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General Category => General Comments => Topic started by: yossarian22c on October 10, 2017, 10:23:43 PM

Title: Republican Tax Plan
Post by: yossarian22c on October 10, 2017, 10:23:43 PM
So analysis of the initial framework shows huge tax cuts for the wealthy, likely slightly higher tax bills for the upper middle class, and pretty much no change for the middle class. Yet Trump claims "I won't benefit". Anyone buying this sack of trickle down BS being good for the middle class?

http://www.npr.org/2017/10/04/555433641/who-will-benefit-most-from-gop-tax-plan-early-report-suggests-the-wealthy (http://www.npr.org/2017/10/04/555433641/who-will-benefit-most-from-gop-tax-plan-early-report-suggests-the-wealthy)
Title: Re: Republican Tax Plan
Post by: Crunch on October 11, 2017, 09:27:25 AM
I get he demagoguery and that we’re supposed to be angry about this but when it comes to federal income taxes whose taxes can you cut? The upper middle class and up carry roughly 80% of the federal tax burden with the rest of the middle class carrying about 15%. If you’re going to cut taxes at all, it almost by definition will predominantly affect wealthy taxpayers as they’re very nearly paying all the taxes. The middle class is paying at a rate that a tax cut there will not really have much effect on them or the economy so if you support tax cuts then you support the cuts at higher earnings. I just don’t see any other way to go.

I should add, I don’t support or reject the proposed plan, I haven’t really looked at it yet.
Title: Re: Republican Tax Plan
Post by: D.W. on October 11, 2017, 10:43:04 AM
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If you’re going to cut taxes at all
Indeed.  So don't.  I'm cool with changing priorities depending on which party is at the wheel.  But there's a lot of *censored* we need done and a lot we don't yet do well enough.  I don't think we need to cut taxes on those who can manage just fine at current rates.

I don't know if it's a partisan thing, but hypocrisy and BS allergies are a big deal when it comes to this issue.  If you believe cutting taxes leads to job creation, make the case.  Don't sugar coat it, or worse, lie about it.  Don't promote one plan and enact another.  If your plan can't stand on its own, maybe it's a bad plan!
Title: Re: Republican Tax Plan
Post by: DonaldD on October 11, 2017, 11:04:13 AM
What D.W. said - if your argument is trickle-down, make that argument.  I know it has become normalized to treat everything the president says as a-factual, and I know we could all waste years debating his lies instead of the substance of the proposals, but shouldn't the substance actually be debated at least a little?
Title: Re: Republican Tax Plan
Post by: Seriati on October 11, 2017, 11:50:08 AM
It seems to me that most arguments on tax cuts have little to nothing to do with the actual economics involved and far more to do with the political team we happen to support.  US tax culture is already very heavy for the level of benefits we actually receive.  It's a virtual certainty that it's slowing our rate of economic growth, which itself is directly tied to the actual income that everyone receives. 

It is - in no way - a reasonable argument to whine about whether a rich person benefits, without considering, in any real way, who else benefits and by how much.

You also need to consider that most of the "penalty" on the upper middle class comes from one, single source.  Excessive state taxes for certain states where high income individuals reside.  If the states followed suit and actually cut expenses allowing them to lower taxes that effect would disappear entirely, and we'd all be massively better off.  Instead, we have states with incredibly wealthy citizens with repressive levels of taxes spending themselves into bankruptcy.
Title: Re: Republican Tax Plan
Post by: TheDrake on October 11, 2017, 12:07:16 PM
So, you couldn't cut taxes by increasing the EITC, or by raising the standard deduction?

Of course you could. The proposal does the latter. Standard deductions are being doubled and would help anyone who does not itemize, which usually includes renters. Particularly, the people who live in states with no income tax will benefit, because the proposal drops itemized state and local tax deductions. Which would be a real thumb in the eye to Californians, but I honestly never understood that deduction anyway.

It also increases the child tax credit, but we don't yet know how much.

Repealing the AMT does indeed benefit wealthier people, but is long overdue.

Dropping the corporate tax rate as much as proposed is probably the most dramatic, going from 35% to 20%. I can't imagine how they hope to make up the 150 billion dollars.
Title: Re: Republican Tax Plan
Post by: Seriati on October 11, 2017, 01:07:37 PM
So, you couldn't cut taxes by increasing the EITC, or by raising the standard deduction?

No by the EITC, that's not a tax cut so much as a welfare program.  Nor would it have any of the economic benefits that accrue specifically from cutting an individual or entities taxes, only the benefits of increased consumer spending.

As you noted the standardized deduction change is a real benefit to the middle class (most of whom do not itemize, other than those living in high tax states).

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Repealing the AMT does indeed benefit wealthier people, but is long overdue.

AMT was a garbage solution to Congress having granted poorly considered deductions, that increasingly penalized middle class people.  By the way the "big" difference for the middle class on the AMT?  No deduction for state taxes on the AMT!  Sounds familiar doesn't it.

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Dropping the corporate tax rate as much as proposed is probably the most dramatic, going from 35% to 20%. I can't imagine how they hope to make up the 150 billion dollars.

It won't hurt as much as you think, cutting the rate is very likely to increase the use of corporations, which use has suffered because of the tax burden compared to other legal structures.

https://taxfoundation.org/us-corporate-tax-revenue-low-because-high-taxes-have-shrunk-corporate-sector/ (https://taxfoundation.org/us-corporate-tax-revenue-low-because-high-taxes-have-shrunk-corporate-sector/)

It's not in that link, but I think its also been shown that lowering the corporate tax rate is directly linked to increases in middle class incomes.
Title: Re: Republican Tax Plan
Post by: D.W. on October 11, 2017, 01:11:25 PM
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Excessive state taxes for certain states where high income individuals reside.  If the states followed suit and actually cut expenses allowing them to lower taxes that effect would disappear entirely, and we'd all be massively better off.
This seems a little muddy to me.  The places where these high income people reside, often have higher infrastructure demands.  You simply put, NEED more money to keep say NYC running compared to smaller or more rural areas.

The question, and it's likely a city planing policy lost cause at this point, would be how do revenue requirements shift as population density increases?  Do a million people spread out over small rural towns actually require less money to operate than a million people densely populated into one urban setting?  Maybe they require more not less?  Do we benefit from economies of scale? 

I personally feel that we subsidize a lot of areas in this country where we'd be much better served encouraging people to relocate.  Then again, that is more gut feeling than data driven.  Is it easier to move people to where the economic opportunities are, or bring those opportunities to them? 
Title: Re: Republican Tax Plan
Post by: Seriati on October 11, 2017, 01:49:59 PM
This seems a little muddy to me.  The places where these high income people reside, often have higher infrastructure demands.  You simply put, NEED more money to keep say NYC running compared to smaller or more rural areas.

You'd be depressed at the comparatively small portion of the budget that goes to what you'd actually consider infrastructure.  NYC benefits from the economy of scale over smaller communities on a number of things.  Small communities have to "oversupply" themselves with things that can't be done at a smaller scale. Not sure its entirely one side, with some services being required in a place like NYC and not realistically required in smaller communities.

NYC's budget has many practical things, and many many things where political favors have resulted in gross over payments.  Whether you'd prefer that waste not be taken in the first place, or used to fund better infrastructure is a matter of some debate, but having an inflated tax rate specifically to allow for political payola does no one favors (other than the politicians).

I'd love a constitutional amendment that required a politician to fund long term pension commitments from their current budget.  Not promise that 40 years from now the town will pay you x, only promise that today they'd put in escrow x to pay you in 40 years.
Title: Re: Republican Tax Plan
Post by: yossarian22c on October 11, 2017, 05:53:11 PM
If they actually cared about the poor and middle class they would lower the Medicare/Medicaid and SS tax rates and raise the income cap on those taxes to keep the change revenue neutral.
Title: Re: Republican Tax Plan
Post by: Wayward Son on October 12, 2017, 03:04:15 PM
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NYC's budget has many practical things, and many many things where political favors have resulted in gross over payments.  Whether you'd prefer that waste not be taken in the first place, or used to fund better infrastructure is a matter of some debate, but having an inflated tax rate specifically to allow for political payola does no one favors (other than the politicians).

The problem with cutting out the entire state tax deduction is that it throws out the baby with the bath water.  Sure, it eliminates Federal subsidy of the waste, but it also eliminates funding for the infrastructure paid by the state.  Which means the states will have to fund their necessary work some other way.

IOW, it doesn't solve the problem.
Title: Re: Republican Tax Plan
Post by: Seriati on October 12, 2017, 05:25:29 PM
The problem with cutting out the entire state tax deduction is that it throws out the baby with the bath water.  Sure, it eliminates Federal subsidy of the waste, but it also eliminates funding for the infrastructure paid by the state.  Which means the states will have to fund their necessary work some other way.

It doesn't do any such thing.  Throwing out the deduction and changing the federal rates does nothing but redistribute the burden.  Effectively high state taxes are a wealth transfer mechanism from poorer rural areas to wealthy high income areas.  This tax eliminates the federal policy in favor of that wealth transfer.

For most of the country the standard deduction exceeds the state tax deduction, and this will be even more true after it's doubled.  You can't be on the left and claim that your state taxes are too high, as your entire argument is premised on the good of government spending versus retaining the amounts in individual's hands.  If the infrastructure is a good investment, then state taxes can still fund it, if on the other hand you live in a state where the taxes are so high as to penalize you it's time to consider if you're really getting the full benefit from the state taxes that you pay.

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IOW, it doesn't solve the problem.

I think you need to be clearer about the "problem".
Title: Re: Republican Tax Plan
Post by: Seriati on October 12, 2017, 07:04:38 PM
Given, the criticisms of the Republican plan being a tax cut for the wealthy, and the Dems general attempt to claim the absolute moral high ground on this, I found this fact - from the Wall Street Journal - about who benefits from the State and Local tax deduction (which is pretty much the Dem's number one issue) fascinating:

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The deduction for income and sales taxes is even more concentrated among high-income households, with 71% of the benefit going to those above $200,000 in income.

It's totally understandable given the cost of living in the blue areas of the country, still amusing to throw down on something that is so beneficial to those who earn $200k plus.
Title: Re: Republican Tax Plan
Post by: Wayward Son on October 13, 2017, 01:48:03 PM
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For most of the country the standard deduction exceeds the state tax deduction, and this will be even more true after it's doubled.

True, but you are not accounting the fact that the state taxes are added to other deductions, such as mortgage interest and fees, charitable gifts, and auto licensing fees.  Removing this deduction could actually annul these other deductions in many people's taxes.

