseeable, as tariffs are unlikely to be sufficiently long-term funding source for tax cuts. -Bond yields have not yet reached levels that would force legislators to confront unsustainable debt growth, but that point is drawing closer, as indicated by the recent rise in term premium for longer-dated Treasuries. -We expect that the US government may pursue both fiscal consolidation and financial repression to contain #yields and keep the high debt burden manageable. -Powerful measures of financial repression in the US would likely have global repercussions for asset prices, with the impact depending on the details and prevailing economic and financial market conditions. -Distortions from financial repression may create various tactical trading opportunities, but global diversification remains the most effective way to preserve wealth. Read more below

S&P Global Ratings expects the U.S.’s recently passed One Big Beautiful Bill Act (which includes significant changes in spending and taxation) to clarify some near-term policy uncertainty, but ongoing macroeconomic risks may shape its long-term implications: 🇺🇸 While the new law could generally strengthen companies' post-tax cash flow, likely spurring more capital expenditure and potentially domestic investments or dividends and share repurchases, at this juncture we don't expect it to significantly boost the U.S. economy's long-run potential. 🇺🇸 The legislation could pose long-term risks for some rated issuers—such as insurers in the health care sector and U.S. public finance entities, along with companies that benefited from clean energy tax credits that will now be phased out. 🇺🇸 Considering that the bill increased the government debt ceiling by $5 trillion, we believe the high fiscal deficit will persist. In our latest edition of #CreditWeek, Lisa Schineller, Satyam Panday, Shripad Joshi, and Nora Wittstruck answer investors’ questions about the emerging and established credit risks moving markets today. Read and subscribe to receive insights from our subject matter experts via newsletter every Thursday.

Should the UK reduce taxes to attract high-value economic migrants, or raise them to fund public services? 1. The Fiscal Reality: High-Value Migrants Are Net Contributors The top 1 per cent of taxpayers pay nearly 30 per cent of all UK income tax. Non-domiciled UK residents contributed over £12 billion in one tax year alone (HMRC, 2022). Migrant-founded firms drive significant job creation in fintech, biotech and AI. Skilled migrants tend to be younger, reducing the burden on the health and pension systems. Losing even a small portion of this group weakens the Treasury disproportionately. When such individuals leave for Ireland, Portugal, Dubai or Singapore, the UK loses not only their tax contribution but also their investment, innovation and spending. This suggests that reducing targeted taxes to attract and retain high-value migrants strengthens, rather than weakens, fiscal capacity. 2. The Competitiveness Challenge: Britain Is No Longer the Default Destination Ireland offers a 12.5 per cent corporation tax and favourable treatment of intellectual property income. Portugal and Italy offer reduced tax regimes for internationally mobile workers. Dubai levies zero income tax and aggressively targets British professionals and retirees. Singapore combines low tax with strong state capacity. High-value migrants are rational actors. Thus, tax competitiveness is not optional but essential for an open, services-driven economy. 3. Public Services: Raising Taxes Does Not Automatically Improve Outcomes Advocates of higher taxes argue that funding public services is a moral and social priority. This is correct. But the assumption that raising taxes on the wealthy will reliably enhance services is flawed for two reasons. a) Elasticity of the high-income tax base The internationally mobile tax base responds strongly to changes in the fiscal regime. Raising taxes can reduce total revenue if it accelerates migration outflows or reduces investment. b) Spending quality Productivity in the NHS, courts and local government has fallen. Without structural reform, higher taxes risk financing inefficiency rather than improving outcomes. 4. The Social Contract Critics argue that reducing taxes for wealthy migrants undermines fairness and erodes social solidarity. However, most high-value migrants do not rely heavily on public services. They tend to be younger, healthier and more transient. 5. The Middle Path: Intelligent Tax Policy a) Targeted competitiveness measures Introduce long-term certainty around taxation of investment gains. Lower business taxes for innovation-intensive firms. b) Strengthen the broader tax base Raise tax thresholds for low and middle-income workers. Improve enforcement to reduce avoidance and evasion. Expand the tax base through economic growth, not higher rates. c) Reform public spending to improve efficiency Competitiveness is not the enemy of public services. It is their foundation.

