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Politics Republican Tax Cuts Would Lift Some Industries More Than Others

05:26  19 december  2017
05:26  19 december  2017 Source:   nytimes.com

Tax Plans May Give Your Co-Worker a Better Deal Than You

  Tax Plans May Give Your Co-Worker a Better Deal Than You The G.O.P. bills impose different rates on the same income based on things like organizational structure or occupation. At the losing end? Employees with paychecks.In most places, a dollar is a dollar. But in the tax code envisioned by Republicans, the amount you make may be less important than how you make it.

The cuts would boost some industries far more than others , in part because some sectors, like financial firms, pay higher effective tax rates than others , like manufacturing. Average effective rates are the tax rates that industries actually pay on profits after accounting for deductions and other tax

The cuts would boost some industries far more than others , in part because some sectors, like financial firms, pay higher effective tax rates than others , like manufacturing. Financial firms start with a higher effective rate, and in the first few years would see a larger rate cut .

Mounds of unsold coal stand above ground at a coal mine near Fairview, West Virginia. © Luke Sharrett for The New York Times Mounds of unsold coal stand above ground at a coal mine near Fairview, West Virginia.

WASHINGTON — The $1.5 trillion tax bill heading for a vote this week is a big win for corporations overall. But not every business benefits equally, with bigger cuts flowing to financial firms and the real estate industry than to manufacturers or mining companies, a new economic analysis finds.

The disparities illustrate the difficulty in tailoring tax cuts for two of the blue-collar industries that Mr. Trump frequently promises to invigorate through economic policy changes. That’s in part because both mining and manufacturing companies already benefit from relatively low effective tax rates among Americans companies.

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7. It would benefit some industries more than others . Some of the bill’s biggest changes come up in the Some industries fare much better than others as a result of those changes. Much of that disapproval probably stems from people’s beliefs about who the tax cut would help versus who it

The tax cuts Congress is likely to pass by the end of the year will benefit many Americans, harm some and leave others unaffected. Perhaps it’s no surprise that Republicans across the country will benefit more from the cuts than Democrats or Independents, according to a new Yahoo Finance analysis of.

They also show how the tax plan is likely to shower benefits on the industry Mr. Trump built his fortune in — and on the Wall Street firms he railed against and has promised would not benefit from the bill.

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The findings come from economists at the Penn Wharton Budget Model at the University of Pennsylvania, who projected how the final tax bill would change the average effective tax rates of a variety of industries over time.

The legislation is expected to be put to a vote in the House as early as Tuesday and in the Senate on Wednesday. It would reduce the corporate tax rate to 21 percent, from the current top rate of 35 percent, and make a host of other changes to the way businesses are taxed.

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20 – 22 and asking whether tax cuts would generate more spending and hiring, helping or hurting employees in the longer term. The results suggest tax cuts won’t be the magic economic elixir some Republicans claim, but will still help some middle-class workers in tangible ways. Fifty-one percent of

Cuts in business taxes , however, would remain permanent. Republicans insist that cutting business taxes will itself help workers earn more , at Then, all the tax cuts would expire. “This is an obvious ruse to hide very real costs and make more room for debt-financed cuts and giveaways,” Maya

Other analysts, particularly Wall Street firms, have begun estimating how specific industries would fare under the tax plan in the years ahead. On Monday, Goldman Sachs researchers said they expect the corporate cut in the tax bill to increase earnings-per-share by 13 percent on average for America’s largest banks, with Wells Fargo standing to gain the most from the change.

The Penn Wharton economists found that it would reduce the average effective tax rate across industries to 9 percent next year, down from 21 percent under current law.

The cuts would boost some industries far more than others, in part because some sectors, like financial firms, pay higher effective tax rates than others, like manufacturing. Average effective rates are the tax rates that industries actually pay on profits after accounting for deductions and other tax breaks, as opposed to the statutory rate, which is set under law.

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More important than tax cuts will be income support measures, says BNP Paribas. CNBC-TV18. 2:36. Katy Katy: I haven't heard a sensible Republican idea Trump’s Tax Cuts in Hand, Companies Spend More on Themselves Than on Wages. RisingWorld. 2:03. Republican Tax Cuts Would Lift Some

profitable industries more than others . In some cases, non-neutral tax treatment —. as with research and development and exploration — may be economically. reducing in its capital tax rate by a half. Ontario is yet to be heard from. The 2005 federal budget, providing further corporate tax cuts , is the

The study found that real estate firms would see a 16-point reduction in their effective rates next year, and financial firms would see a 12-point reduction. Mining companies would see a cut of just under 9 points. Manufacturers’ rate would fall by less than 7 points.

“Some industries see smaller gains because they already benefit from so much preferential tax treatment,” said Alexander Arnon, a researcher with the Penn Wharton Budget Model. “Manufacturing and natural resource extraction already have low effective tax rates under current law, and so there isn’t much room for them to fall further.”

a group of people walking down a street next to a building: A view of the New York Stock Exchange and Wall Street in New York. © Nicole Bengiveno/The New York Times A view of the New York Stock Exchange and Wall Street in New York. The analysis projects that the bill will save financial firms $250 billion on corporate taxes over the next decade, a 35 percent cut from what otherwise would have been a $715 billion tax liability.

It projects manufacturers will save nearly the same amount, $261 billion. But that amounts to only a 22 percent cut, because that industry is larger than finance, and would have otherwise faced a $1.2 trillion liability over that time.

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Republicans believe deeply in tax cuts , both as a means of limiting government and as a tool for boosting economic growth. Jeff Flake of Arizona who criticized the plan Thursday. The plan gives businesses tax cuts more than three times as it gives individuals, and early analyses suggest some

Republican Tax Cuts Would Lift Some Industries More Than Others .

Financial firms start with a higher effective rate, and in the first few years would see a larger rate cut. In later years, though, manufacturers in particular fall prey to a pair of provisions phased in by Republicans.

One is the ability to immediately deduct the full cost of some capital investments, like heavy equipment and factories, which expires after five years. The other is a provision that effectively reduces the annual value of a tax credit for investments in research and development, which manufacturers utilize heavily.

Manufacturing lobbyists say they are bullish on the tax bill and plan to fight Congress in later years to ensure neither of those provisions take effect down the road.

Nearly 95 percent of respondents in a recent National Association of Manufacturers survey of its members said they were optimistic about their company’s outlook, a record for the 20-year-old survey. More than three-fifths said approval of the tax bill would likely cause them to increase capital spending.

“Our members are very happy about the tax bill as it’s written,” said Chad Moutray, the association’s chief economist. “You wouldn’t see that level of optimism if they didn’t think this was something that’s going to benefit them.”

Manufacturers currently enjoy one of the lowest effective tax rates of any industry, and they would continue to if the bill becomes law. Penn Wharton projects that manufacturers’ effective rate would drop from 17.5 percent to 10.9 percent in 2018. But that number would rebound to 15.8 percent in 2027 if the law remains as written.

No other major industry would see its rate savings shrink so drastically. But, under the legislation, every industry would see its gains erode over time. The average effective tax rate across industries, the Penn Wharton researchers calculated, would fall by 12 percent in 2018 compared to current law.

By 2027, that cut would shrink to less than 5 percent.

Middle class faces risk of fading GOP tax cuts .
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