Although doubling the standard deduction may do the same thing.

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You can't be on the left and claim that your state taxes are too high, as your entire argument is premised on the good of government spending versus retaining the amounts in individual's hands.  If the infrastructure is a good investment, then state taxes can still fund it, if on the other hand you live in a state where the taxes are so high as to penalize you it's time to consider if you're really getting the full benefit from the state taxes that you pay.

You seem to be equating high state income taxes with waste (which is "the problem" :) ).  But not all taxes go to waste, even in a high-tax state.  And the cuts are not based on whether the monies are being wasted or not, but simply eliminating Federal subsidies (by eliminating the deduction) of all taxes to state governments.

This shifts the burden of those taxes from the Federal government to the state taxpayer, in the form of higher taxes.  This will induce the states to lower their taxes (to ease the tax burden on their citizens), and require them (assuming that at least some of the taxes were providing "full benefit) to seek the monies from the Federal government to make up the difference.  IOW, it won't address any problem of waste, but transfer more power to the Federal government (to fund the beneficial programs).
Title: Re: Republican Tax Plan
Post by: Greg Davidson on October 15, 2017, 08:49:41 PM
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It seems to me that most arguments on tax cuts have little to nothing to do with the actual economics involved and far more to do with the political team we happen to support.  US tax culture is already very heavy for the level of benefits we actually receive.  It's a virtual certainty that it's slowing our rate of economic growth, which itself is directly tied to the actual income that everyone receives. 

That "virtually certainty" is the exact opposite of what has been demonstrated in the US economy over the past 25 years. When the Democrats raised taxes in 1993, Republicans had that same "virtual certainty" that the economic impacts would be catastrophic - but instead growth increased.  When Bush, who inherited the budget surplus primarily created by those tax increase, cut taxes in 2002 to spur growth, the net result was economic growth slower than under Clinton, just huge windfalls to the 1%. The Obama stimulus did create one of the largest tax cuts in US history, targeted at payroll taxes (social security/medicare) that actually did get most of the tax relief to the majority of the population - and that did have a positive net effect (during a recession it stimulated expenditures by those who needed to spend whatever they had), but later the Democrats imposed another round of tax increases that were once again met by Republican assertions that they would result in a halt to economic growth, and that did not occur (but once again the deficit shrunk significantly).

So Seriati, where exactly is the evidence upon which your virtual certainty is based?
Title: Re: Republican Tax Plan
Post by: TheDrake on October 16, 2017, 10:00:57 AM
The virtual certainty, as I see it, is that the byzantine tax code is a drag on the economy. Money is spent on tax lawyers and accountants that is simply a burden. That tax code is a result of our system of government, and how campaigns get funded. This is a center issue that both sides could agree on ideologically, but practically it is a non-starter.
Title: Re: Republican Tax Plan
Post by: Seriati on October 16, 2017, 12:48:18 PM
You seem to be equating high state income taxes with waste (which is "the problem" :) ).  But not all taxes go to waste, even in a high-tax state.  And the cuts are not based on whether the monies are being wasted or not, but simply eliminating Federal subsidies (by eliminating the deduction) of all taxes to state governments.

I never said all taxes were waste.  Only that politicians are incentivized to use public funds to garner support for themselves.  It's no mistake that both blue and red politicians choose to reward those who bring them votes and campaign funds, the mistake is that we let them do it.

Unless your point is that there is NO waste, we'd be better off without the waste.  Like I said, it's politics whether you think the saved government resources would be better in the hands of the tax payers or other government programs.

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This shifts the burden of those taxes from the Federal government to the state taxpayer, in the form of higher taxes.

It doesn't.  It removes the shift of the burden of those state taxes from the tax payers of the other states and puts them back on the people who are choosing to have high state taxes. 

Why on earth should your local choice exempt you, even in part, from sharing in the national burden?  I don't accept, as an explanation, that you've supported the federal government extending it's own mandate to overlap that of the states.  You can't cause a problem and then demand a solution to the problem.

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This will induce the states to lower their taxes (to ease the tax burden on their citizens), and require them (assuming that at least some of the taxes were providing "full benefit) to seek the monies from the Federal government to make up the difference.

Which should be denied.  A state is responsible for balancing the services it wants to provide against the utility of having its citizens pay for them.  There is no "blank check" right where states spend whatever the heck they want and force the citizens of other states to make up the difference.

If you're going to "quote" statistics about states that pay more federal revenues out than they get back, all you're really arguing is that federal taxes are far too high, and that state taxes should be the bigger component.  I agree.  Then we could pick what state it made sense to live in.

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IOW, it won't address any problem of waste, but transfer more power to the Federal government (to fund the beneficial programs).

It's not the federal government's job to "fund beneficial programs."  Quit spending other people's money.
Title: Re: Republican Tax Plan
Post by: Seriati on October 16, 2017, 02:11:45 PM
That "virtually certainty" is the exact opposite of what has been demonstrated in the US economy over the past 25 years. When the Democrats raised taxes in 1993, Republicans had that same "virtual certainty" that the economic impacts would be catastrophic - but instead growth increased.  When Bush, who inherited the budget surplus primarily created by those tax increase, cut taxes in 2002 to spur growth, the net result was economic growth slower than under Clinton, just huge windfalls to the 1%.

It's an odd response.  You can cherry pick all you want, that barely qualifies as an analysis when you ignore actual facts.  What's key now?  Under Obama businesses were hoarding capital rather than investing it because of rational fear of regulatory and tax overreach.  Tax inversions and offshore strategies have become a far more significant part of the big picture, specifically because of anti-corporate US tax rules - our taxes are both higher than anyone else's and grossly more expansive (taxing world wide).  The policies you seem to be endorsing have deliberately starved the US of capital, leaving no one but the government to fill in the gaps.

What was key then?  Well you had two bubbles the dot com and sub-prime that both began under Clinton and pushed the economy up (and despite what you said real gains in the top 5% under Clinton where far bigger inflation-adusted than under Bush or Obama), the first popped right before Bush took office (dot com) and the second before he left office (sub-prime).  Those two events end up with a bigger impact on GDP (not to mention 9/11) than general tax policy. 

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The Obama stimulus did create one of the largest tax cuts in US history, targeted at payroll taxes (social security/medicare) that actually did get most of the tax relief to the majority of the population - and that did have a positive net effect (during a recession it stimulated expenditures by those who needed to spend whatever they had), but later the Democrats imposed another round of tax increases that were once again met by Republican assertions that they would result in a halt to economic growth, and that did not occur (but once again the deficit shrunk significantly).

That's so bizarre an interpretation I almost feel like its not in good faith.  I mean lets unpack it a bit.

You keep citing (and have been for years) this idea that Obama shrunk the deficit.  It's literal nonsense.  Of the 9 years with the largest individual deficits in US history, Obama was the President for 8 of them.  Whether on an inflation adjusted or absolute value all eight years of highest federal expenditures on record - Obama.  I grant you, he didn't get to increase his spending at the rate he wanted, cause revenues were not on pace during his "recovery." 

Meanwhile, he had 8 solid years of the fed funds rate effectively at zero.  Keep in mind, it had never even been at zero before, let alone been pegged to that rate for such a period of time.  What did that free capital buy us?  Below average GDP growth.  That means even with the ability to borrow for free, the regulatory and tax burden he imposed was so great that economy historically under-performed.  This paragraph alone, should be causing a little humility on your part.  If you economics are right, we combined free money with record government spending and got historically below average returns.  Telling how immediately after he left office, economic indicators started spiking dramatically upwards.

Meanwhile, real wage growth?  Plumetted under Obama and stayed historically low until virtually the end of his Presidency.  Why?  Again abusive tax and regulatory regime that encouraged anyone with capital to invest somewhere else or horde it, only letting up when the light showed at the end of the tunnel.  Short story, if you like raises, Obama's policies (and Greg's) are really against your interests. 

Payroll tax break?  Economic impact of that was front loaded, yet the real gains for Obama didn't show up until it became clear he wasn't going to be President and Clinton wouldn't be able to keep his policies in place.

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So Seriati, where exactly is the evidence upon which your virtual certainty is based?

All over the place.  I'm not aware that there is any evidence that supports a high coporate tax rate as being beneficial to an economy.  Maybe you can show where you got that idea?  We have reached the point of corporate tax where tax avoidance has become the norm, that's well past the point of diminishing returns in any rational tax model.
Title: Re: Republican Tax Plan
Post by: yossarian22c on October 16, 2017, 09:04:37 PM
The virtual certainty, as I see it, is that the byzantine tax code is a drag on the economy. Money is spent on tax lawyers and accountants that is simply a burden. That tax code is a result of our system of government, and how campaigns get funded. This is a center issue that both sides could agree on ideologically, but practically it is a non-starter.

I've often wondered what the impact of dramatically simplifying the tax code would be. Short term you would have a lot of CPAs and tax software companies without customers but long term those workers could be used in a more productive way. However the 45+ year old senior tax CPA is unlikely to be able to find a comparable paying job in their lifetime. Long term there is no doubt this is wasted productivity but reallocating all of that talent productively in the short term is a real challenge.

But from what I see they aren't getting rid of any of the byzantine tax code in anything they've put out so far. The framework is just to lower rates for corporations and for the very wealthy. The only tax deductions I've seen targeted are the one for state and local taxes and for personal exemptions. Basically a big tax cut for the super-wealthy and corporations, a small tax hike on upper middle class families, and pretty much no change for the middle and lower class. If they actually put out a plan were corporations have a 20% tax rate with very few deductions and loopholes I would be surprised. The one change I'm ambivalent about is switching to a territorial system of taxation so that it would be easier to repatriate profits earned overseas. This is the one change that I can see a rational economic argument for positive economic growth in the US. As for the other cuts I see very little economic benefit for the average worker. Most economic studies show cutting corporate tax rates have 70%+ of the gain go to investors, with smaller amounts divided up between higher wages and increased investment. The last two are pretty low on that list because they are generally tax deducible expenses, so if there are opportunities to grow your business through investment or higher wages a high tax rate actually encourages making those investments.
Title: Re: Republican Tax Plan
Post by: yossarian22c on October 16, 2017, 09:14:21 PM
That's so bizarre an interpretation I almost feel like its not in good faith.  I mean lets unpack it a bit.
You keep citing (and have been for years) this idea that Obama shrunk the deficit.  It's literal nonsense.  Of the 9 years with the largest individual deficits in US history, Obama was the President for 8 of them.  Whether on an inflation adjusted or absolute value all eight years of highest federal expenditures on record - Obama.  I grant you, he didn't get to increase his spending at the rate he wanted, cause revenues were not on pace during his "recovery." 

