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The European Union’s top five economies are warning the U.S. that its massive tax overhaul could contravene some of its international obligations and risks “having a major distortive impact on international trade.”

In a letter to U.S. Secretary of the Treasury Steven Mnuchin, the finance ministers of Germany, France, Britain, Italy and Spain wrote they had “significant concerns” about three tax initiatives in particular, including the so-called base erosion and anti-abuse tax Senate bill.

In a letter seen by The Associated Press, the five wrote that “it is important that the U.S. government’s rights over domestic tax policy be exercised in a way that adheres with international obligations to which it has signed-up.”

Also read: What you need to know about the U.S. estate tax debate

Revenue estimates

The Trump administration is now estimating the Republican tax bill will generate about US$1.8 trillion in new tax revenue over 10 years by boosting economic growth.

But that’s a lot more than nonpartisan congressional analysts have projected. The Joint Committee on Taxation estimates that growth stimulated by the anticipated tax cuts will generate some US$409 billion in additional tax revenue over 10 years.

President Donald Trump and Republican leaders in Congress have promoted the massive tax plan by promising the tax cuts will boost the economy. The US$1.5 trillion House and Senate tax bills combine steep tax cuts for corporations with modest reductions for individuals.

The new Treasury Department analysis out Monday says about half the expected increase in economic growth likely will result from tax benefits for corporations.

Originally published on Advisor.ca
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