The recently passed "One Big Beautiful Bill" (OBBB) introduces substantial tax benefits, creating valuable opportunities for family offices and real estate investors focused on preserving and growing wealth. Understanding and acting on these changes can significantly improve your investment strategy and offer lasting financial advantages: • Permanent 20% QBI Deduction: Provides long-term tax savings for pass-through entities, increasing profitability and investment potential. • Permanent 100% Bonus Depreciation: Enables immediate deductions on property improvements and tangible assets, significantly improving cash flow. • Increased Estate and Gift Tax Exemption: Exemption limits have increased to $15 million per individual ($30 million per couple), simplifying the transfer of generational wealth. • Expanded SALT Deduction: The limit for State and Local Tax (SALT) deductions, including property and income taxes, rises from $10,000 to $40,000 starting in 2025. Full benefits apply only to individuals with modified adjusted gross income (MAGI) below $500,000 (or $600,000 for joint filers). Above those levels, the deduction gradually phases out, ultimately reverting to $10,000 once income reaches approximately $600,000. • Enhanced Affordable Housing Incentives: A 12% increase in Low Income Housing Tax Credits makes affordable housing investments more financially attractive. Investors can achieve stronger yields while contributing to community development and meeting ESG objectives. These provisions offer more than incremental tax savings. They create strategic financial opportunities for real estate investment and wealth transfer planning. Are you prepared to take full advantage of these new tax opportunities? Now is an ideal time to review your investment and estate strategies. Taking action today can secure financial benefits for years to come.

If you're a freelancer, consultant, or small business owner, the Qualified Business Income (QBI) Deduction is your friend. It's one of the most powerful tax breaks in the US, but most people don't use it right- or don't know they qualify! What is QBI? (Section 199A): - The QBI Deduction allows eligible owners of non-corporate businesses (called "pass-through entities") to deduct up to 20% of their net business income. Who Qualifies? - Sole Proprietorships (Schedule C) - Partnerships - S Corporations - LLCs taxed as any of the above. - If your business income is taxed on your personal return (Form 1040), you are likely eligible. What is QBI? - Essentially, your net profit from the qualified business activity. - It generally excludes W-2 wages, capital gains/losses, and guaranteed payments to partners. Why does it exist? - It was created to give small businesses a comparable tax break when the corporate tax rate was significantly lowered. The Big Catch: Income Limits - While the deduction is simple at low incomes, it becomes complicated (or disappears) if your total Taxable Income (business + all other income) goes over certain thresholds. Below the Threshold: You generally get the full 20% QBI deduction with no limitations, regardless of your business type. Above the Threshold: - Specified Service Trades/Businesses (SSTBs): Your deduction is phased out and eventually eliminated (SSTBs include fields like health, law, accounting, consulting, and financial services). - All Other Businesses: The deduction becomes limited based on the W-2 wages paid by your business or the cost of business property (like equipment and real estate). Key Takeaway - If you are self-employed, the QBI deduction is not an optional write-off; it is a critical tax reduction. If your income is high, strategies like paying W-2 wages or buying business property might be needed to keep the deduction alive. Follow @thetaxsaaab on Instagram for more simple US tax breakdowns!