It isn't nonsense it is the literal data for the years he was in office. The 2009 budget was already set by the Bush admin, the only thing Obama added to that was the stimulus which was 700 billion stretchered out over 3 or 4+ years. So he inherited a deficit of 1 trillion (800-900 billion if you don't count the stimulus) and then had the deficit go down each year after that. Bush had also artificially decreased the size of his official deficits by excluding all the funding for the wars in Iraq and Afghanistan from the official budget. Since those expenses were largely predictable Obama moved them into the budget, which coupled with the economic crash that took place over the 3 months before he took office and the 3-6 months after he was in office drastically reduced tax revenues and automatically increased government assistance spending. From that point forward the deficit did decrease every year he was in office. It never got back down to the pre-Iraq war level but it ended up about half of what it was when he took office.
Title: Re: Republican Tax Plan
Post by: yossarian22c on October 16, 2017, 09:36:09 PM
Meanwhile, he had 8 solid years of the fed funds rate effectively at zero.  Keep in mind, it had never even been at zero before, let alone been pegged to that rate for such a period of time.  What did that free capital buy us?  Below average GDP growth.  That means even with the ability to borrow for free, the regulatory and tax burden he imposed was so great that economy historically under-performed.  This paragraph alone, should be causing a little humility on your part.  If you economics are right, we combined free money with record government spending and got historically below average returns.  Telling how immediately after he left office, economic indicators started spiking dramatically upwards.

GDP growth is actually a horrible measure for how well an economy is doing for the people of the country. GDP/capita growth would be a much more consistent and meaningful measure. We aren't going to return to 3%+ growth because the size of our workforce has  stopped growing. Looking at this measure it becomes rather obvious that Japan's economic growth was destined to stall in the late 80's/early 90's when in essence their population had plateaued. This is really the challenge for the economic future of the country and the world is how to have a healthy economy that isn't predicated on continual exponential population growth.

So the fact that the economy recovered slowly (which it always does after a financial crash) and continued to grow slowly which is somewhat expected based on the size of the labor force and the type of economic recession. Our demographics basically mean 3%+ growth is history unless we want to throw open the borders then we may get more than 3%+ GDP growth but actually have a shrinking GDP/capita. The fact remains that what we should hope for is for economic growth to slightly outpace population growth and for the job market to tighten enough that employers actually have to start raising wages again.
Title: Re: Republican Tax Plan
Post by: Seriati on October 17, 2017, 11:09:14 AM
That's so bizarre an interpretation I almost feel like its not in good faith.  I mean lets unpack it a bit.
You keep citing (and have been for years) this idea that Obama shrunk the deficit.  It's literal nonsense.  Of the 9 years with the largest individual deficits in US history, Obama was the President for 8 of them.  Whether on an inflation adjusted or absolute value all eight years of highest federal expenditures on record - Obama.  I grant you, he didn't get to increase his spending at the rate he wanted, cause revenues were not on pace during his "recovery." 

It isn't nonsense it is the literal data for the years he was in office. The 2009 budget was already set by the Bush admin, the only thing Obama added to that was the stimulus which was 700 billion stretchered out over 3 or 4+ years. So he inherited a deficit of 1 trillion (800-900 billion if you don't count the stimulus) and then had the deficit go down each year after that.

Which is why I pointed out you are Cherry Picking.  The 2009 budget includes the "one-time" quantatative easing payments.  Obama locked them in and continued to spend on an emergency basis in future years.  As I pointed out, 8 out of 8 for highest government expenditure years, and 8 out 9 for highest deficit years (the "other" one was 2009 - which as you pointed out is on Bush and comes in either at number 7 or 8).

The claim you guys are making is as true as when Kenobi told Luke that Vader betrayed and murdered your father, you know only true from a certain point of view and entirely misleading.

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Bush had also artificially decreased the size of his official deficits by excluding all the funding for the wars in Iraq and Afghanistan from the official budget.

Which were separately budgeted (and appear in the records on government expenditures and revenues).

Besides which, Bush was an overspending tool, he just didn't hold a candle to Obama.
Title: Re: Republican Tax Plan
Post by: Seriati on October 17, 2017, 05:00:08 PM
I always enjoy Walter Williams's essays:

https://www.creators.com/read/walter-williams (https://www.creators.com/read/walter-williams)

This one just happens to be, as many are, on topic for this tax question.  Not of course high level as it's meant for mass consumption but based on solid points.
Title: Re: Republican Tax Plan
Post by: Wayward Son on October 17, 2017, 06:06:06 PM
I don't think Walter realizes how ironic his first two sentences are.

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Politicians exploit public ignorance.  Few areas of public ignorance provide as many opportunities for political demagoguery as taxation.

He then goes on to demonstrate some political demagoguery. :D

He talks about the top 1 percent paying 39 percent of all taxes, and the top 10 percent pay about 70.6 percent of all taxes.  He rhetorically asks if that seems fair.

Then he goes on about the bottom 50 percent, who pay only 2.83 percent of the taxes.  The horrors!

But did you notice he didn't mention something relevant about those groups?  What percentage of total taxable income they made.

Back in 2005, it was somewhat similar.  The top 1 percent paid 39.4 percent of the total taxes, the top 10 percent paid 70.3 percent, and the bottom 50 percent paid only 3.1 percent.

But the top 1 percent had 21.2 percent of the total AGI, the top 10 percent had 46.4 percent, and the bottom 50 percent had only 12.8 percent.

In other words, half the earners in this country split about 13 percent of the total income.  The top 10 percent split 46 percent.  And top 1 percent split 21.2 percent--a greater percentage than what the bottom 50 percent got.

Once you've taken out expenses for food, housing, clothing and transportation--you know, the necessities--how much disposable income do you think the bottom 50 percent has left over for taxes?  Conversely, how much disposable income does the top 1 percent have (who made on average about 83 times what the bottom 50 percent made) for taxes? ;)

In reality, there are only two groups that paid a disproportionate share of federal income taxes.  The bottom 50 percent, who got 13 percent of the income but pay only 3 percent of the taxes--10 percent less than their "fair share."  ("Fair share" being defined as the proportion of taxes of that bracket equaling the proportion of income for that bracket.)  And the top 1 percent who made 20.8 percent of the AGI but paid 37.4 percent of the taxes--16.6 percent more than their "fair share."  Every other group was within 10 percent of their "fair share."

I won't even go into how most of those who pay no taxes are retirees, children and students.  Which, of course, Walter didn't bother to go into, either. :P

So I really don't care to hear someone whining about how the rich are being unfairly taxed.  Somebody has to pay the taxes.  The bottom 50 percent can't afford to pay more.  You can't squeeze blood from a turnip.  But the top 1 percent can afford to, and do. 

And, seriously, when you are making 82 times what half the country makes, is it really that bad? ;)
Title: Re: Republican Tax Plan
Post by: yossarian22c on October 17, 2017, 08:21:58 PM
Which is why I pointed out you are Cherry Picking.  The 2009 budget includes the "one-time" quantatative easing payments.  Obama locked them in and continued to spend on an emergency basis in future years.  As I pointed out, 8 out of 8 for highest government expenditure years, and 8 out 9 for highest deficit years (the "other" one was 2009 - which as you pointed out is on Bush and comes in either at number 7 or 8).

How is the first year he was in office cherry picking, it's literally the baseline he inherited?

As to the highest government spending since has increased every year 1948-2009 you could make that claim about every 2 term president since the second world war. And every one term president was a solid 4 for 4 on that metric.

2001  1,862,846
2002  2,010,894
2003  2,159,899
2004  2,292,841
2005  2,471,957
2006  2,655,050
2007  2,728,686
2008  2,982,544
2009  3,517,677
2010  3,457,079
2011  3,603,065
2012  3,536,945
2013  3,454,647
2014  3,506,091
2015  3,688,383
2016  3,852,612

So there was a big jump in 2009 but government spending actually leveled off after that and we had the first years of decreased spending since '48. In the end the government basically grew at or below its long term tend for the Obama term.
Title: Re: Republican Tax Plan
Post by: Greg Davidson on October 18, 2017, 02:06:21 AM
Quote
You keep citing (and have been for years) this idea that Obama shrunk the deficit.  It's literal nonsense.

Seriati, Obama inherited a $1.4T deficit in his first day in office. In the subsequent years it got smaller. Much smaller. That seems to be the literal definition of literal.

Title: Re: Republican Tax Plan
Post by: TheDrake on October 18, 2017, 08:20:57 AM
No president can shrink the deficit. Appropriations controls the spending side residing in the House and Senate. Mostly the deficit is increased or decreased according to global macro-economic forces like energy cost and emergency funding bills (like wars or natural disasters). Occasionally, a President intercepts a boom or bubble (housing, internet) that temporarily increases revenues by a significant amount.

Strategic initiatives taken by the President can take years to fully be felt and realized. Like Kennedy's space program that was enormous in cost, but launched technologies and companies that helped fuel the economy for decades.

Picking which year to start a ham-handed analysis of President good for economy, President bad by lining up a single metric like GDP or Deficit is just a ridiculous partisan exercise.
Title: Re: Republican Tax Plan
Post by: Seriati on October 18, 2017, 10:33:16 AM
Quote
You keep citing (and have been for years) this idea that Obama shrunk the deficit.  It's literal nonsense.

Seriati, Obama inherited a $1.4T deficit in his first day in office. In the subsequent years it got smaller. Much smaller. That seems to be the literal definition of literal.

He inherited an emergency spending measure that caused that $1.4T.  I never blamed him for that.  I blame him for locking it as the new default and working from there.  Given that revenues had taken a massive hit, the decision not to return to historical spending norms but instead to spend as if the emergency measure was the new norm is 100% on him.

In any event, why are you complaining?  It's literally your philosophy that excess government spending should have given a power surge to the economy.  As walked through above, there's next to no evidence that it did so, which is a fundamental, immediate and direct attack on your policies.

yossarian22c, if you want to play this game have the intellectual honesty to look at the trend line and acknowledge how fundamental and atypical that spending line is.  Obama was way off historical trend, and got not to nothing to show for it, all at a time when revenues had taken a hit.
Title: Re: Republican Tax Plan
Post by: Greg Davidson on October 18, 2017, 10:19:59 PM
Seriati,

The US stimulated its economy more than all of the other developed nations, and the US economy recovered to a greater degree than all of the other developed economies. The conservative economic theory that austerity is the appropriate response to economic collapse was tested and, once again, proven wrong.
Title: Re: Republican Tax Plan
Post by: Fenring on October 19, 2017, 01:29:08 AM
The US stimulated its economy more than all of the other developed nations, and the US economy recovered to a greater degree than all of the other developed economies. The conservative economic theory that austerity is the appropriate response to economic collapse was tested and, once again, proven wrong.

