Author Topic: Republican Tax Plan 2017  (Read 72145 times)

Acastus

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Re: Republican Tax Plan 2017
« Reply #600 on: November 21, 2017, 07:33:31 AM »
One of the commentators I heard recently said something that I think is a very accurate description of the bill.  He said the only goal is to get the corporate rate down to 20%, the rest is just window dressing.  BTW, does anyone know if either of the bills closes even one corporate tax loophole??

Corporate tax cuts cost about 2 trillion over 10 years. The total tax cut is at 6 trillion for now. Not exactly a sideshow. The cuts to the 40% bracket and pass throughs for Donald'sh companies cost a lot, too.

How anyone can call raising taxes on 30% of the population a tax cut is the height of hubris.

Glenstache

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Re: Republican Tax Plan 2017
« Reply #601 on: November 21, 2017, 09:02:33 AM »
One of the commentators I heard recently said something that I think is a very accurate description of the bill.  He said the only goal is to get the corporate rate down to 20%, the rest is just window dressing.  BTW, does anyone know if either of the bills closes even one corporate tax loophole??

Corporate tax cuts cost about 2 trillion over 10 years. The total tax cut is at 6 trillion for now. Not exactly a sideshow. The cuts to the 40% bracket and pass throughs for Donald'sh companies cost a lot, too.

How anyone can call raising taxes on 30% of the population a tax cut is the height of hubris.

Also known as "doublespeak"
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DarkandStormy

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Re: Republican Tax Plan 2017
« Reply #602 on: November 21, 2017, 09:05:22 AM »
https://www.cnbc.com/2017/11/20/senate-gop-tax-plan-to-ultimately-raise-taxes-for-half-of-us-tax-policy-center.html

Quote
Trump spoke as the Tax Policy Center said that while all income groups would see tax reductions, on average, under the Senate bill in 2019, 9 percent of taxpayers would pay higher taxes that year than under current law. By 2027, that proportion would grow to 50 percent, largely because the legislation's personal tax cuts expire in 2026, which Republicans did to curb budget deficits the bill would create.

Quote
In 2019, those making less than $25,000 would get an average $50 tax reduction, or 0.3 percent of their after-tax income. Middle-income earners would get average cuts of $850, while people making at least $746,000 would get average cuts of $34,000, or 2.2 percent of income.

Quote
The center also said the Senate proposal would generate enough economic growth to produce additional revenue of $169 billion over a decade. That's far short of closing the near $1.5 trillion in red ink that Congress' nonpartisan Joint Committee on Taxation has estimated the bill would produce over that period.

So basically the plan does very little for economic growth while making sure corporations and the top 1% get a little more cash.  Idiotic.
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A Definite Beta Guy

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Re: Republican Tax Plan 2017
« Reply #603 on: November 21, 2017, 09:12:13 AM »
Giving corporations and the top 1% a tax cut makes more sense from a supply-side growth perspective than a tax cut for wage earners. The bottom do not drive growth.

obstinate

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Re: Republican Tax Plan 2017
« Reply #604 on: November 21, 2017, 09:14:41 AM »
Giving corporations and the top 1% a tax cut makes more sense from a supply-side growth perspective than a tax cut for wage earners. The bottom do not drive growth.
Yeah, in that model, it's true. But the supply side model is not actually how reality works, so a tax policy being good in that model does it no credit in real life.

ixtap

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Re: Republican Tax Plan 2017
« Reply #605 on: November 21, 2017, 09:16:04 AM »
Giving corporations and the top 1% a tax cut makes more sense from a supply-side growth perspective than a tax cut for wage earners. The bottom do not drive growth.

The economics class I took said that the demand side causes the supply to grow. So we will have a greater demand for luxury goods?

partgypsy

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Re: Republican Tax Plan 2017
« Reply #606 on: November 21, 2017, 09:26:59 AM »
Giving corporations and the top 1% a tax cut makes more sense from a supply-side growth perspective than a tax cut for wage earners. The bottom do not drive growth.

yes, economic experts call supply-side economics "voodoo economics". It has been shown historically not to help to the degree proponents say it will, hence the ballooning of the deficits that happened during the Reagan years. People using the "supply-side" argument for these tax cuts are ignorant, deceptive or both. Other names for it is "trickle down" economics, and also
"horse and sparrow theory"
"—what an older and less elegant generation called the horse-and-sparrow theory: If you feed the horse enough oats, some will pass through to the road for the sparrows." — John Kenneth Galbraith

Demand does create supply. The opposite is not necessarily true.
« Last Edit: November 21, 2017, 09:32:54 AM by partgypsy »

GreenEggs

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Re: Republican Tax Plan 2017
« Reply #607 on: November 21, 2017, 09:27:29 AM »
We elected Trump & he'll give us what we deserve for being so foolish. 

He said he would "drain the swamp", but he didn't tell us that he'd "drain our wallets" too. 


RangerOne

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Re: Republican Tax Plan 2017
« Reply #608 on: November 21, 2017, 09:27:32 AM »
Giving corporations and the top 1% a tax cut makes more sense from a supply-side growth perspective than a tax cut for wage earners. The bottom do not drive growth.

That statement can't be universally true. If you give more money to consumers they can absolutely drive growth. Walmart could certainly gorw if everyone shopped more. But clearly not all companies would benefit.

Just the same boosting coorporate earnings gives you first short term artificial growth if we'll after tax earnings get a bump. It will also put more money in the pockets of growing companies to grow faster which means more jobs. I haven't studied this so I must assume there are some studies on the potential impact of expanding your middle income consuemr base.

But I assume some companies are happy with their growth rate and won't just hire more people. They can pocket the extra earnings or simply pump it right back into stocks and their share holders. The later is not really the growth we need though I believe this will be more common from the largest American companies.

I think the Republican balancing between breaks for mid and high are off balance. And their budgeting ability sucks as bad as the Dems the railed on for the past 8 years.

A Definite Beta Guy

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Re: Republican Tax Plan 2017
« Reply #609 on: November 21, 2017, 09:55:28 AM »
Giving consumers more money works to boost demand, but you don't need more demand except in cases where the economy is in recession. It's more a special case than the general rule.

All economic growth in the long-run comes from innovation, resources, and capital deepening....IE, the supply side. Not all tax cuts are equal, and if you are going to go for a supply-side tax cut, you should target the people who actually are most likely to produce more with a tax reduction. To give a labor economics example, men are not as sensitive to the tax rate as women are. Men just work per their social-norm required hours. Women are more likely to have a decision between working part-time, full-time, or not at all, and are more likely to work when the tax rate is lower.
Either way, though, reducing tax cuts on the middle class would be considered less important than cutting taxes on innovators, savers, and investors.

Most conservative economists will point out that the phase-outs of government spending create marginal tax rates close to or over 100% for lower-income families, but that's not the middle class either.