🎺 𝐓𝐫𝐮𝐦𝐩 𝐚𝐧𝐝 𝐓𝐚𝐱𝐞𝐬: 𝐖𝐡𝐚𝐭 𝐭𝐨 𝐄𝐱𝐩𝐞𝐜𝐭 𝐟𝐨𝐫 𝐁𝐮𝐬𝐢𝐧𝐞𝐬𝐬𝐞𝐬? 🌟 With a strong voter mandate, President-elect Donald Trump is poised to advance his ambitious tax policy agenda. I am sharing a breakdown of the key plans and their potential impacts, based on insights from economics, finance, and accounting research: 𝑲𝒆𝒚 𝑻𝒂𝒙 𝑷𝒐𝒍𝒊𝒄𝒚 𝑷𝒍𝒂𝒏𝒔 𝒇𝒐𝒓 𝑩𝒖𝒔𝒊𝒏𝒆𝒔𝒔𝒆𝒔 📊 • Extension of 2017 Tax Cuts and Jobs Act (TCJA): Businesses will likely continue benefiting from low corporate tax rates and favorable depreciation rules for investment (capital expenditures) and R&D. • Further Tax Cuts: Potential reduction of corporate tax rates from 21% to as low as 15%. • Tariffs and Import Incentives: New tariffs on imports could be paired with incentives for US-domestic production. • Reduced IRS Budget for Enforcement: Cuts to IRS funding may reduce tax enforcement, potentially creating more leeway for corporate tax planning. 𝑾𝒉𝒂𝒕 𝑫𝒐𝒆𝒔 𝑹𝒆𝒔𝒆𝒂𝒓𝒄𝒉 𝑺𝒂𝒚 𝑨𝒃𝒐𝒖𝒕 𝒕𝒉𝒆 𝑷𝒐𝒕𝒆𝒏𝒕𝒊𝒂𝒍 𝑰𝒎𝒑𝒂𝒄𝒕? 🔬 In a working paper with Rebecca Lester from Stanford University Graduate School of Business, we review the evidence on how firms respond to tax incentives. Key takeaways include: • Investment Growth: Increased tax deductions for R&D and investment effectively boost growth and employment, but some benefits may be windfall gains for firms rather than new investments. • Attractiveness of Lower Tax Rates: A low corporate tax rate (21% vs. ~30% in Germany/France) attracts international investment and stimulates domestic business activity. • Cost-Effectiveness: Tax rate cuts are costly for public finances due to permanent revenue losses. Incentives like depreciation rate increases are budget-neutral in the long run and can also drive growth. • Policy Uncertainty: Firms hesitate to invest without credible, sustainable tax policies. Certainty is critical to maximizing the benefits of these incentives. • Tax Enforcement Trade-offs: Lower enforcement could encourage avoidance but also reduce capital availability for smaller firms, as tax enforcement improves information quality for lenders. • Green taxes: Firms do respond to carbon taxes and related policy tools. The question is how and by how much, a crucial question for effective climate policy design Our full paper 📄 is available here: https://lnkd.in/e8vjYyR5 We were kindly invited to present these and other research insights at the 2024 Journal of Accounting and Economics Conference. Huge thanks to our discussant Jennifer Blouin and all attendees for their invaluable feedback! Have thoughts or questions? Drop them 👇 in the comments. I’ll also share links to studies supporting these findings below. 🚀 #Taxes #Economics #Trump #Research #Investment Ed deHaan Michelle Hanlon Jeff Hoopes Scott Dyreng Lisa De Simone Anthony Welsch Andrew Belnap Jaron Wilde John Gallemore Harald Amberger Christoph Spengel

Is the One Big Beautiful Bill good for the economy? Here are the highlights: 1) Tax cuts from the 2017 Tax Cuts & Jobs Act set to expire after this year have been made permanent. That means: ✅ Permanent tax bracket changes >> Lower taxes for the highest earners >> Higher or lower taxes for everyone else, depending on income ✅ Permanent lower corporate taxes (21%) ✅ Permanent 20% Qualified Business Income (QBI) deduction >> Lower tax bill for small businesses, contractors, freelancers, etc. ✅ Permanent R&D business deduction >> Lower taxes for businesses building in the US ✅ Permanent & higher child tax credit ($2,200) >> Lower taxes/refund for families with children ✅ Permanent estate tax exemption per person to $15 million >> More money passed on to heirs tax-free ✅ Higher State & Local Tax (SALT) Deduction ($40K+ until 2030) >> Lower federal taxes for people in high-tax states ✅ Higher Standard Deduction ($15,750 – single; $31,500 – joint) >> Lower tax bill for people who don't itemize their deductions (most) ✅ Higher deductions for tips and overtime pay ($25K & $12.5K) >> Lower tax bill for hourly and service workers ✅ Senior "bonus" tax deduction ($6,000)  >> Lower tax bill for retirees 2) To pay for the lost tax income (in addition to tariff income), the government cut spending in other areas: 🔻 Reduced Medicaid funding, affecting millions 🔻 Reduced food stamps funding, affecting millions 🔻 Stricter borrowing limits on federal student loans, particularly for graduates and parents 🔻 Elimination of tax incentives for environmentally-friendly choices like electric vehicles, solar, etc. This isn't an exhaustive list, but it hits the highlights. What does it mean for the economy? You'll hear mixed projections. Tax cuts are typically a boost to the economy, but much of this is just avoiding a reversion to higher taxes than lowering them further. So, the uplift might not be as big.  Reducing healthcare, food assistance, student loan access, and other services for millions of Americans isn't great for an economy that runs on consumer spending and faces a growing labor shortage. 👉 What do you think? Will this hurt or benefit you? Your business? Action steps to consider: 1️⃣ Review your expected tax deductions. There might be new savings. 2️⃣ Seniors: Check your eligibility for the new Social Security tax deduction. 3️⃣ Students and families: Plan for upcoming changes to federal loan limits. Review your payment plan options before 2026. 4️⃣ Medicaid recipients: Stay informed on new eligibility guidelines. Want more simple money talk? 🔔 Follow me. Want to create financial content like me for your clients? 📩 Subscribe to my newsletter.