I don't think that's quite right. The conservative theory isn't to engage in austerity suddenly when standard monetary policy causes a recession. Their theory (insofar as 'they' have one single theory) is to not engage in manipulations of the money supply in the first place and to have a solid currency based on production. Or at least, that's the theory behind there theory, since as we know in practice both parties in fact enjoy the system as it is so long as it benefits them. But in abstract terms the reason why conservative monetary policy cannot work at present is because the entire system leans the other way, and one can't engage in hybrid tactics. One is either manipulating the money supply all the way, or not at all. Declining to do so after having (for example) massively inflated it) is a non-starter.
Title: Re: Republican Tax Plan
Post by: Seriati on October 19, 2017, 09:48:00 AM
The US stimulated its economy more than all of the other developed nations, and the US economy recovered to a greater degree than all of the other developed economies. The conservative economic theory that austerity is the appropriate response to economic collapse was tested and, once again, proven wrong.

As Fenring mentioned, there's quite a gap between "austerity" (great liberal buzz/scare word, intended to try to make people believe that spending within their means is inherently stingy) and the reckless and unsustainable over "stimulation" (another great buzz word, intended again to get people to ignore what it really is - borrowing money with no intent of ever being able to pay it back to trade a short term boost for a long time loss). 

But your basic premise is flawed.  Obama's policies tanked our recovery because of over regulation and anti-business tax and regulatory policies.  Most of the developed world (ie Europe) has an even bigger love of excessive regulation, which is what really tanked their growth.  The EU is bad for business and getting worse.

If stimulation worked the way you believe, Obama's economy would have been record setting in a good way.  Why is it though, when the result you predict isn't what occurs it doesn't cause you to relook at your premise?  Instead you find some way to claim it still worked.
Title: Re: Republican Tax Plan
Post by: DonaldD on October 19, 2017, 10:24:50 AM
By what metric did the economic recovery of the USA "tank"?  It wasn't the unemployment rate or GDP per capita, which both showed strong positive trends over the period in question. Given that those two metrics show strong growth over the period, characterizing the effects of whatever actions Obama took as having tanked the economy requires a bunch of other metrics having strong and unambiguous negative responses over that same period.  What are they?
Title: Re: Republican Tax Plan
Post by: DonaldD on October 19, 2017, 12:06:09 PM
Oh, and "austerity" is not exactly a liberal buzzword. In economics, it is a long-standing and essentially value-neutral term. Heck, David Cameron, at the time British Conservative Party leader, embraced the term "age of austerity" while proposing to reduce government overspending in the future.
Title: Re: Republican Tax Plan
Post by: Crunch on October 27, 2017, 09:40:09 AM
If you’re going to cut taxes at all, it almost by definition will predominantly affect wealthy taxpayers as they’re very nearly paying all the taxes. The middle class is paying at a rate that a tax cut there will not really have much effect on them or the economy so if you support tax cuts then you support the cuts at higher earnings.

Update to that:
Quote
Any tax cut for middle income earners will also provide a benefit for those further up the income scale, including the top 20 percent who pay 95 percent of all income taxes, according to the director of the Office of Management and Budget [Mick Mulvaney].

So yeah, the top 20% pay very nearly all federal taxes - 95% of them. You can’t cut taxes at all without cutting taxes on that top 20%, here’s why:
Quote
People always ask all the time, ‘Why do you want to give a tax cut to the rich?' Here's the math. We have a progressive tax system, which means that if you make $1 million and I make $50,000, we both pay the exact same rate on the first, let's say, $20,000. And then, from the next $20,000 up to my $50,000, and her next $20,000 to her next $50,000, we pay the same, I think it's 12 percent of 15 percent, I can't remember where the brackets are right now. And then she goes on to pay her higher rate on the stuff that she makes and I stop.

Well, if you want to give me, the middle class, a cut, take my 15 percent rate down to say 10 percent, and that gives the middle class a cut. Guess who else benefits from that, she does. She pays that same rate on the way up the brackets.

So the way the taxing scheme is structured guarantees that any cut affects all taxpayers, that’s just the way it is. It’s not about any job creation or trickle down or however else you want to muddy the waters, it’s just a fact of the federal tax structure.

Going down to the lower quintiles:
Quote
If you break the income tax universe into what we call quintiles, so equal sized 20 percent columns, the first two columns, the first quintile and the lower quintile, don't pay any taxes at all. In fact they net positive. We pay them when they file a tax return.

So 40% of people not only don’t pay federal income taxes, they actually are profiting from filing in a classic wealth transfer scheme. You can’t cut their taxes, there’s nothing to cut.

The next 2 quintiles only pay 5% of the federal tax burden. It’s hard to cut their taxes and have much impact and, as shown, it rolls up to cut the taxes of the top 20% as well. 
Title: Re: Republican Tax Plan
Post by: TheDrake on October 27, 2017, 03:21:08 PM
Quote
People always ask all the time, ‘Why do you want to give a tax cut to the rich?' Here's the math. We have a progressive tax system, which means that if you make $1 million and I make $50,000, we both pay the exact same rate on the first, let's say, $20,000. And then, from the next $20,000 up to my $50,000, and her next $20,000 to her next $50,000, we pay the same, I think it's 12 percent of 15 percent, I can't remember where the brackets are right now. And then she goes on to pay her higher rate on the stuff that she makes and I stop.

You can clearly adjust the rates to be revenue neutral to the rich while cutting the lower bracket. You lower the lowest rate and raise the middle rate. This is just sophistry, as this isn't even what people are referring to when they discuss cutting the taxes of the rich. They are talking about AMT reform and estate tax repeal- which benefits no one in the lower brackets. Regardless of how beneficial they might be, they are unequivocal tax cuts for the rich. Others, like capital gains, are de-facto cuts for the rich because people in the lower quintile usually have debt - not savings, and certainly not investment.

So the scheme very much doesn't have to affect everyone. It is very possible to cut taxes to the rich with no benefit to people in lower quintiles.

As to the merits, I'll step aside for that discussion.
Title: Re: Republican Tax Plan
Post by: Wayward Son on October 30, 2017, 12:24:28 PM
I always love it when someone talks about how much the upper X% pay of the share of taxes without mentioning what is their share of the total income in this country.  :)

Quote
Any tax cut for middle income earners will also provide a benefit for those further up the income scale, including the top 20 percent who pay 95 percent of all income taxes, according to the director of the Office of Management and Budget [Mick Mulvaney].

In order to get that high a percent, he must be including everyone who doesn't make any income at all--mostly children, students and retirees.  It certainly is not just those who file taxes.  Does anyone know the breakdown of his numbers?

Quote
People always ask all the time, ‘Why do you want to give a tax cut to the rich?' Here's the math. We have a progressive tax system, which means that if you make $1 million and I make $50,000, we both pay the exact same rate on the first, let's say, $20,000. And then, from the next $20,000 up to my $50,000, and her next $20,000 to her next $50,000, we pay the same, I think it's 12 percent of 15 percent, I can't remember where the brackets are right now. And then she goes on to pay her higher rate on the stuff that she makes and I stop.

Well, if you want to give me, the middle class, a cut, take my 15 percent rate down to say 10 percent, and that gives the middle class a cut. Guess who else benefits from that, she does. She pays that same rate on the way up the brackets.

Mnuchin is being disingenuous here.  While everything he says is true, if that was the only source of the tax breaks, the percentage should go down for higher-income people.

Let's say that people pay 10% on their first $20,000 in income.  (I don't recall the exact percentage--someone can correct me with the correct numbers if they'd like.)  So someone making $50,000/yr would currently pay $2000 for their first $20,000 and $4500 for their next $50,000, for a total of $6500.  If the tax on the middle bracket was reduced to 12%, they would only pay $3600 for that bracket, reducing their total tax to $5600.  A 13% decrease.

Now let's say someone making $130,000/yr pays 25% for their income between $50,000 - $130,000.  (Again, a guess.  Please feel free to find the precise percentage.)  That means the person pays $26,500 in taxes.  But if the percentage is cut in the aforementioned bracket, his total taxes would now be $26,600--a whopping 3% tax decrease.

Is the percentage of tax decrease to the highest percentage lower than to the middle class?

Furthermore, since it is a fixed number of dollars less for each person, the top 20% of taxpayers would have the same total tax decrease as 20% in the middle class.  IOW, the top 20% would have the same total tax decrease as the next 20% of taxpayers.  Are the numbers showing that?

So while it is true that a tax break to the middle class would also cut taxes to the upper class, it would not show a higher percent of tax cuts to the upper class, and the total tax break by dollars would be the same for the same percentages of taxpayers in the different groups.  Instead, we are seeing higher total tax decreases to the top percentage earners, which means the decreases are not coming from the middle-class tax bracket.
Title: Re: Republican Tax Plan
Post by: DonaldD on October 30, 2017, 01:16:04 PM
Quote
So someone making $50,000/yr would currently pay $2000 for their first $20,000 and $4500 for their next $50,000, for a total of $6500.
Did you mean $70,000 the first time you mentioned $50,000, or $30,000 the second time? ;)
Title: Re: Republican Tax Plan
Post by: Wayward Son on October 30, 2017, 04:27:23 PM
Quote
So someone making $50,000/yr would currently pay $2000 for their first $20,000 and $4500 for their next $50,000, for a total of $6500.
Did you mean $70,000 the first time you mentioned $50,000, or $30,000 the second time? ;)

I mean $4500 for the income between $20,000 and $50,000.  :-[

Man, I could use an editor!  :(
Title: Re: Republican Tax Plan
Post by: yossarian22c on October 31, 2017, 10:33:02 PM
If we really cared about honesty in talking about federal income taxes and the percent different groups pay we would include the taxes paid for Medicare and SS.
Title: Re: Republican Tax Plan
Post by: TheDrake on November 01, 2017, 10:05:51 AM
If we really cared about honesty in talking about federal income taxes and the percent different groups pay we would include the taxes paid for Medicare and SS.