Quote
I hope you're just saying that since it's the basis of supply-side economics and not something you actually believe. In the economic literature, supply-side economics is given about as much credibility as homeopathy is by Western medicine.
Not really. This is just a Democratic political attack. There's no one that believes in the extreme claims that tax cuts pay for themselves, but that's totally different from everyone assuming tax cuts are a bad idea and tax hikes pose no problem at all.

ZiziPB

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Re: Republican Tax Plan 2017
« Reply #610 on: November 21, 2017, 10:07:39 AM »
An interesting article regarding existing and new tax loopholes in the House bill:

https://www.bloomberg.com/news/articles/2017-11-21/tax-loopholes-for-wall-street-s-wealthiest-loom-in-house-bill



Scortius

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Re: Republican Tax Plan 2017
« Reply #611 on: November 21, 2017, 10:14:12 AM »
Giving consumers more money works to boost demand, but you don't need more demand except in cases where the economy is in recession. It's more a special case than the general rule.

All economic growth in the long-run comes from innovation, resources, and capital deepening....IE, the supply side. Not all tax cuts are equal, and if you are going to go for a supply-side tax cut, you should target the people who actually are most likely to produce more with a tax reduction. To give a labor economics example, men are not as sensitive to the tax rate as women are. Men just work per their social-norm required hours. Women are more likely to have a decision between working part-time, full-time, or not at all, and are more likely to work when the tax rate is lower.
Either way, though, reducing tax cuts on the middle class would be considered less important than cutting taxes on innovators, savers, and investors.

Most conservative economists will point out that the phase-outs of government spending create marginal tax rates close to or over 100% for lower-income families, but that's not the middle class either.


Quote
I hope you're just saying that since it's the basis of supply-side economics and not something you actually believe. In the economic literature, supply-side economics is given about as much credibility as homeopathy is by Western medicine.
Not really. This is just a Democratic political attack. There's no one that believes in the extreme claims that tax cuts pay for themselves, but that's totally different from everyone assuming tax cuts are a bad idea and tax hikes pose no problem at all.

You're right, we don't need more demand right now, and with corporations sitting on record levels of cash reserves, we certainly don't need to give them more tax breaks to help them stimulate the current record bull market. So, why the hell are we cutting taxes right now at all? Indeed, we want to stimulate the growth of our economy by reducing the burden on innovators, so let's leverage a tax on tuition credits that will all but destroy America's amazing system of higher eduction, the source of which has brought most of the expansion of our modern information-age economy. For all of the things you name as important, this tax bill addresses none of those issues and actively penalizes others. But at least it will add 2 trillion to the debt once the temporary tax cuts are made permanent. All for what?

J Boogie

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Re: Republican Tax Plan 2017
« Reply #612 on: November 21, 2017, 10:30:09 AM »
I think it's important to differentiate between the idea that domestic trickle-down economics is effective and the idea that lowering the corporate tax rate to a more globally competitive number is needed to stop businesses from moving their HQs.

It makes sense to lower our corp tax rate to 20%.  The avg corp tax rate in the EU is 22.5%.

Maybe we're not big fans of globalization, but as one country we can't enact effective legislation to stop businesses from relocating. I think our best option is to be competitive so we recapture some of these trillions of dollars that corporations hold in tax havens.








Glenstache

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Re: Republican Tax Plan 2017
« Reply #613 on: November 21, 2017, 10:33:47 AM »
Giving consumers more money works to boost demand, but you don't need more demand except in cases where the economy is in recession. It's more a special case than the general rule.

All economic growth in the long-run comes from innovation, resources, and capital deepening....IE, the supply side. Not all tax cuts are equal, and if you are going to go for a supply-side tax cut, you should target the people who actually are most likely to produce more with a tax reduction. To give a labor economics example, men are not as sensitive to the tax rate as women are. Men just work per their social-norm required hours. Women are more likely to have a decision between working part-time, full-time, or not at all, and are more likely to work when the tax rate is lower.
Either way, though, reducing tax cuts on the middle class would be considered less important than cutting taxes on innovators, savers, and investors.

Most conservative economists will point out that the phase-outs of government spending create marginal tax rates close to or over 100% for lower-income families, but that's not the middle class either.

It is worth pointing out that the currently proposed tax bill will strongly discourage people from going to graduate school because they will be taxed on the value of tuition waivers received for doing work for the university (teaching , etc). This is a directly disincentive to innovation, etc. This is in addition to changes in deductions for student loan interest. This will have a long-term negative impact on our country's standing in STEM and innovation. 

Scortius

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Re: Republican Tax Plan 2017
« Reply #614 on: November 21, 2017, 11:09:37 AM »
I think it's important to differentiate between the idea that domestic trickle-down economics is effective and the idea that lowering the corporate tax rate to a more globally competitive number is needed to stop businesses from moving their HQs.

It makes sense to lower our corp tax rate to 20%.  The avg corp tax rate in the EU is 22.5%.

Maybe we're not big fans of globalization, but as one country we can't enact effective legislation to stop businesses from relocating. I think our best option is to be competitive so we recapture some of these trillions of dollars that corporations hold in tax havens.

I keep hearing this argument as well, but I think it's important to question the premise that we want to be involved in a race to the bottom. On the surface it makes intuitive sense that we want to have a lower tax rate than our 'competitors', but I think that overlooks and undervalues exactly what we have here in the US. Right now we have far and away the best higher education and academic research system in the world.  The smartest and best students from every country in the world come to the US to study. That benefits the US economy immensely. So many of the modern start-up 'unicorns' have been built by first, second, or third generation immigrants of families that came to the US to study advanced technology. We have the best collection of engineering and mathematic talent in the world by far. Foreign talent fights to obtain visas to come work in the US.

If you wanted to start a modern day tech company, the type that would operate on a global scale, where would you do it? Well, the answer is easy, you do it in Silicon Valley. That's not hyperbole, it's the verifiable truth. Why would you do it in the country with the higher tax rate, in the state with the higher tax rate, in the city with the insane cost of living? Why wouldn't you start your tech company in Austria or Italy, China or India? Because you go to where the talent is and you are more than willing to pay that premium.

Makers of superior luxury goods don't compete in price wars with companies that offer cheaper generic comparable goods. Similarly, the US should have no need to engage in a corporate tax war with a country like India. We are the country that produces the superior brand in terms of an educated workforce, modern infrastructure, stable and uncorrupt government.  All that talk about how VTSAX is a 'global' index because all the companies operate globally. There's a reason all of those companies originated and are based in the US, and it sure as hell isn't because our corporate tax rate is lower. If anything, we should be doing whatever we can to make sure we stay the global leader in higher education and research as the US has benefited incredibly from it's ability to draw in the top talent from across the world to work and innovate (and pay taxes) here in the US. Thus, why this idea of partially paying for corporate tax cuts by cutting tuition credits is the most asinine idea I've ever heard of.

