(Bloomberg) -- As economists ponder how much additional growth is in store for the U.S. economy following the implementation of President Donald Trump's wide-reaching tax reform, the European Central Bank says the consequences for its own jurisdiction “are highly uncertain and complex.”
The tax burden on U.S. corporate income will fall significantly to a level close to that in a number of euro-area economies, the Frankfurt-based institution said in a report published Monday. That could overhaul the way companies choose to invest or shift profits.
“The reform risks intensifying tax competition worldwide, entailing a possible erosion of tax bases in EU countries,” the ECB said.
Prior to the reform, the U.S. corporate tax rate stood above the rates of all large euro-area countries, the ECB said. While the reform could carry some positive macroeconomic spillovers if a stronger U.S. economy raises demand for euro-area goods and services, “the overall size of the effect is likely to be rather small.”
To contact the reporter on this story: Carolynn Look in Frankfurt at clook4@bloomberg.net.
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jana Randow
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