I agree. We should be talking about effective rates, but that gets awfully complicated because it starts including deduction impacts for everything from having children to renewable energy. Those effective rates should also include gasoline taxes and other consumable taxes. The problem is that the system is too byzantine to even define who pays what.
Title: Re: Republican Tax Plan
Post by: Seriati on November 01, 2017, 12:57:34 PM
Now obviously I don't agree with everything in this article, it's more written from Greg's side of the fence, but I think it's interesting in the detail it provides and it's discussion on why the corporate rate needs to go down.

https://www.wsj.com/articles/gop-goes-with-the-global-flow-tax-people-not-companies-1509554364 (https://www.wsj.com/articles/gop-goes-with-the-global-flow-tax-people-not-companies-1509554364)
Title: Re: Republican Tax Plan
Post by: Seriati on November 01, 2017, 12:59:51 PM
Oh, and "austerity" is not exactly a liberal buzzword. In economics, it is a long-standing and essentially value-neutral term.

I agree, if liberals used "austerity" correctly I would not have called it a liberal buzz word.  Austerity requires a commit to controlling the public debt which neither party has shown, nor will tax relief do anything really to control public spending.  Cutting revenues /= to austerity.
Title: Re: Republican Tax Plan
Post by: Seriati on November 01, 2017, 01:43:32 PM
Quote
People always ask all the time, ‘Why do you want to give a tax cut to the rich?' Here's the math. We have a progressive tax system, which means that if you make $1 million and I make $50,000, we both pay the exact same rate on the first, let's say, $20,000. And then, from the next $20,000 up to my $50,000, and her next $20,000 to her next $50,000, we pay the same, I think it's 12 percent of 15 percent, I can't remember where the brackets are right now. And then she goes on to pay her higher rate on the stuff that she makes and I stop.

Well, if you want to give me, the middle class, a cut, take my 15 percent rate down to say 10 percent, and that gives the middle class a cut. Guess who else benefits from that, she does. She pays that same rate on the way up the brackets.

Mnuchin is being disingenuous here.  While everything he says is true, if that was the only source of the tax breaks, the percentage should go down for higher-income people.

His point is silly, but your math is worse.  It's silly because the incremental bracket point is true, it's just not why the "rich" are benefiting (by the way we're not talking about the rich, we're talking about high income earners, which is not necessarily the same group).

Quote
Let's say that people pay 10% on their first $20,000 in income.

Let's not, cause it's not true.  Everyone gets the standard deduction, which means the first dollars you earn are effectively tax free.  Why is that relevant, when rich people get the same thing (or even better itemized deductions)?  Because it impacts the effective tax rate paid.  I think we currently have over forty percent with an effective rate of zero or less.  They can't get a tax cut. 

Doubling the standard deduction is going to increase that group of people, and extend the group of people for whom their effective tax rate is below even the tax rate of the bottom of the bracket.

So your $20k earner, had a standard deduction of $9,300 leaving a taxable income of $10,700, with a simple tax liability of about $1,140 (which honestly, would almost never be the case because they'd be entitled to other credits, including refundable ones and deductions).  An effective tax rate of 5.7%.

Your 50k earner, on the same assumptions (which are fairer in a 50k earner case on the credits as they'd be far less likely, but not on the deductions which would be far more likely). Would have a taxable income of $40,700 and a simple tax liability of $5,950.  An effective tax rate of 11.9%

That was based on the existing 10/15/25% brackets beginning at 0, 9275, 37560, respectively.  If we change those to 5/10/20, and begin them at 0, 15000, 47000, with a double personal exemption of 18,600 the results are as follows:

Your 20k earner, has $1400 taxable at 10% for $140 liability an effective rate of 0.7% (almost a 90% reduction).  They pay 1/10 of what they currently would.

Your 50k earner, has taxable income of 31,400.  15,000 at 10% and 16400 at 15% for a total of $3960 and an effective rate of 7.9% (which is 34% reduction).  They pay 2/3's of what they currently would.

The higher you go up the chain, the less the actual impact - by percentage - actually will be, until you get to the top of the chain where it will literally approach exactly the different between the two top brackets.  If the top bracket goes from 39% to 30% then the limit on this particular change will approach approximately a 25% reduction with the top earners paying 75% of what they would have. I note however, the current rumor is that the top bracket may stay in place, which means not much tax relief to the top earners.
Title: Re: Republican Tax Plan
Post by: Seriati on November 01, 2017, 01:49:05 PM
That was based on the existing 10/15/25% brackets beginning at 0, 9275, 37560, respectively.  If we change those to 5/10/20, and begin them at 0, 15000, 47000, with a double personal exemption of 18,600 the results are as follows:

Your 20k earner, has $1400 taxable at 10% for $140 liability an effective rate of 0.7% (almost a 90% reduction).  They pay 1/10 of what they currently would.

Your 50k earner, has taxable income of 31,400.  15,000 at 10% and 16400 at 15% for a total of $3960 and an effective rate of 7.9% (which is 34% reduction).  They pay 2/3's of what they currently would.

This math is wrong too.  I used the old bracket rates.  With the posited 5 and 10 applying it comes out like this:

Your 20k earner, has $1400 taxable at 5% for $70 liability an effective rate of 0.35% (almost a 95% reduction).  They pay 1/20 of what they currently would.

Your 50k earner, has taxable income of 31,400.  15,000 at 5% and 16400 at 10% for a total of $2390 and an effective rate of 4.8% (which is a 60% reduction).  They pay 2/5's of what they currently would.
Title: Re: Republican Tax Plan
Post by: Wayward Son on November 01, 2017, 03:22:12 PM
Quote
His point is silly, but your math is worse.

My math was a back-of-an-envelope quickie, so I'll accede to your critique.  But both our maths come to the same conclusion: Mnuchin implied that any tax cuts to the rich come from tax cuts to the middle class, and that is patently untrue.  The tax cuts to the wealthy would look significantly different if it were true.
Title: Re: Republican Tax Plan
Post by: Seriati on November 01, 2017, 05:06:08 PM
Which is why I said his point is silly.  The impact of larger deductions and reduced lower rates flows overwhelming to the middle class.  The impact of a reduction in the top rate is the only one that hits big income earners materially.

Again though top wage earners /= rich.  High wages correlate to jobs in Cities, not necessarily wealth.  People like Buffet have big wages but the vast majority of their income is not wages and is not often subject to these tax rates.
Title: Re: Republican Tax Plan
Post by: TheDrake on November 16, 2017, 05:02:58 PM
* Here's what I like about the house bill.

It seems pretty neutral for the lowest earners. While the 10% bracket moves up to 12%, the increase in standard deduction is nearly 6k.
Reduces the procreation subsidy by eliminating 4k personal exemption. It does raise some other credits, but they are capped for high income which the exemption was not.
It cuts the mortgage deduction if your debt is over $500k
Dumps a lot of deductions that I think are used to game the system
Gets rid of AMT

* There are things I don't like

Removing moving expense deduction for people willing to relocate to find work and/or move to lower cost areas.
Repealing the estate tax, mostly benefiting people who croak as multimillionaires.
corp tax rate to 20%. I think this is too huge of an experiment, I'd prefer it not so drastic.
Lowers tax rate on pass-through. I think this encourages more gaming of the system and tax avoidance.

* There are some things that just confuse me.

Why is the top bracket 39.6? I know that's no change from prior, but can't it just be 40%? Everything else is rounded to the nearest whole percent.
I really am not equipped to form an opinion on the whole overseas corp profit thing.
Title: Re: Republican Tax Plan
Post by: D.W. on November 16, 2017, 05:11:17 PM
I haven't compared the nitty gritty of each bill, but my biggest gripes, other than thinking the whole thing is unnecessary right now, are the little things that people glom onto it.  Repeal ACA mandate?  I get it, you hate this, and yes, the ACA did bring this on by the mechanics of the mandate, but can't we just save health care for later?  There's also changes to political contributions from religious institutions in one of them right? 

I don't think I'll ever get over my revulsion of horsetrading and trying to "sneak one past" the public by burying unrelated or somewhat unrelated things into bills.  Or worse, burying unpopular and otherwise unpassable items through "must pass" or otherwise popular bills.
Title: Re: Republican Tax Plan
Post by: Crunch on November 17, 2017, 09:07:38 AM
Repeal ACA mandate?  I get it, you hate this, and yes, the ACA did bring this on by the mechanics of the mandate, but can't we just save health care for later?  There's also changes to political contributions from religious institutions in one of them right? 

I don't think I'll ever get over my revulsion of horsetrading and trying to "sneak one past" the public by burying unrelated or somewhat unrelated things into bills.  Or worse, burying unpopular and otherwise unpassable items through "must pass" or otherwise popular bills.
It was ruled a tax. Addressing in a tax bill is perfectly legitimate, not a sneaky or unrelated thing in any way. Why do you object to addressing taxes in tax bills?
Title: Re: Republican Tax Plan
Post by: D.W. on November 17, 2017, 09:32:17 AM
Because removing just that, without addressing health care as a broader issue, is strait up sabotage that's going to cost people money in (more quickly) raising premiums leave more people uninsured.

Now maybe the theory (or excuse) is that this will shine a light on the problem with ACA and light a fire under all of congress to address healthcare overall... 

And it being ruled a tax, opened it up for this.  I don't contest that.  It's still a political move that does zero good, a lot of harm, and is part of a much more complicated discussion our country needs to have.

That's why I object to it.  It's also the part I was least comfortable with when it went through in the first place.  The goal was logical, the mechanic was always the Achilles heel of the plan.
Title: Re: Republican Tax Plan
Post by: TheDrake on November 17, 2017, 10:36:23 AM
ACA is already effectively dead from dropping payment. Premiums will/have doubled. I don't think the tax bill has much relevance on that front now.

Trump's legacy, part of it, will be making healthcare unaffordable for millions that used to have access. The tax reform is irrelevant to that.
Title: Re: Republican Tax Plan
Post by: Wayward Son on November 20, 2017, 10:51:06 AM
Here's one for the books.

The Republican tax plan could increase taxes on graduate students by up to 400 percent. (https://www.cnbc.com/2017/11/16/house-gop-tax-plan-could-increase-taxes-for-grad-students-by-400-percent.html)

Graduate students often receive a tuition waver, worth up to $50,000 or more.  This makes sense, since more graduate students aren't working, and live off stipends or other financial aid which barely cover the cost of living.

The proposed Republican plan would make this waiver taxable.

So a grad student living off a $30,000 stipend (which is taxable) with a $50,000 tuition waiver would suddenly see his taxable income increase from $30,000 a year to $80,000 a year!  :o

You want to try to live off $30,000 a year after paying taxes for $80,000 a year?

This is truly insane.  Trying to pay for a corporate tax cut by taxing graduate students, forcing many of them to drop out?