DarkandStormy

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Re: Republican Tax Plan 2017
« Reply #615 on: November 21, 2017, 11:14:02 AM »

It makes sense to lower our corp tax rate to 20%.  The avg corp tax rate in the EU is 22.5%.

The average effective corporate tax rate in the U.S. is 19%.
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J Boogie

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Re: Republican Tax Plan 2017
« Reply #616 on: November 21, 2017, 11:33:37 AM »
I agree the US is great. But we're not great because of our 35% corp tax rate, and adjusting it to match our peers doesn't constitute a race to the bottom - maybe if we aimed to beat Singapore or Ireland, I'd see it that way.

If we kill loopholes and lower to 20%, I think it's possible our revenue might increase, not decrease.

Yeah, silicon valley is special. Our universities are special. And it's good to focus on making those core competencies of ours better, not worse. However there's very little our 35% corp tax rate contributes to making silicon valley special. It'd be just as or more special if we lower it to 20%. Our schools are funded by state governments, not federal. I don't think there's a very strong positive relationship between our 35% rate and the success of our universities.

I'd be interested in your argument that our 35% corp tax rate directly benefits silicon valley and our universities.

As far as luxury brands go, we overestimate our superiority at our own peril. Peter Thiel himself sees Silicon Valley's dominance diminishing over the next ten years, to no region in particular - though he mentions China as a country where there has been immense innovation recently.

Spotify, Skype, Tencent (Chinese version of FB with a higher valuation than FB), Waze, Shazam, etc all started outside silicon valley and outside the US for that matter.

Another reason it would make us more competitive - combined with killing loopholes, it would shift focus away from creative tax strategy, which creates zero value - to allow focus something that does create value.




J Boogie

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Re: Republican Tax Plan 2017
« Reply #617 on: November 21, 2017, 11:39:59 AM »

It makes sense to lower our corp tax rate to 20%.  The avg corp tax rate in the EU is 22.5%.

The average effective corporate tax rate in the U.S. is 19%.
Plus all of the work needed to get that rate keeps of financial professionals employed. ;)

Exactly my point - as low as 12% by some estimates. That's why I think a 20% tax rate would actually result in increased revenue, as companies would be disincentived to pursue loopholes as the financial benefit would greatly diminish. They couldn't justify hiring the best of the best tax lawyers to get them 1/4 of the tax break they've historically been able to achieve - and this is factoring no efforts to close loopholes.

Even Obama wanted to lower the corp tax rate - granted, not to 20, but 28, but still - he recognized 35% is problematic.

sokoloff

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Re: Republican Tax Plan 2017
« Reply #618 on: November 21, 2017, 11:45:48 AM »
If you wanted to start a modern day tech company, the type that would operate on a global scale, where would you do it? Well, the answer is easy, you do it in Silicon Valley. That's not hyperbole, it's the verifiable truth. Why would you do it in the country with the higher tax rate, in the state with the higher tax rate, in the city with the insane cost of living? Why wouldn't you start your tech company in Austria or Italy, China or India? Because you go to where the talent is and you are more than willing to pay that premium.
I would start as a Delaware company and hire employees in Silicon Valley, but if I were targeting a global company, I'd be sure to have a plan for how to make the company not a US company in the end, or at least not exclusively a US company. That's pretty much the standard playbook for VC-funded tech startups. I can think of far more Delaware startups than California startups, even those who are very heavy employers in California.

Peter Parker

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Re: Republican Tax Plan 2017
« Reply #619 on: November 21, 2017, 11:58:24 AM »
I agree the US is great. But we're not great because of our 35% corp tax rate, and adjusting it to match our peers doesn't constitute a race to the bottom - maybe if we aimed to beat Singapore or Ireland, I'd see it that way.

If we kill loopholes and lower to 20%, I think it's possible our revenue might increase, not decrease.

Yeah, silicon valley is special. Our universities are special. And it's good to focus on making those core competencies of ours better, not worse. However there's very little our 35% corp tax rate contributes to making silicon valley special. It'd be just as or more special if we lower it to 20%. Our schools are funded by state governments, not federal. I don't think there's a very strong positive relationship between our 35% rate and the success of our universities.

I'd be interested in your argument that our 35% corp tax rate directly benefits silicon valley and our universities.

As far as luxury brands go, we overestimate our superiority at our own peril. Peter Thiel himself sees Silicon Valley's dominance diminishing over the next ten years, to no region in particular - though he mentions China as a country where there has been immense innovation recently.

Spotify, Skype, Tencent (Chinese version of FB with a higher valuation than FB), Waze, Shazam, etc all started outside silicon valley and outside the US for that matter.

Another reason it would make us more competitive - combined with killing loopholes, it would shift focus away from creative tax strategy, which creates zero value - to allow focus something that does create value.

One thing that is rarely mentioned when it comes to US corporations is that we also have the greatest military in the world that protects their interests around the globe (think oil in the middle east).  This costs life and treasure....

I see taxes like insurance--when you have more to lose your premium should be higher.

sokoloff

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Re: Republican Tax Plan 2017
« Reply #620 on: November 21, 2017, 01:06:58 PM »
I see taxes like insurance--when you have more to lose your premium should be higher.
I don't think there's all that much debate on that point. The question is not whether they should be higher in absolute numbers, but whether they should be progressively higher as a percentage of <whatever>.

IOW, should they be twice as much when you have twice as much to lose, or more than twice as much?

DarkandStormy

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Re: Republican Tax Plan 2017
« Reply #621 on: November 21, 2017, 01:14:55 PM »

It makes sense to lower our corp tax rate to 20%.  The avg corp tax rate in the EU is 22.5%.

The average effective corporate tax rate in the U.S. is 19%.
Plus all of the work needed to get that rate keeps of financial professionals employed. ;)

Exactly my point - as low as 12% by some estimates. That's why I think a 20% tax rate would actually result in increased revenue, as companies would be disincentived to pursue loopholes as the financial benefit would greatly diminish. They couldn't justify hiring the best of the best tax lawyers to get them 1/4 of the tax break they've historically been able to achieve - and this is factoring no efforts to close loopholes.

Even Obama wanted to lower the corp tax rate - granted, not to 20, but 28, but still - he recognized 35% is problematic.

You want 20% but keep the deductions/credits?

If you don't think companies will still pay to pay as close to $0 in tax as possible, you don't understand corporations.  It's all about squeezing as many dollars as they can.

Plus, most companies are probably sitting on NOLs and Cap Losses to carry forward anyway.  It would be a mess.
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J Boogie

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Re: Republican Tax Plan 2017
« Reply #622 on: November 21, 2017, 01:24:09 PM »

It makes sense to lower our corp tax rate to 20%.  The avg corp tax rate in the EU is 22.5%.

