•   
  •   
  •   

Opinion GOP tax plan will make economy worse, not better

22:35  14 november  2017
22:35  14 november  2017 Source:   usatoday.com

Top Saudi official ousted, princes reportedly arrested

  Top Saudi official ousted, princes reportedly arrested Saudi Arabia's King Salman has removed a prominent prince who headed the National Guard, replaced the economy minister and announced the creation of a new anti-corruption committee.The Saudi-owned Al-ArabiyaThe Saudi-owned Al-Arabiya news channel also reported late Saturday that dozens of princes and former ministers were detained in a new anti-corruption probe headed by the kingdom's powerful Crown Prince Mohammed Salman. No further details were immediately given.

GOP tax plan won't 'unleash' economic growth. It'll make things worse . Jared Bernstein Published 6:00 a.m. ET Nov. By deeply worsening our fiscal outlook, it will block us from adopting policies with a much better chance of helping those who could use the help — none of whom, to state the obvious

GOP tax plan will make economy worse , not better . In an analysis that’s been widely pilloried, including by the economists whose work they cite, President Trump’s economics team claims that their big corporate rate cut will deliver at least ,000 to every family.

Outside of the Department of Commerce on Nov. 10, 2017. © Brendan Smialowski, AFP/Getty Images Outside of the Department of Commerce on Nov. 10, 2017.

Editor’s note: The opinions in this article are the author’s, as published by our content partner, and do not necessarily represent the views of MSN or Microsoft.

The debate over the Republican tax cut plan comes down to this: Opponents view it as a wasteful giveaway of much-needed government revenue to the wealthiest households and businesses that need it the least. Supporters argue that it will unleash significant economic growth, enough to offset its costs.

Full disclosure: I’m in the opposition. The idea of adding $1.5 trillion to the national debt over the next decade, of which almost half (47% of cuts in 2017) goes to the wealthiest 1% (average income: $3.6 million), seems totally misguided. No question, our code needs improvement, especially on the corporate side. But this plan has nothing to do with genuine tax reform.

Half a Tax Reform

  Half a Tax Reform A pro-growth business plan but no growth on the individual side.House Republicans released their tax bill at long last Thursday, and we wish we could say it repeats the Reagan reform of 1986. It isn’t close. The Ways and Means draft is instead a much-needed and pro-growth reform of business taxes marred by a mess on individual taxes that makes that part of the code even worse than it is now.

And the GOP Tax Plan Will Only Make It Worse . Our economy has plenty of problems, but too little cash at the top is not one of them. Tax cuts for corporations and the rich—along with a suite of policies pushed over 40 years—have shifted how, when and where corporations and individuals decide to

This is precisely what analysts predicted would happen as the GOP tax plan made its way through Congress last year. The GOP tax plan will exacerbate these trends, increasing shareholder payouts at the expense of creating jobs. All of this is unfair, but it's also bad economics .

Real reform would pay for lower rates by closing loopholes, and would be revenue neutral — the government would take in at least the same percentage of Gross Domestic Product in tax revenues as it does now. The Republican plan, by contrast, loses revenue while opening up a fat new loophole that encourages high-end earners to reclassify their income as profits from a pass-through business.

And what about the advocates’ arguments regarding unleashed growth? They turn out to be the same evidence-free, trickle-down sales job tax cutters have been making since Ronald Reagan was president.

Economic growth is a function of two broad factors: labor force and productivity growth, the latter being how efficiently workers produce the goods and services we want and need. In the last decade, both have significantly slowed. For the labor force, that’s largely due to our aging demographics. There’s nothing the tax code can do about the growing share of retirees.

The Case for a Big GOP Tax Cut Is Falling Apart

  The Case for a Big GOP Tax Cut Is Falling Apart The Republican Party has long billed itself as being for family values, for the dignity of work, for lower taxes, and (at least, as the minority party) for balanced budgets. The House GOP tax bill cuts against all of these positions. It would raise taxes on about one-third of the middle class by 2027. By eliminating the estate tax, it would benefit heirs of large estates, even if they don’t work a day in their life. Meanwhile, by eliminating some tax breaks often claimed by higher earners, the plan would raise taxes on many upper-middle class households. As a result, the bill would ironically privilege the “idle rich” over the “working rich.

Economic theory doesn’t support claims made by supporters of the GOP tax plan . Below, we ’ ll lay out why the TCJA is bad policy regardless of whether or not today’s economy remains demand-constrained. Corporate tax cuts don’t rate any better on this core, for the same reasons.

Unfortunately, good news usually sometimes comes with bad . All that money that China gets from us comes right back into the US economy . This is why the GOP tax plan could enrage Trump and his supporters.

Productivity is a more plausible target, because if businesses have higher after-tax profits, they could invest in more productive equipment or worker training. But here’s the thing: We have a long, empirical record showing little to no correlation between tax changes and business investment. I could easily cite the statistics, but better to cut to the chase and quote Warren Buffett, who knows a little something about investing: “I have worked with investors for 60 years and I have yet to see anyone … shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off.”