Call your Representative. (http://phdcomics.com/comics.php?f=1985)
Title: Re: Republican Tax Plan
Post by: TheDrake on November 20, 2017, 11:24:36 AM
Perhaps without a waiver, schools would have to lower their tuition from the egregiously high levels that are currently the case. The current system is designed to smash the rich students with massive bills while winking and nodding to all the working poor students. The answer is not to wreck the lives of the poor students, but rather to redress this poor system.

117(d) requires that students work for the university in exchange for the aid. That sounds a whole lot like salary to me, or a taxable benefit. Universities can still get students to work for their stipends (taxable).

Since no real increase in revenue will occur, it can't pay for any other tax cuts. Even if the dire pronouncement were true (students will have to drop out), they still won't be providing revenue, they'll be out of the system.
Title: Re: Republican Tax Plan
Post by: Wayward Son on November 20, 2017, 12:11:35 PM
Perhaps without a waiver, schools would have to lower their tuition from the egregiously high levels that are currently the case. The current system is designed to smash the rich students with massive bills while winking and nodding to all the working poor students. The answer is not to wreck the lives of the poor students, but rather to redress this poor system.

It's certainly a ham-handed way to do it, don't you think?  Make graduate education unaffordable until universities lower the cost.  What happens to the students in the meantime?

And, of course, who decided that tuitions are at "egregiously high levels?"  Are universities rolling in unspent money, or paying their stock holders large dividends?  Or are they not as frugal as some people outside the universities think they should be? 

"Egregiously high" is somewhat subjective, don't you think?  To a student, the tuitions are egregiously high.  To the university president, who doesn't have enough money to pay for everything, they might be egregiously low.  Yet this tax assumes it is high, across the board, regardless of circumstances.

Quote
117(d) requires that students work for the university in exchange for the aid. That sounds a whole lot like salary to me, or a taxable benefit. Universities can still get students to work for their stipends (taxable).

Since no real increase in revenue will occur, it can't pay for any other tax cuts. Even if the dire pronouncement were true (students will have to drop out), they still won't be providing revenue, they'll be out of the system.

Revenue increase will occur, from those graduate students who hang on and get the tax increase.

But, of course, the tax is for something they are not paying for.  ::)  So it's not like they were getting this money from the university and now have to give the Federal government part of it.  It was money they didn't have to pay, that the university was not charging them, and now they have to pay.

So universities will have to increase their graduate student stipends to help them pay the government for money they didn't charge the student in the first place.  Does this make any sense to anyone?  ???
Title: Re: Republican Tax Plan
Post by: D.W. on November 20, 2017, 12:18:21 PM
Quote
"Egregiously high" is somewhat subjective, don't you think?
It's only subjective in that some people will have differing opinions about how many years one should be willing to accept tuition debt after graduation based upon how easily they can find employment with their degree and the pay they are likely to receive on that job. 

By historical comparisons, it IS egregiously high. 
Title: Re: Republican Tax Plan
Post by: Fenring on November 20, 2017, 12:49:58 PM
And, of course, who decided that tuitions are at "egregiously high levels?"

Who decided that putting young people into debt slavery is bad? No one decided it, it's a fact.

Quote
"Egregiously high" is somewhat subjective, don't you think?

No. Being overcharged for a service you're led to believe is essentially mandatory removes any subjectivity from the equation. An important discussion is whether it should be considered mandatory or whether the job market should expect university degrees for some kinds of employment. But while it does require them the discussion is moot: the cost is outrageous.
Title: Re: Republican Tax Plan
Post by: TheDrake on November 20, 2017, 12:50:25 PM
"Egregiously high" is somewhat subjective, don't you think?  To a student, the tuitions are egregiously high.  To the university president, who doesn't have enough money to pay for everything, they might be egregiously low.  Yet this tax assumes it is high, across the board, regardless of circumstances.

That's fair, it is somewhat subjective. I base my own personal assessment on the time value of money. Unless you earn back more than you put in, versus the money that you could have made with the best alternative, that's one way to look at it. Another is personal satisfaction - does it make the individual happier than $300,000 spent on consumer goods or travel or charitable giving?

If the former, it is about training and career value. If the latter, it can get as expensive as someone can bear, but doesn't need subsidy.

Quote
Quote
117(d) requires that students work for the university in exchange for the aid. That sounds a whole lot like salary to me, or a taxable benefit. Universities can still get students to work for their stipends (taxable).

Since no real increase in revenue will occur, it can't pay for any other tax cuts. Even if the dire pronouncement were true (students will have to drop out), they still won't be providing revenue, they'll be out of the system.

Revenue increase will occur, from those graduate students who hang on and get the tax increase.

But, of course, the tax is for something they are not paying for.  ::)  So it's not like they were getting this money from the university and now have to give the Federal government part of it.  It was money they didn't have to pay, that the university was not charging them, and now they have to pay.

So universities will have to increase their graduate student stipends to help them pay the government for money they didn't charge the student in the first place.  Does this make any sense to anyone?  ???

Stipends don't help, they are already taxed. Very very simple solution - scholarships instead of tuition waivers. Problem solved.

BTW, other employers are capped at $5,250 tax free tuition assistance. So if IBM wants to pay somebody to be a full time student, they are only allowed a paltry assistance tax free, but if a University wants to pay somebody to be a full time student they get to do whatever they want.

Discounts also do tend to be taxable after some point. The current standard for every other company discounting its own product, is that employee discounts may not exceed 20% of the normal price. Otherwise Tesla would just pay employees in Teslas, tax free.

A university is essentially offering a student an employee discount, I don't know why it should have special rules. If the societal goal is to promote more education, I would think you'd want it to apply to any potential entity that wants to get in on it.
Title: Re: Republican Tax Plan
Post by: LetterRip on November 20, 2017, 01:06:16 PM
A university is essentially offering a student an employee discount, I don't know why it should have special rules. If the societal goal is to promote more education, I would think you'd want it to apply to any potential entity that wants to get in on it.

No, a university is offering employee training.  The knowledge is generally necessary for the research that the graduate student is being paid for.

Do you think that employees should be taxed on the training that they receive from their employers?
Title: Re: Republican Tax Plan
Post by: Fenring on November 20, 2017, 01:13:44 PM
Do you think that employees should be taxed on the training that they receive from their employers?

The only proviso is that the training gained at once place can be used to gain employment at another university. However if we consider the system on the aggregate it probably evens out to an extent (i.e. one business 'loses' people it's trained but then gains people trained elsewhere under the same system).
Title: Re: Republican Tax Plan
Post by: TheDrake on November 20, 2017, 01:39:57 PM
Quote
No, a university is offering employee training.  The knowledge is generally necessary for the research that the graduate student is being paid for.

Do you think that employees should be taxed on the training that they receive from their employers?

That's an interesting way of looking at it. I'm not sure what happens when a company that gives training that has an open-market value generally has to do. Without a market value, everything becomes moot, because there is no standard for taxation. If I sit in on an internal seminar, it has no public value.

This argument does nothing to salvage tuition waivers for family members, but I think it has merit for the student-employees.

As for the "knowledge generally necessary" part - this would apply equally to corporate tuition reimbursement, wouldn't it? I don't know why it is any different when you provide the training personally or outsource it.

The tests for this under IRS rules:

Quote
To qualify as a working condition benefit, the education must meet at least one of the following tests:

» The education is required by the employer or by law for the employee to keep his or her present salary, status, or job and must serve a bona fide business purpose.

» The education maintains or improves skills needed in the job.

Even if the education meets one or both of those tests, the costs would count as taxable income if the education:

» Is needed to meet the minimum educational requirements of the employee's present trade or business, or

» Is part of a program of study that will qualify the employee for a new trade or business.


Title: Re: Republican Tax Plan
Post by: LetterRip on November 20, 2017, 01:47:18 PM
TheDrake,

I've had training - both external training required for my job; and internal training required for my job - that were valuable and marketable to future employers.

It is a reasonable question why tuition shouldn't be fully deductible to employers in general.
Title: Re: Republican Tax Plan
Post by: Seriati on November 20, 2017, 07:00:38 PM
No, a university is offering employee training.  The knowledge is generally necessary for the research that the graduate student is being paid for.

Do you think that employees should be taxed on the training that they receive from their employers?

If this were the end all of the issue, then someone who graduates with a degree, and someone who completes four years and doesn't get a degree should have substantially the same market value.

Another difference, of course, is that almost all schools are tax exempt organizations, while most other companies are not.  A company is not likely to provide training that is not in its own self interest, which means the employee, while benefiting is primarily being trained at a cost to the company to provide benefits to the company which themselves will be taxed when the company earns income. The training of a university, it tangentially to its benefit, it's obligation is to educate its students (that's what they pay for), and they certainly could run a graduate program that did not require "free" work from its graduate students to be applied to the Universities benefit.  In fact, it's questionable that other than getting slave labor and prestige that the work is to the University's benefit in many cases.  And, again, the labor doesn't get taxed when it generates benefits to the University at all.
Title: Re: Republican Tax Plan
Post by: LetterRip on November 20, 2017, 08:48:41 PM

If this were the end all of the issue, then someone who graduates with a degree, and someone who completes four years and doesn't get a degree should have substantially the same market value.

For many graduate students what matters is what they publish - aka their work experience.  The degree in and of itself is fairly worthless.
Title: Re: Republican Tax Plan
Post by: yossarian22c on November 20, 2017, 09:19:53 PM
Lower taxes for Corps (check)
Eliminate taxes for dynastic wealth (check)
Lower taxes for the highest wage earners (check)
Lower taxes for middle - high income earners in "red states" (low income/property tax) (check)
Higher taxes for middle - high income earners those east/west coast liberals (check)
Higher taxes for grad students (check)
No change for low income people (check)
Title: Re: Republican Tax Plan
Post by: TheDrake on November 21, 2017, 12:01:48 PM
Yossarian, can you give me a valid reason why there should be a deduction for high local taxes? Not a "who wins versus what we did last year" but a logical argument that stands on its own? E.g.

In order to achieve <blank> we should ensure that people who live in high tax states and municipalities pay less federal income tax.

Also: The state and local tax deduction disproportionately benefits high-income taxpayers, with more than 88 percent of the benefit flowing to those with incomes in excess of $100,000. Sounds like a fat benefit for the rich just got taken away.

Title: Re: Republican Tax Plan
Post by: D.W. on November 21, 2017, 12:07:40 PM
This is the game.  You make token gestures that trap people by their own hypocrisy and do so without harming your own voting base.  I don't think their are many valid reasons to be honest.  That doesn't mean that blatant partisanship forced through on a party line vote isn't infuriating. 