The average effective corporate tax rate in the U.S. is 19%.
Plus all of the work needed to get that rate keeps of financial professionals employed. ;)

Exactly my point - as low as 12% by some estimates. That's why I think a 20% tax rate would actually result in increased revenue, as companies would be disincentived to pursue loopholes as the financial benefit would greatly diminish. They couldn't justify hiring the best of the best tax lawyers to get them 1/4 of the tax break they've historically been able to achieve - and this is factoring no efforts to close loopholes.

Even Obama wanted to lower the corp tax rate - granted, not to 20, but 28, but still - he recognized 35% is problematic.

You want 20% but keep the deductions/credits?

If you don't think companies will still pay to pay as close to $0 in tax as possible, you don't understand corporations.  It's all about squeezing as many dollars as they can.

Plus, most companies are probably sitting on NOLs and Cap Losses to carry forward anyway.  It would be a mess.

No, I want to close loopholes as well. My point is that when there isn't that much left to save, the juice isn't worth the squeeze. Of course corporations want to minimize their tax burdens as much as possible. But their efforts will be much different when there's far less to save. This effect will be compounded by the closing of loopholes.

« Last Edit: November 21, 2017, 01:27:42 PM by J Boogie »

J Boogie

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Re: Republican Tax Plan 2017
« Reply #623 on: November 21, 2017, 01:32:03 PM »
I agree the US is great. But we're not great because of our 35% corp tax rate, and adjusting it to match our peers doesn't constitute a race to the bottom - maybe if we aimed to beat Singapore or Ireland, I'd see it that way.

If we kill loopholes and lower to 20%, I think it's possible our revenue might increase, not decrease.

Yeah, silicon valley is special. Our universities are special. And it's good to focus on making those core competencies of ours better, not worse. However there's very little our 35% corp tax rate contributes to making silicon valley special. It'd be just as or more special if we lower it to 20%. Our schools are funded by state governments, not federal. I don't think there's a very strong positive relationship between our 35% rate and the success of our universities.

I'd be interested in your argument that our 35% corp tax rate directly benefits silicon valley and our universities.

As far as luxury brands go, we overestimate our superiority at our own peril. Peter Thiel himself sees Silicon Valley's dominance diminishing over the next ten years, to no region in particular - though he mentions China as a country where there has been immense innovation recently.

Spotify, Skype, Tencent (Chinese version of FB with a higher valuation than FB), Waze, Shazam, etc all started outside silicon valley and outside the US for that matter.

Another reason it would make us more competitive - combined with killing loopholes, it would shift focus away from creative tax strategy, which creates zero value - to allow focus something that does create value.

One thing that is rarely mentioned when it comes to US corporations is that we also have the greatest military in the world that protects their interests around the globe (think oil in the middle east).  This costs life and treasure....

I see taxes like insurance--when you have more to lose your premium should be higher.

Yeah, our military spending crossed my mind in regards to why we would need to charge more.

However, as has been mentioned, the avg corp tax rate is pretty low as tons of sheltering and tax law gymnastics is going on, so it seems we're not actually getting more revenue from our corps than other countries without massive militaries.


DarkandStormy

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Re: Republican Tax Plan 2017
« Reply #624 on: November 21, 2017, 01:49:58 PM »
No, I want to close loopholes as well. My point is that when there isn't that much left to save, the juice isn't worth the squeeze. Of course corporations want to minimize their tax burdens as much as possible. But their efforts will be much different when there's far less to save. This effect will be compounded by the closing of loopholes.

I could get behind a 20% corporate rate with no deductions or credits.  But it'll never pass - they'll throw a fit and lobby the **** out of Congress.  Not to mention all the tax prep work that goes on.
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Peter Parker

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Re: Republican Tax Plan 2017
« Reply #625 on: November 21, 2017, 01:51:06 PM »
I agree the US is great. But we're not great because of our 35% corp tax rate, and adjusting it to match our peers doesn't constitute a race to the bottom - maybe if we aimed to beat Singapore or Ireland, I'd see it that way.

If we kill loopholes and lower to 20%, I think it's possible our revenue might increase, not decrease.

Yeah, silicon valley is special. Our universities are special. And it's good to focus on making those core competencies of ours better, not worse. However there's very little our 35% corp tax rate contributes to making silicon valley special. It'd be just as or more special if we lower it to 20%. Our schools are funded by state governments, not federal. I don't think there's a very strong positive relationship between our 35% rate and the success of our universities.

I'd be interested in your argument that our 35% corp tax rate directly benefits silicon valley and our universities.

As far as luxury brands go, we overestimate our superiority at our own peril. Peter Thiel himself sees Silicon Valley's dominance diminishing over the next ten years, to no region in particular - though he mentions China as a country where there has been immense innovation recently.

Spotify, Skype, Tencent (Chinese version of FB with a higher valuation than FB), Waze, Shazam, etc all started outside silicon valley and outside the US for that matter.

Another reason it would make us more competitive - combined with killing loopholes, it would shift focus away from creative tax strategy, which creates zero value - to allow focus something that does create value.

One thing that is rarely mentioned when it comes to US corporations is that we also have the greatest military in the world that protects their interests around the globe (think oil in the middle east).  This costs life and treasure....

I see taxes like insurance--when you have more to lose your premium should be higher.

Yeah, our military spending crossed my mind in regards to why we would need to charge more.

However, as has been mentioned, the avg corp tax rate is pretty low as tons of sheltering and tax law gymnastics is going on, so it seems we're not actually getting more revenue from our corps than other countries without massive militaries.

Which is my point--Why provide Corporations with a tax cut when we provide them with:

1.  The highest educated workforce in the world
2.  The highest investment in research and development
3.  The protections of  our laws (patents etc)
4.  And the might and protection of our military around the world

Maybe they should pay more for all of this rather than the 19% effective rate that they are paying now.  Maybe we should tax products made by US corporations that produce products oversees (so they don't have to pay american wages) at a higher rate....when we are the ones that are shouldering the costs for their protection.

DumpTruck

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Re: Republican Tax Plan 2017
« Reply #626 on: November 21, 2017, 02:07:24 PM »
Yeah, but why would the corporations, which control the government, offer to tax themselves more? That doesn't make sense does it?

J Boogie

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Re: Republican Tax Plan 2017
« Reply #627 on: November 21, 2017, 02:25:33 PM »
Yeah, but why would the corporations, which control the government, offer to tax themselves more? That doesn't make sense does it?

Corporations are happy to take advantage of the various loopholes they can find at any given time, naturally. They'll lobby and study to have as much tax avoidance as possible.

However, all the moving parts that contribute to this strategy make it more difficult for corporations to forecast how risky their new investments will be. There's a lot of value in having a stable and predictable tax rate when it comes to making long term financial decisions.

I disagree with your statement that corporations control the govt. It lacks nuance and totally lets us off the hook. Corporations didn't vote trump in, we did. Corporations didn't elect the congress and the senate, we did. Sure they lobby and litigate. It's concerning no doubt, but their influence does not equal control. Corruption is much lower in the US than in the developing world and we're not much more corrupt than other developed nations.

