Fitch: Tax proposal may add fiscal strain to the US public finance

The US-based ratings agency, Fitch ratings, published the latest note on Monday, reviewing the US tax reforms proposal, with the key highlights found below.

“A tax reform proposal by Republicans in the U.S. House of Representatives could affect some states' and local jurisdictions' revenues if passed.

The likelihood of the passage of this proposed legislation into law remains far from certain and will be subject to potentially key changes as it proceeds through the House and the rest of Congress.

The proposal could limit tax raising flexibility, particularly for the states that charge higher taxes, as it would substantially reduce the federal tax deduction for state and local taxes. This would cause an increase in the impact of state and local taxes, as they would be without an offsetting federal deduction.”