This whole bill is nothing but a gift to the high value donors.  This is what they spent their money for.  The only surprising thing is how the working class Trump supporters are eating up the BS being force fed to the party out of power.
Title: Re: Republican Tax Plan
Post by: yossarian22c on November 21, 2017, 01:04:26 PM
Yossarian, can you give me a valid reason why there should be a deduction for high local taxes? Not a "who wins versus what we did last year" but a logical argument that stands on its own? E.g.

Well you get taxed on income by your local and state government and then the feds tax what is left over. If there is any justifiable deduction it is that. I am much more sympathetic to the elimination of the mortgage interest deduction which benefits many of the people in the same group.

They are also eliminating the deduction for health care expenses in excess of 10% of income. I don't really see a reason for a tax bill that picks on the sick and grad students so congress can pay for eliminating the estate tax.
Title: Re: Republican Tax Plan
Post by: yossarian22c on November 21, 2017, 01:52:50 PM
While we're on it, state and local taxes I think should actually be a deduction everyone gets (i.e. not an either/or with the standard deduction). I would be happy if this were automatically calculated as part of your w2 so that everyone got this deduction. In exchange I would be happy to see the mortgage interest deduction scrapped, I see little merit in a tax benefit to people taking on large debts.
Title: Re: Republican Tax Plan
Post by: Fenring on November 21, 2017, 02:07:51 PM
In exchange I would be happy to see the mortgage interest deduction scrapped, I see little merit in a tax benefit to people taking on large debts.

I don't know about that one. I don't see the value in making it harder for middle class people to open a new business or to purchase property when they're the ones who might be on the border of being able to do so in the first place. If what you're going after is to hit the pocketbook of 'the rich' then I don't think this is a good way. Maybe what you might want to do is put a cap on the absolute amount of interest you can deduct per year in this way so that everyone across the board gets an equal value there and the rich don't cash in more than the middle class. Eliminating it altogether sounds like an exercise in hurting the economy while helping no one.

In any case I find discussions about which important thing to cut laughable when the military budget is what it is.
Title: Re: Republican Tax Plan
Post by: NobleHunter on November 21, 2017, 02:15:32 PM
There's an argument that the mortgage deduction just inflates house prices by making bigger mortgages more "affordable."
Title: Re: Republican Tax Plan
Post by: Fenring on November 21, 2017, 02:27:32 PM
There's an argument that the mortgage deduction just inflates house prices by making bigger mortgages more "affordable."

If foreign investment wasn't a thing then I could see this argument holding water. You could at least measure the local effects of changing the amount and decide whether it's causing an inflation or not. But as it stands in areas where the laws make foreign investment easy you have a situation where a combination of factors can drive up housing prices. In NYC in the last 30 years the prices went insanely high and I very much doubt this can be attributed to the ease of taking housing loans. Maybe it was a contributing factor, maybe not, but the sheer amount of foreign investment there makes any such effect probably negligible in comparison. In other cities it may not be quite that extreme but bottom line if we're talking about definitely hitting the middle class with eliminating their deduction then you'd better be pretty sure that the deduction is the real cause of the supposed inflation. And even if it is I would worry that it would pave the way for wealthier competition to swoop in and buy up the real estate that someone on the border could have done and now can't, so instead of a deflation it might just cause the proportion of buyers to shift to the wealthier end of the spectrum.
Title: Re: Republican Tax Plan
Post by: Seriati on November 21, 2017, 03:16:49 PM
There's an argument that the mortgage deduction just inflates house prices by making bigger mortgages more "affordable."

What makes housing prices inflate are rules on easy credit.  Pegging the fed rate at zero for eight years, letting people finance with less than 5% down, forcing banks to lend to people with damaged or horrible credit in disadvantaged areas.  The end result of that is what causes massive loans.

The trade off you get is that you put people into houses 10-20 years before they otherwise would have afforded and the vast majority of them "make it".  With that kind of credit policy the mortgage interest deduction is necessary to keep the line of the "make its" versus the "loses their houses" relatively stable.
Title: Re: Republican Tax Plan
Post by: Seriati on November 21, 2017, 03:22:28 PM
Lower taxes for Corps (check)
Eliminate taxes for dynastic wealth (check)
Lower taxes for the highest wage earners (check)
Lower taxes for middle - high income earners in "red states" (low income/property tax) (check)
Higher taxes for middle - high income earners those east/west coast liberals (check)
Higher taxes for grad students (check)
No change for low income people (check)

Poorly thought out list of bullets (check)

You seem not understand the actual tax impacts of the proposals, or have the remotest understanding of how they would interact.  You'd have to posit that the corporate tax change won't increase the economy or salaries (notwithstanding that all evidence globally is that this is a settled fact, and most other countries have deliberately lowered their corporate tax rates to achieve this effect), which if either occur, virtually all income groups improve, but particularly the middle class.

You also seem to ignore that many low income people are going to have their tax burdens (if they bore any taxes) radically reduced by the bracket change.  It also seems with the changes to certain credits there will be additional gifts to some of those whose taxes are negative (and refundable).

Professionals in high tax states are about the only group that doesn't straight up benefit, and even they will benefit if the economy improves even half as much as is reasonably predictable.

Maybe you could offer some explanation rather that "check" for the opinions.
Title: Re: Republican Tax Plan
Post by: DonaldD on November 21, 2017, 03:52:50 PM
Quote
You'd have to posit that the corporate tax change won't increase the economy or salaries (notwithstanding that all evidence globally is that this is a settled fact, and most other countries have deliberately lowered their corporate tax rates to achieve this effect), which if either occur, virtually all income groups improve, but particularly the middle class.
I don't think the word "fact" means what you think it means.

Corporations are already making record profits.  Increasing their profits and expecting that will magically lead to higher salaries?  it's just not going to happen; otherwise, their record profits in recent years would have led to higher salaries, not to the salary stagnation that we have seen.

As for "increasing the economy" (whatever that means): I suppose giving shareholders, board members and C-level administrators stock value increases might be considered "increasing the economy", but I can't imagine most people think that to be terribly sexy.
Title: Re: Republican Tax Plan
Post by: yossarian22c on November 21, 2017, 05:04:20 PM
Lower taxes for Corps (check)
Eliminate taxes for dynastic wealth (check)
Lower taxes for the highest wage earners (check)
Lower taxes for middle - high income earners in "red states" (low income/property tax) (check)
Higher taxes for middle - high income earners those east/west coast liberals (check)
Higher taxes for grad students (check)
No change for low income people (check)

Poorly thought out list of bullets (check)

You seem not understand the actual tax impacts of the proposals, or have the remotest understanding of how they would interact.  You'd have to posit that the corporate tax change won't increase the economy or salaries (notwithstanding that all evidence globally is that this is a settled fact, and most other countries have deliberately lowered their corporate tax rates to achieve this effect), which if either occur, virtually all income groups improve, but particularly the middle class.

You also seem to ignore that many low income people are going to have their tax burdens (if they bore any taxes) radically reduced by the bracket change.  It also seems with the changes to certain credits there will be additional gifts to some of those whose taxes are negative (and refundable).

Professionals in high tax states are about the only group that doesn't straight up benefit, and even they will benefit if the economy improves even half as much as is reasonably predictable.

Maybe you could offer some explanation rather that "check" for the opinions.

So you agree with all the points except the no change for low income people? Did you just not like the presentation or are there more of those points you actually disagree with?

I didn't address the knock off issues just the direct effects of the bill. That would be a more detailed discussion but almost no economist not in the administration is claiming a majority of the corporate tax cut would end up in workers pockets. Other countries have lowered taxes in a race to the bottom regulation/tax environment in order to attract companies to come in the first place, I haven't seen any evidence that lower corporate tax rates in a country lead directly to significantly higher wages.
Title: Re: Republican Tax Plan
Post by: TheDrake on November 21, 2017, 06:01:17 PM
I don't think you can at all correlate a change in tax rate with an increase in workers wages. More debatable is an increase in available jobs, certainly in the short term a drop in rate has an effect (usually a "special deal" for situations like the Amazon HQ Bonanza Scavenger Hunt).

In general, It think the company is not going to suddenly decide to give their employees better compensation. The only way it goes up is scarcity of workers, but especially in this day and age, a company may be much better off buying automation than paying for hard to find workers. Leftovers might fuel an expansion, but it also might just as easily spur a stock buyback, translate in to windfall dividends, or power an M&A frenzy that can actually consolidate work, losing jobs and the mobility of workers at the same time.

I'm generally in favor of lowering corporate income tax, I think it leads to pathologies. I'd much rather just tax individuals appropriately due to the impact on exports. "Tax corporations" really just translates into "Tax investors", "Tax employees", or "Tax Customers"

You can do the former by raising capital gains taxes, the second by raising personal income tax or payroll tax, the third by a sales or use tax.

Title: Re: Republican Tax Plan
Post by: Seriati on November 22, 2017, 11:30:07 PM
So you guys don't think it sounds right that corporate tax rates being lower will increase wages, and therefore its not a fact.  Can I ask that you do a little bit of research on the point and come back to me.  Whether something sounds right to you is not a test of whether its a fact, or is representative of a fairly large body of research, and you certainly didn't dispute or even acknowledge that many countries around the world have deliberately cut their corporate tax rates to try and achieve this result.

But hey, "corporations" have "too much money" ergo higher taxes must be good.  /sigh
Title: Re: Republican Tax Plan
Post by: yossarian22c on November 23, 2017, 07:48:14 AM
So you guys don't think it sounds right that corporate tax rates being lower will increase wages, and therefore its not a fact.  Can I ask that you do a little bit of research on the point and come back to me. 

https://www.cbpp.org/research/federal-tax/corporate-tax-cuts-mainly-benefit-shareholders-and-ceos-not-workers

Countries cut taxes in order to attract businesses in the first place. Sometimes getting Apple to set up "headquarters" in Ireland is going to bring some relatively high paying jobs but I don't think that goes through to raises in workers already employed there. You have the reason for the tax cuts wrong.
Title: Re: Republican Tax Plan
Post by: DonaldD on November 23, 2017, 08:16:33 AM
Fact: Corporate profits have been increasing over a number of years.
Fact: Wage rates have been stagnant over that same period.
Fact: Corporate profits are at an all time high.
Fact: Reducing actual corporate taxes will increase corporate profits further.
Wishful thinking: the profit increases related to reduced corporate taxes will be redirected in significant amounts to raising wages, where profit increases not related to tax reduction have not gone towards raising wages.