A Definite Beta Guy

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Re: Republican Tax Plan 2017
« Reply #628 on: November 21, 2017, 02:40:16 PM »
Giving consumers more money works to boost demand, but you don't need more demand except in cases where the economy is in recession. It's more a special case than the general rule.

All economic growth in the long-run comes from innovation, resources, and capital deepening....IE, the supply side. Not all tax cuts are equal, and if you are going to go for a supply-side tax cut, you should target the people who actually are most likely to produce more with a tax reduction. To give a labor economics example, men are not as sensitive to the tax rate as women are. Men just work per their social-norm required hours. Women are more likely to have a decision between working part-time, full-time, or not at all, and are more likely to work when the tax rate is lower.
Either way, though, reducing tax cuts on the middle class would be considered less important than cutting taxes on innovators, savers, and investors.

Most conservative economists will point out that the phase-outs of government spending create marginal tax rates close to or over 100% for lower-income families, but that's not the middle class either.


Quote
I hope you're just saying that since it's the basis of supply-side economics and not something you actually believe. In the economic literature, supply-side economics is given about as much credibility as homeopathy is by Western medicine.
Not really. This is just a Democratic political attack. There's no one that believes in the extreme claims that tax cuts pay for themselves, but that's totally different from everyone assuming tax cuts are a bad idea and tax hikes pose no problem at all.

You're right, we don't need more demand right now, and with corporations sitting on record levels of cash reserves, we certainly don't need to give them more tax breaks to help them stimulate the current record bull market. So, why the hell are we cutting taxes right now at all? Indeed, we want to stimulate the growth of our economy by reducing the burden on innovators, so let's leverage a tax on tuition credits that will all but destroy America's amazing system of higher eduction, the source of which has brought most of the expansion of our modern information-age economy. For all of the things you name as important, this tax bill addresses none of those issues and actively penalizes others. But at least it will add 2 trillion to the debt once the temporary tax cuts are made permanent. All for what?

So you support sending more people to graduate education to expand the economy? And you think raising taxes on graduate students will reduce the number of graduate students and therefore reduce economic growth. Because that's really only one step away from supply-side economics, and because graduate students are wealthier than the average American, it is also trickle-down economics.

Anyways, the idea behind the tax isn't necessarily to pump more money into the economy to make the economy grow faster. It's to make investment and innovation more attractive. If you have a hypothetical investment that yields $1,000,000 over the next 10 years, you make $5.8 million at a tax rate of 35%, and $7.2 million at a tax rate of 20%. All investments that cost between $5.8 million and $7.2 million suddenly become viable investment projects. The government is also basically subsidizing any project that were going to be pursued anyways, but there are some projects that become better.

If the tax cut actually "stimulated" a full-employment economy, the Fed would have to raise interest rates to offset the stimulus.


Panda,
"Innovation" is hard to measure, but no one denies that it exists. You can look into Krugman's "The Myth of the Asian Miracle" for a discussion on this from a liberal economist, where he argues that Asian economies have accomplished all their economic growth by input gains, rather than actual productivity improvements. The slowdown in both the Korean and Japanese economies bolsters that point, IMO.

Your assertion that NO ONE takes supply-side economics just isn't true. Here's Gregory Mankiw in the NY Times, who gives an off-hand comment to how he thinks the world works:
https://www.nytimes.com/2017/06/02/upshot/a-tax-cut-might-be-nice-but-remember-the-deficit.html
Quote
A key question is how revenue neutrality is to be judged. Traditional analyses of the effects of tax proposals rely on what is known as static scoring, a method based on the simple but dubious assumption that changes in the tax code do not alter the path of national income. An alternative approach, called dynamic scoring, accounts for the possibility that lower tax rates will promote growth.

Dynamic scoring is potentially more accurate, but it is also more easily abused by those who want to promote their policies with an unhealthy dose of wishful thinking. Tax cuts rarely pay for themselves. My reading of the academic literature leads me to believe that about one-third of the cost of a typical tax cut is recouped with faster economic growth.
He's on the record as saying a tax cut will recover up to 1/3 of the revenue lost through increased economic growth.

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Re: Republican Tax Plan 2017
« Reply #629 on: November 21, 2017, 02:57:03 PM »

It makes sense to lower our corp tax rate to 20%.  The avg corp tax rate in the EU is 22.5%.

The average effective corporate tax rate in the U.S. is 19%.

A high statutory tax rate, with a low average effective tax rate because of lots of special interest deductions and credits and loopholes is a terrible system that is going to great all sorts of unintended economic distortions and perverse incentives.

If the approach to tax cuts was to eliminate deductions/credits/loopholes, and use the increase in revenue to reduce statutory tax rates in a revenue neutral fashion (so that the average effective corporate tax rate would stay the same), I think this part of the bill would get a lot more support. I'd support it anyway.

But that's not what this tax bill does.
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A Definite Beta Guy

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Re: Republican Tax Plan 2017
« Reply #630 on: November 21, 2017, 03:50:39 PM »
Even accounting for the loopholes, which most nations have, the US still has among the highest corporate tax rates.
https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/52419-internationaltaxratecomp.pdf

I don't think you can eliminate the loopholes. Here's a breakdown of the tax loopholes companies use to not pay tax:
https://taxfoundation.org/corporate-and-individual-tax-expenditures/
1. Deferral of Income from Controlled Foreign Corporations ($65 billion) - The US does not tax income that is earned in a foreign nation and remains in a foreign nation. This is by far the largest "corporate tax loophole." But virtually every nation has the same system. It's why the UK is leading the charge against Ireland and Switzerland as tax havens. You can't realistically stop this, and attempting to do so would turn the US into a pariah worse than Trump.

2. Deduction for US production activities. - Good luck convincing Congress to close this one.

3. Exclusion of income earned on muni bonds - Utterly standard, applies to everyone. The same logic applies to giving it to both GE and myself.

4. Accelerated Depreciation - This basically is just a tax deduction to encourage investment. It means instead of straight-line depreciating a 5 year asset by 20% each year, you can depreciate  20% in Year 1, 60% in Year 2, 10% in Year 3, 5% Year 4, 5% Year 5. It affects government finances in a present value of money sense, but the government is just deferring income in a non-preferential manner. It's not really foregoing income.


There's other ones, and they aren't trivial in total, but the big deductions aren't really closeable. Obama's tax reform was to charge a minimum tax on foreign earnings (which will piss off practically everyone), and selectively targeting oil and gas companies to eliminate certain deductions. The last easy loopholes to close were in 1986, and the hit to real estate in the 1986 tax reform probably made sure multi-family real estate investment didn't recover for decades:
https://fred.stlouisfed.org/series/C292RC1Q027SBEA



maizeman

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Re: Republican Tax Plan 2017
« Reply #631 on: November 22, 2017, 08:52:26 AM »
So you support sending more people to graduate education to expand the economy? And you think raising taxes on graduate students will reduce the number of graduate students and therefore reduce economic growth. Because that's really only one step away from supply-side economics, and because graduate students are wealthier than the average American, it is also trickle-down economics.
I want to see your source for graduate students being wealthier than the average American. Perhaps you meant that graduate degree holders are wealthier than the average American?

