Opinion GOP tax plan will make economy worse, not better

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

Some middle-class Americans would pay higher taxes under GOP bill, despite Trump’s promise

  Some middle-class Americans would pay higher taxes under GOP bill, despite Trump’s promise President Trump promised to cut taxes for the middle class, but some would end up paying more under the “Tax Cuts and Jobs Act,”The Trump administration says it has a “bright line test” that the president won't support any tax bill that does not give the middle class relief on their taxes. The “Tax Cuts And Jobs Act” that House Republicans released Thursday appears to violate that vow, at least for some middle-class taxpayers.

The GOP tax plan eliminates that option. For families with three or more kids, that could mute if not negate any tax The final GOP bill proposes switching the U.S. to a territorial system. It also includes a number of anti-abuse provisions to prevent corporations with foreign profits from gaming the system.

Former Bush Council of Economic Advisers chair Glenn Hubbard and New York Times columnist and ABC News contributor Paul Krugman debate how the sweeping GOP

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 . BY Nell Abernathy, The Roosevelt Institute. Instead of funding new research to create better products, expanding operations to boost jobs or increasing wages, these businesses are instead choosing to give money to shareholders—a practice

The GOP tax plan has a hidden irony for President Trump. Unfortunately, good news usually sometimes comes with bad . The bad news is that according to the same analysis the growth would come Reducing the corporate tax rate would make America an even more attractive place to invest.

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.

GOP tax plan won't 'unleash' economic growth. 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.

You asked, we answered: Will the GOP tax plan boost economic growth? Not much (if at all), say So they weren't unanimous, but almost none of them had confidence that the tax plan will lead to So there's a good case to be made that there will be initial growth, but that it will disappear — or nearly

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.

Now that the GOP tax bill sharply limits the deduction for state and local taxes , pre-retirees in high- tax states may ponder: Should I stay or should I go? The final version of the " Tax Cuts and Jobs Act," which was released Friday, places a cap of

Another economic group, Oxford Economics , put the odds of the House proposal's success at 60 percent. How taxpayers fare under the plan will depend on everything from their geographic location -- residents in high- tax states are expected to be worse off -- to their income bracket.

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.

The GOP tax plan scores well on all these fronts. Key Takeaways. The United States ranks consistently as one of the worst in business tax environments in the world. The GOP tax plan would take the long-overdue step of allowing parents to use elementary and secondary education expenses

The GOP tax plan makes families pay more so global corporations pay less. Instead, the current tax reform plan is less radical—it just cuts tax rates and exempts foreign income. This already makes the bill politically dicey, and when it changes to meet the Byrd rule, it’s likely to get worse .

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!