Note also that U.S. businesses have been highly profitable for years now — that’s one reason the stock market’s been crushing it — and the cost of investment capital (the rate of interest) is very low. If firms wanted to make more productive investments, nothing’s stopping them, and there’s no reason to think a huge rate cut, from 35% to 20%, is going to do anything other than further boost their profits and share prices. In fact, that expectation is another reason U.S. equities have been on such a tear.

Opinions | The GOP tax plan will be a massive political nightmare for Republicans

  Opinions | The GOP tax plan will be a massive political nightmare for Republicans They might be able to pass it, but can they sell this turkey to the public?The Republicans’ theory about their tax-cut bill goes like this. We absolutely have to pass it, or else our base will be disgusted and our donors will abandon us. The substance doesn’t matter — we’ll get it past complex Senate rules, and even if some provisions look troubling, after it passes we can have a triumphal Rose Garden ceremony and proclaim we’ve delivered prosperity for all. In coming months and years, people won’t remember the details, as long as we keep saying “We cut taxes” over and over again.

137 Economists Sign Open Letter Endorsing GOP Tax Plan . “ Economic growth will accelerate if the Tax Cuts and Jobs Act passes, leading to more jobs, higher wages, and a better standard of living for the American people.

The rotten core of the US tax system is how it treats overseas business earnings. Large American companies hold nearly trillion overseas, and it’s not taxed as long as the money stays abroad. Republicans want to make that tax holiday permanent.

What about wage growth? In an analysis that’s been widely pilloried, including by the economists whose work they cite, President Trump’s economics team claims that their big corporate rate cut will deliver at least $4,000 to every family. That’s a lot of chickens in every pot. But this claim depends on a chain of many weak links: The cuts will boost investment (nope), that, in turn, will boost productivity (maybe), and faster productivity will boost middle-class wages.

That last link is particularly problematic, as important work by the Economic Policy Institute has shown a long and persistent de-coupling of productivity growth and middle-class compensation.

All of which begs the question: Is there a tax plan that would boost growth and wages?

Believe it or not, the answer to the wage part is simple. The U.S. has an extremely effective pro-work, anti-poverty program called the Earned Income Tax Credit which significantly subsidizes the earnings of low-income working parents. Expanding the credit to more workers and increasing its value would be a surefire way — there’s no links in this chain — to raise the pay of low-income workers.

The Republican plan is to take away your health care to pay for their tax cuts

  The Republican plan is to take away your health care to pay for their tax cuts Over the summer, we saw a health care repeal bill that cut taxes for the wealthy by hundreds of billions of dollars. Now we have a tax cut bill paid for by increasing the ranks of the uninsured by 13 million, raising premiums for the middle-class, and cutting Medicare. For Republicans, it seems that health care for middle-class families is little more than a piggy bank to be used to pay back their wealthy donors with enormous tax breaks.On Tuesday, Republicans announced that they would be including repeal of the individual mandate in their plan to cuts taxes for the wealthy.

Cars with the best and worst fuel economy . First, it's far from certain that the proposal will make it into law. Some economists and analysts are skeptical of its chances in its current form. Because the GOP plan limits some popular deductions such as the home mortgage interest tax break, it's already

The combination of business tax reforms would provide a huge boost to the U.S. economy and its workers. The GOP tax plan scores well on all these fronts. Key Takeaways. 1. Simplification. Maintaining a high top rate for wealthy Americans may make the plan more politically palatable The United States ranks consistently as one of the worst in business tax environments in the world.

Productivity is much harder as economists simply don’t know what makes this critically important variable speed up or slow down. But in the long-term, it’s a good bet that investment in physical and human capital will help. As noted, the government can’t dictate private sector actions in this space, but it can make those investments itself, through productive public infrastructure such as transportation, water systems, air travel, ports and education, starting with preschool.

But we can’t make those public investments if we squander trillions on a wasteful tax cut. Not only will this benighted plan fail to “unleash growth.” By deeply worsening our fiscal outlook, it will block us from adopting policies with a much better chance of helping those who could use the help — none of whom, to state the obvious, reside in the top 1%.

Jared Bernstein, a former chief economist to former vice president Joe Biden, is a senior fellow at the Center on Budget and Policy Priorities and author of The Reconnection Agenda: Reuniting Growth and Prosperity. Follow him on Twitter: @econjared

Trump touts economy, vows to build border wall in Thanksgiving tweets .
President Trump wished his Twitter followers a Happy Thanksgiving early Thursday morning, touting the strong performance of the nation's stock market and vowing to build a wall along the U.S. border with Mexico. "HAPPY THANKSGIVING, your Country is starting to do really well. Jobs coming back, highest Stock Market EVER, Military getting really strong, we will build the WALL, V.A. taking care of our Vets, great Supreme Court Justice, RECORD CUT IN REGS, lowest unemployment in 17 years....!"HAPPY THANKSGIVING, your Country is starting to do really well.

—   Share news in the SOC. Networks

Topical videos:

This is interesting!