This is one of those issues where both sides get to feel like they're right.

On the one hand, grad students are demonstrably quite poor. Many are supporting two person households on $18,000-$24,000/year. On top of this they are often expected to absorb the cost of things like traveling to meetings (registration, hotel, and airfare can run $1,000-$2,000) for several months before getting reimbursed by the university.

On the other hand, domestic grad students are much more likely to come from affluent family backgrounds, in part because people who come from poorer backgrounds tend to feel a lot more family pressure to go out and start earning significant amounts of money right away once they complete their undergrad degree. If you look at physical, life, and social scientists today, their parents were in about the 70th percentile of household incomes when they were children, and, on average, they tend to end up back around the 70th percentile of household incomes themselves after they go out into the world and find real jobs.

Both the above paragraphs are true. So it boils down to whether we're judging people based on the economic circumstances of their parents or based on their own economic circumstances. (With the caveat that if we decide grad students have rich parents and can afford to pay more taxes, it'll also mean even fewer people without rich parents end up going to grad school).
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Peter Parker

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Re: Republican Tax Plan 2017
« Reply #632 on: November 22, 2017, 09:39:53 AM »
Back to reality--This is going to be a cluster F*ck.  Murkowski seems to have given in.  I've called/written the other reps that are on the fence--hoping this doesn't go through.  What a royal screw job.

https://www.accountingtoday.com/articles/tax-reform-bill-odds-improve-as-key-senator-lisa-murkowski-backs-health-mandate-repeal


A Definite Beta Guy

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Re: Republican Tax Plan 2017
« Reply #633 on: November 22, 2017, 10:01:47 AM »
So you support sending more people to graduate education to expand the economy? And you think raising taxes on graduate students will reduce the number of graduate students and therefore reduce economic growth. Because that's really only one step away from supply-side economics, and because graduate students are wealthier than the average American, it is also trickle-down economics.
I want to see your source for graduate students being wealthier than the average American. Perhaps you meant that graduate degree holders are wealthier than the average American?

Quote
Anyways, the idea behind the tax isn't necessarily to pump more money into the economy to make the economy grow faster. It's to make investment and innovation more attractive. If you have a hypothetical investment that yields $1,000,000 over the next 10 years, you make $5.8 million at a tax rate of 35%, and $7.2 million at a tax rate of 20%. All investments that cost between $5.8 million and $7.2 million suddenly become viable investment projects. The government is also basically subsidizing any project that were going to be pursued anyways, but there are some projects that become better.
The problem is that for that claim to be true you are also arguing that companies are refraining from investing because the current yields aren't high enough. However, CEO's recently said they aren't really planning on increasing investments if the tax rates go down. Turns out that you really need to have something to invest in.

Quote
Your assertion that NO ONE takes supply-side economics just isn't true. Here's Gregory Mankiw in the NY Times, who gives an off-hand comment to how he thinks the world works:
https://www.nytimes.com/2017/06/02/upshot/a-tax-cut-might-be-nice-but-remember-the-deficit.html
Quote
A key question is how revenue neutrality is to be judged. Traditional analyses of the effects of tax proposals rely on what is known as static scoring, a method based on the simple but dubious assumption that changes in the tax code do not alter the path of national income. An alternative approach, called dynamic scoring, accounts for the possibility that lower tax rates will promote growth.

Dynamic scoring is potentially more accurate, but it is also more easily abused by those who want to promote their policies with an unhealthy dose of wishful thinking. Tax cuts rarely pay for themselves. My reading of the academic literature leads me to believe that about one-third of the cost of a typical tax cut is recouped with faster economic growth.
He's on the record as saying a tax cut will recover up to 1/3 of the revenue lost through increased economic growth.
I didn't say that no one takes it, I said that,

In the economic literature, supply-side economics is given about as much credibility as homeopathy is by Western medicine.

Sorry, I meant that graduate degree holders are wealthier than the average American. However, the average graduate student makes $30,000 per year per Glassdoor, so a household of two average graduate students also exceeds the median household income in the US. Whether you want to compare average to median is up to you....

Education spending tends to favor well-off Americans. This is why Obama tried (unsuccessfully) to eliminate the tax loophole that allows wealthy families to save for their children's college education. It's just trickle-down economics, with a group that happens to be more liked than Paris Hilton.

I disagree with your statement about supply-side economics. N Gregory Mankiw is not a random guy. He is one of the most respected economists on the planet, and probably is among the top 100 respected economists in history. The only go with more name recognition is probably Paul Krugman. I think he works mostly with stabilization policies, but he has papers on tax policies as well, and supports no capital income tax, a possibly LOWER tax for the richest Americans, and wants a consumption tax.  That's not exactly unusual for a right-leaning economist. I am sure Eugene Fama, John Taylor, Gary Becker, etc. all hold/held similar views (though none address tax and growth specifically in their work, afaik).



simonsez

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Re: Republican Tax Plan 2017
« Reply #634 on: November 22, 2017, 10:23:37 AM »
However, the average graduate student makes $30,000 per year per Glassdoor, so a household of two average graduate students also exceeds the median household income in the US. Whether you want to compare average to median is up to you....
I think that figure is PhD only.  PhD students are much more likely than Master's to have a stipend these days.  And yes, median is a lot better than average.  For instance, if you have 9 full-time PhD students while getting a stipend of 20k per year while there is a part-time student working making 110k with a stipend of 10k (still a 30k average), it can skew things.

FWIW, I'm not 100% opposed to the idea of taxing these benefits to grad students in a vacuum, I just don't like them being siphoned off to make up the partial difference on estate taxes and corporate rates.  Grad students provide cheap labor for a lot of research and innovative work all the while getting experience themselves (which they can take with them to corporations).  I'm not sure we want to punish or dis-incentivize this arrangement too much.

frugalecon

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Re: Republican Tax Plan 2017
« Reply #635 on: November 22, 2017, 12:02:24 PM »
Back to reality--This is going to be a cluster F*ck.  Murkowski seems to have given in.  I've called/written the other reps that are on the fence--hoping this doesn't go through.  What a royal screw job.

https://www.accountingtoday.com/articles/tax-reform-bill-odds-improve-as-key-senator-lisa-murkowski-backs-health-mandate-repeal

My spidey sense is tingling also.

wenchsenior

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Re: Republican Tax Plan 2017
« Reply #636 on: November 22, 2017, 12:18:22 PM »
Oh yeah, I think the odds are they definitely pass SOMETHING.  They have to or they will have literally nothing to show for a year of complete GOP control. Doesn't matter at this point how shitty the bill actually is, as long as it cuts corporate taxes.

PathtoFIRE

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Re: Republican Tax Plan 2017
« Reply #637 on: November 22, 2017, 12:25:12 PM »
Oh they got something done, something their base will continue to reward them for for a while.


jean

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Re: Republican Tax Plan 2017
« Reply #638 on: November 22, 2017, 12:33:23 PM »
Oh yeah, I think the odds are they definitely pass SOMETHING.  They have to or they will have literally nothing to show for a year of complete GOP control. Doesn't matter at this point how shitty the bill actually is, as long as it cuts corporate taxes.

It seems like they are in a lose-lose situation for the GOP here. However, the "lose" of not passing anything is a more certain loss than passing something that is unpopular. They can probably spin passing something unpopular, and people might forget by 2018 elections, or they can remind people that they got a $1000 tax cut and they can buy a new car or renovate their kitchen with that.  (Ha. ha. ha.)

Most average americans don't want this tax reform, but that isn't how our government works.  The GOP could take a little more time and pass something more popular (or maybe tax reform is bound to be unpopular because someone has to give something up?) but they probably don't want to risk any delays.  Rushing things through seems to be working...

wenchsenior

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Re: Republican Tax Plan 2017
« Reply #639 on: November 22, 2017, 12:33:55 PM »
Oh they got something done, something their base will continue to reward them for for a while.



True.  I wish the liberal base would get half as motivated over things like judicial appointments as they do over minority, etc., civil rights issues.  The right seems to never lose track of the bigger more consequential over longer periods of time (ETA for clarity) battles.  I believe (someone might correct me) that there have been an unprecedented number of super conservative judicial appointments under Trump. That very likely will be his big legacy. Possibly his only legacy.

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Re: Republican Tax Plan 2017
« Reply #640 on: November 22, 2017, 12:39:26 PM »
Oh yeah, I think the odds are they definitely pass SOMETHING.  They have to or they will have literally nothing to show for a year of complete GOP control. Doesn't matter at this point how shitty the bill actually is, as long as it cuts corporate taxes.

Honestly I wish they'd just lower corporate taxes and leave everything else alone.  Deficit spending is not the end of the world, and it's easier to fix later.

TexasRunner

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Re: Republican Tax Plan 2017
« Reply #641 on: November 22, 2017, 12:44:14 PM »
Oh yeah, I think the odds are they definitely pass SOMETHING.  They have to or they will have literally nothing to show for a year of complete GOP control. Doesn't matter at this point how shitty the bill actually is, as long as it cuts corporate taxes.

It seems like they are in a lose-lose situation for the GOP here. However, the "lose" of not passing anything is a more certain loss than passing something that is unpopular. They can probably spin passing something unpopular, and people might forget by 2018 elections, or they can remind people that they got a $1000 tax cut and they can buy a new car or renovate their kitchen with that.  (Ha. ha. ha.)

Most average americans don't want this tax reform, but that isn't how our government works.  The GOP could take a little more time and pass something more popular (or maybe tax reform is bound to be unpopular because someone has to give something up?) but they probably don't want to risk any delays.  Rushing things through seems to be working...

Do I need to remind anyone how rapidly Obama Care was reamed through the House....?

I disagree with your statement about supply-side economics. N Gregory Mankiw is not a random guy. He is one of the most respected economists on the planet, and probably is among the top 100 respected economists in history. The only go with more name recognition is probably Paul Krugman. I think he works mostly with stabilization policies, but he has papers on tax policies as well, and supports no capital income tax, a possibly LOWER tax for the richest Americans, and wants a consumption tax.  That's not exactly unusual for a right-leaning economist. I am sure Eugene Fama, John Taylor, Gary Becker, etc. all hold/held similar views (though none address tax and growth specifically in their work, afaik).

Don't worry, at least one of us read your post.  Frustrating that the echo chamber still exists, but if those discussing this topic can't 'prove you wrong', then they have no choice but to try and discredit your opinion by calling it psudo-science.  That way, they can happily continue to ignore other valid opinions! :)

Haven't heard of some of these, you have given me some more reading material.  Thanks!

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FIREchiefsr

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Re: Republican Tax Plan 2017
« Reply #642 on: November 22, 2017, 12:48:08 PM »
Most average americans don't want this tax reform, but that isn't how our government works.  The GOP could take a little more time and pass something more popular (or maybe tax reform is bound to be unpopular because someone has to give something up?) but they probably don't want to risk any delays.  Rushing things through seems to be working...

I believe that "most average americans" have paid little attention to this and are more concerned with how they're going to pay this month's bills.  The majority don't like our president, so will likely disagree with anything associated with his name.
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Scortius

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Re: Republican Tax Plan 2017
« Reply #643 on: November 22, 2017, 12:52:20 PM »
I feel like we got a bit sidetracked with this discussion of what exactly supply-side economics are and just how rich or poor are domestic grad students. Neither of those really had anything to do with the points I was trying to make. There's a difference between raising or lowering taxes on grad students vs. counting tuition credits as income and essentially decimating the entire research community in the country. As an aside, I've never heard of a $30k grad stipend, even in STEM fields. Not to say they don't exist, but that would be exceptional to me.

What I want to get back to with all this talk of supply-side economics and the desire to spur economic growth through a lowering of the corporate tax rate is this idea that 1) do corporations really need tax relief right now to spur investment and 2) do we actually want economic expansion to be our primary goal. Republicans right now seem to speak to the idea that we need this plan to stimulating corporate well-being and increasing the GDP and create more jobs. Yet, currently, we are sitting at record low unemployment, record high market valuations, and corporations are sitting on record piles of cash. What are we trying to fix here? Do Apple and Walmart really need a lowering of their tax rate or a repatriation event to allow them to hire more people or invest in more capital? It seems like Apple's limitations are the supply of enough highly educated engineers to design their products and the demand of the billions of people who buy their new phone every year. With record profit margins and cash reserves, it seems that Apple's first problem, the ability to recruit and hire more talented people (and invest in new facilities) is not a problem at all. Rather, making sure the people we complain about on this site have enough money to continue to pay for their thousand dollar phones is certainly an potential threat to their business projections. The same with Walmart. What do they need relief for? What would they do with the extra money? They certainly wouldn't give their employees a better wage as they don't have to in order to hire unskilled labor to man their stores. The profits would like go back to the shareholders, the people who are wealthy enough to buy and hold stock in the first place. Would it expand the economy? Sure.  Would it increase the standard of living for a broad base of Americans? Absolutely not.

And that's the catch.  All this talk about expanding the economy continues to ignore one of the most well-known facts. That all the gains from the growth of the economy over the last 20 years has gone to owners of capital, not to labor (the people Republicans claim to care about the most). So yes, we can grow the economy, and certainly it's a worthy goal, but no, that growth is not helping the people who most need help, and that's a problem. You can call it socialism or class warfare or demand-side economics or whatever, but in this time of record profits and economic growth where wealth inequality is nearing the highest it's ever been, why do we need to now focus on those who have gained immensely from this process rather than those who have been completely left behind? There has to be a middle ground somewhere between economic expansion and quality of life improvements for middle- and lower-class America. That is not what this tax bill is about.

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Re: Republican Tax Plan 2017
« Reply #644 on: November 22, 2017, 01:55:25 PM »
Back to reality--This is going to be a cluster F*ck.  Murkowski seems to have given in.

Murkowski was bought when they offered her the chance to open ANWR to drilling.  Everyone in Alaska desperately wants to drill for oil in the arctic, because each Alaskan citizen gets a dividend check from the oil companies just for being an Alaska resident.  Murkowski has previously opposed dismantling the ACA, but oil drilling in the arctic has always been her number one issue and it will trump everything else. 

So I think she'll fold, and vote for the tax bill.  Horse trading at its finest.

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Re: Republican Tax Plan 2017
« Reply #645 on: November 22, 2017, 02:43:57 PM »
I feel like we got a bit sidetracked with this discussion of what exactly supply-side economics are and just how rich or poor are domestic grad students. Neither of those really had anything to do with the points I was trying to make. There's a difference between raising or lowering taxes on grad students vs. counting tuition credits as income and essentially decimating the entire research community in the country. As an aside, I've never heard of a $30k grad stipend, even in STEM fields. Not to say they don't exist, but that would be exceptional to me.

What I want to get back to with all this talk of supply-side economics and the desire to spur economic growth through a lowering of the corporate tax rate is this idea that 1) do corporations really need tax relief right now to spur investment and 2) do we actually want economic expansion to be our primary goal. Republicans right now seem to speak to the idea that we need this plan to stimulating corporate well-being and increasing the GDP and create more jobs. Yet, currently, we are sitting at record low unemployment, record high market valuations, and corporations are sitting on record piles of cash. What are we trying to fix here? Do Apple and Walmart really need a lowering of their tax rate or a repatriation event to allow them to hire more people or invest in more capital? It seems like Apple's limitations are the supply of enough highly educated engineers to design their products and the demand of the billions of people who buy their new phone every year. With record profit margins and cash reserves, it seems that Apple's first problem, the ability to recruit and hire more talented people (and invest in new facilities) is not a problem at all. Rather, making sure the people we complain about on this site have enough money to continue to pay for their thousand dollar phones is certainly an potential threat to their business projections. The same with Walmart. What do they need relief for? What would they do with the extra money? They certainly wouldn't give their employees a better wage as they don't have to in order to hire unskilled labor to man their stores. The profits would like go back to the shareholders, the people who are wealthy enough to buy and hold stock in the first place. Would it expand the economy? Sure.  Would it increase the standard of living for a broad base of Americans? Absolutely not.

And that's the catch.  All this talk about expanding the economy continues to ignore one of the most well-known facts. That all the gains from the growth of the economy over the last 20 years has gone to owners of capital, not to labor (the people Republicans claim to care about the most). So yes, we can grow the economy, and certainly it's a worthy goal, but no, that growth is not helping the people who most need help, and that's a problem. You can call it socialism or class warfare or demand-side economics or whatever, but in this time of record profits and economic growth where wealth inequality is nearing the highest it's ever been, why do we need to now focus on those who have gained immensely from this process rather than those who have been completely left behind? There has to be a middle ground somewhere between economic expansion and quality of life improvements for middle- and lower-class America. That is not what this tax bill is about.

+1

bdylan

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Re: Republican Tax Plan 2017
« Reply #646 on: November 22, 2017, 02:59:17 PM »
I'd just wish folks would remember a fundamental rule of tax policy: corporations don't pay taxes, people pay taxes. 

A corporate rate cut will benefit individuals in one of three ways:

1. Increased returns to shareholders
2. Increased wages for workers
3. Reduced prices for consumers.

The incidence of corporate taxes is a matter of dispute in the economic literature.  My own personal thought is that the incidence is going to fall on different groups of people differently depending on the industry.

ixtap

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Re: Republican Tax Plan 2017
« Reply #647 on: November 22, 2017, 03:00:47 PM »
I'd just wish folks would remember a fundamental rule of tax policy: corporations don't pay taxes, people pay taxes. 

A corporate rate cut will benefit individuals in one of three ways:

1. Increased returns to shareholders
2. Increased wages for workers
3. Reduced prices for consumers.

The incidence of corporate taxes is a matter of dispute in the economic literature.  My own personal thought is that the incidence is going to fall on different groups of people differently depending on the industry.

I think it is naive to expect 2 or 3. The opposite might be true when taxes go up, but why would the give up the increased profits of taxes going down?

bdylan

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Re: Republican Tax Plan 2017
« Reply #648 on: November 22, 2017, 03:08:12 PM »
I'd just wish folks would remember a fundamental rule of tax policy: corporations don't pay taxes, people pay taxes. 

A corporate rate cut will benefit individuals in one of three ways:

1. Increased returns to shareholders
2. Increased wages for workers
3. Reduced prices for consumers.

The incidence of corporate taxes is a matter of dispute in the economic literature.  My own personal thought is that the incidence is going to fall on different groups of people differently depending on the industry.

I think it is naive to expect 2 or 3. The opposite might be true when taxes go up, but why would the give up the increased profits of taxes going down?

Well, say you're in a highly competitive industry (say fast food).  McDonalds can now go back to the dollar menu and maintain the exact same profit margins, plus, steal business away from Burger King and Wendy's.  How do you think Burger King and Wendy's will react? 

Peter Parker

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Re: Republican Tax Plan 2017
« Reply #649 on: November 22, 2017, 03:57:44 PM »
I'd just wish folks would remember a fundamental rule of tax policy: corporations don't pay taxes, people pay taxes. 

A corporate rate cut will benefit individuals in one of three ways:

1. Increased returns to shareholders
2. Increased wages for workers
3. Reduced prices for consumers.

The incidence of corporate taxes is a matter of dispute in the economic literature.  My own personal thought is that the incidence is going to fall on different groups of people differently depending on the industry.

I think it is naive to expect 2 or 3. The opposite might be true when taxes go up, but why would the give up the increased profits of taxes going down?

Well, say you're in a highly competitive industry (say fast food).  McDonalds can now go back to the dollar menu and maintain the exact same profit margins, plus, steal business away from Burger King and Wendy's.  How do you think Burger King and Wendy's will react?

Probably by taking tax savings, investing in automation, firing all the workers ,and serve their crappy product to those lucky few who still have jobs...

The point is, as Scortius points out, this will not increase wages as the Republicans like to pretend.  Did you not see all the CEOs at the round table say they would not invest in their workers?
« Last Edit: November 22, 2017, 04:04:10 PM by Peter Parker »