As to this
Quote
But hey, "corporations" have "too much money" ergo higher taxes must be good.  /sigh
This goes a long way to understanding why you are unable to process these points.  On this topic, as on many others, your argument is based on how you perceive others' motives for holding a position, as opposed to their actual reasons.
Title: Re: Republican Tax Plan
Post by: Seriati on November 27, 2017, 03:07:15 PM
So you guys don't think it sounds right that corporate tax rates being lower will increase wages, and therefore its not a fact.  Can I ask that you do a little bit of research on the point and come back to me. 

https://www.cbpp.org/research/federal-tax/corporate-tax-cuts-mainly-benefit-shareholders-and-ceos-not-workers

Lol, I'll see your progressive think tank (literally by the way a progressive think tank, not figuratively), and raise you a Wall Street Journal (by the way there are several there):

https://www.wsj.com/articles/the-wages-of-corporate-taxes-1508799171 (https://www.wsj.com/articles/the-wages-of-corporate-taxes-1508799171)

A journal article (pay particular attention to the sections where it talks of labor bearing the burden of corporate taxes, but really the whole thing is on point):

https://www.kansascityfed.org/kdnRn/publicat/econrev/pdf/09q2felix.pdf (https://www.kansascityfed.org/kdnRn/publicat/econrev/pdf/09q2felix.pdf)

Or you could take a look at a meta-analysis, that includes a good bit of review on other studies (all of which show increases to corporate taxes strongly depress wages), which itself says the assumption that corporate taxes are paid by shareholders should be questioned, as labor appears to bear a substantial portion.

https://www.treasury.gov/resource-center/tax-policy/tax-analysis/Documents/WP-101.pdf (https://www.treasury.gov/resource-center/tax-policy/tax-analysis/Documents/WP-101.pdf)

And here's a more recent article just to show that this is an international belief:

http://www.nationalreview.com/article/451811/corporate-tax-cuts-benefit-ordinary-workers (http://www.nationalreview.com/article/451811/corporate-tax-cuts-benefit-ordinary-workers)

I get it, it's counter-intuitive for you, but that doesn't make it wrong.

Quote
Countries cut taxes in order to attract businesses in the first place. Sometimes getting Apple to set up "headquarters" in Ireland is going to bring some relatively high paying jobs but I don't think that goes through to raises in workers already employed there. You have the reason for the tax cuts wrong.

Not really, you're just really confused about what it means to move investment capital across jurisdictions.  By the way, you can't have it both ways.  You can't simultaneously believe that government cash infusions through lending and giveaways will generate economic activity and discount that an impact on capital investment won't.  The latter, is far and away, more directly tied to economic growth than the former.
Title: Re: Republican Tax Plan
Post by: Seriati on November 27, 2017, 03:26:07 PM
Fact: Corporate profits have been increasing over a number of years.

And what do you mean by that?  Did you account for this in the "information" you are looking at?

https://www.forbes.com/sites/timworstall/2013/05/07/why-have-corporate-profits-been-rising-as-a-percentage-of-gdp-globalisation/#1717f30d2a6e (https://www.forbes.com/sites/timworstall/2013/05/07/why-have-corporate-profits-been-rising-as-a-percentage-of-gdp-globalisation/#1717f30d2a6e)

Quote
Fact: Wage rates have been stagnant over that same period.

Which is exactly what I would predict in the environment of past eight years, with extreme regulatory uncertainty, massive corporate tax burden and little to no incentive to invest capital in the US or even repatriate it.

Quote
Fact: Corporate profits are at an all time high.

But investment is not at a record high.  There's some interesting scholarship on why.  Did you intend to cite to it, or just to run through a "facts" list and make implications.

FACT:   Honey bees have been dying in droves.
FACT:  Wages are stagnant.

Conclusion?  We need more honey bees?

Quote
Fact: Reducing actual corporate taxes will increase corporate profits further.

Maybe, though that link isn't as clear as you think.  In any event, where do you think that money will go?  Either into new investments by corp, higher wages or dividends (which the recipient will be looking to reinvest). 

If you want better wages, the key is to make reinvestment desirable.  Nothing about anything you've said even remotely tries to do that, which is why your claims are fairly superficial.

Quote
Wishful thinking: the profit increases related to reduced corporate taxes will be redirected in significant amounts to raising wages, where profit increases not related to tax reduction have not gone towards raising wages.

Well, again, I recommend you spend some time reading about why, rather than emoting. Wages are down because re-investment is down, lowering the tax rate is designed to increase investment.  To my view it doesn't even have to be a straight percentage reduction, I'm not above a bit of heavy handedness that ties breaks to generating better jobs in the US (like say giving bonus to the wages deductions (but only on wages for middle class jobs).

Quote
As to this
Quote
But hey, "corporations" have "too much money" ergo higher taxes must be good.  /sigh
This goes a long way to understanding why you are unable to process these points.  On this topic, as on many others, your argument is based on how you perceive others' motives for holding a position, as opposed to their actual reasons.

No, my argument is based on having read enough to have an opinion about why things are happening.  Feel free to walk me through even a marginally sophisticated position.  Emoting things that are described as "naive" in the literature isn't terribly convincing.
Title: Re: Republican Tax Plan
Post by: DonaldD on November 27, 2017, 04:32:29 PM
Quote
massive corporate tax burden
According to GAO and IRS numbers, almost nobody alive today and still working in corporate governance has ever experienced either a lower statutory or effective rates on capital income in the USA (with the exception of a couple of years post 2008 when the tax bailout was in place).

Since WWII, both rates are currently sitting at or very near their lowest points.  The effective rate is also roughly the same as or lower than other first world countries with which the USA might be competing for corporate interest.

So no, there is no "massive corporate tax burden" - at least not as compared to the last 70 years.

Putting aside your misstatement, given that the modern USA economy has never seen lower corporate rates, it is extremely speculative to make any claims on the effects of further reducing the effective rates.
Title: Re: Republican Tax Plan
Post by: Wayward Son on November 27, 2017, 05:33:10 PM
I read most of your links, Seriati (except for the WSJ, for which I am not a subscriber :( ), and I noticed something.

The links talked about how increased corporate taxes were borne by labor, but they did not address how decreased corporate taxes would benefit labor.

The only study cited that talked about benefits to labor (that I noticed) was in the National Review article, which talked about how "workers at a fully unionized firm capture roughly 54 percent of the benefits of low tax rates."  But notice that the paper limited it to "fully unionized firm"s, not firms in general.

While it is logical that corporations hit with higher taxes would cut expenses by cutting labor expenses, it does not follow that those same corporations would increase their labor expenses if they had lower taxes (unless forced to by union negotiations).  When you consider that these same corporations have seen record profits in the past few years and have shown no increase it wages, your links simply do not show that tax cuts to corporations will increase wages.

Perhaps you have some other links that show that?
 
Title: Re: Republican Tax Plan
Post by: Wayward Son on November 27, 2017, 06:16:44 PM
Meanwhile, a deficit hawk at Forbes is having a real hard time with the bill. (https://www.forbes.com/sites/stancollender/2017/11/19/gop-tax-bill-is-the-end-of-all-economic-sanity-in-washington/#790a4bbd77ef)

Quote
There's no economic justification whatsoever for a tax cut at this time. U.S. GDP is growing, unemployment is close to 4 percent (below what is commonly considered "full employment"), corporate profits are at record levels and stock markets are soaring. It makes no sense to add any federal government-induced stimulus to all this private sector-caused economic activity, let alone a tax cut as big as this one...

Consider the following.
•The $1 trillion a year budget deficit will not be the result of cyclical changes that will be reversed when the economy improves. These will be permanent structural deficit increases.
•The tax hikes that will be needed to resolve the structural imbalance between federal spending and revenues will be impossible for political reasons.
•Whenever the U.S. economy grows more slowly than expected or there's a downturn, an annual deficit of $2 trillion could easily become the norm.
•The federal government will have far less ability to respond to economic downturns unless previously unimaginable and politically intolerable deficits, tax increases or spending cuts suddenly become acceptable.
•Reduce the national debt? As they say in New York, fuhgeddaboudit at least in the next decade.
•Much more national debt plus rising interest rates means interest on the national debt will be the fastest growing part of the federal budget.
•Without massive cuts in Social Security, Medicare and the Pentagon, it won't be possible to reduce federal spending enough to do more than tweak the deficit.
•Washington's ability to invest in anything new that will improve the economy (think infrastructure, education and medical research) will be far less given the already-high deficits.
•Even though the limits to monetary policy became obvious the past few years, the Federal Reserve will be the major economic policy maker in Washington over the next decade.

In other words, if the GOP tax bill is enacted, Congress and the president this year will give up almost all ability to deal with the U.S. economy for at least a decade even when, as almost certainly will happen, there's a downturn. No one else will be able to fulfill this role.
Title: Re: Republican Tax Plan
Post by: yossarian22c on November 27, 2017, 06:25:23 PM
I would have more faith in their analysis if they had realized the 1.4 trillion was a 10 year number. That said many of the points retain validity at 150 billion a year.
Title: Re: Republican Tax Plan
Post by: yossarian22c on November 27, 2017, 10:00:51 PM
So you guys don't think it sounds right that corporate tax rates being lower will increase wages, and therefore its not a fact.  Can I ask that you do a little bit of research on the point and come back to me. 

https://www.cbpp.org/research/federal-tax/corporate-tax-cuts-mainly-benefit-shareholders-and-ceos-not-workers

Lol, I'll see your progressive think tank (literally by the way a progressive think tank, not figuratively), and raise you a Wall Street Journal (by the way there are several there):

https://www.wsj.com/articles/the-wages-of-corporate-taxes-1508799171 (https://www.wsj.com/articles/the-wages-of-corporate-taxes-1508799171)

A journal article (pay particular attention to the sections where it talks of labor bearing the burden of corporate taxes, but really the whole thing is on point):

https://www.kansascityfed.org/kdnRn/publicat/econrev/pdf/09q2felix.pdf (https://www.kansascityfed.org/kdnRn/publicat/econrev/pdf/09q2felix.pdf)

You could also look at this paper from the fed.

https://www.federalreserve.gov/econresdata/feds/2016/files/2016006pap.pdf (https://www.federalreserve.gov/econresdata/feds/2016/files/2016006pap.pdf)

Quote
While tax increases are uniformly harmful, tax cuts have, in general, no significant effect on
either employment or income. The one exception is when tax cuts are implemented during a
recession. In this case, tax cuts lead to sizeable increases in both employment and income. This
finding suggests that corporate tax cuts, when used counter-cyclically, can be an effective policy
tool if government desires to stimulate employment and income during economic downturns.

The paper does show a small positive uptick in employment/wages after a tax cut but it is within their estimated margin of error based on their methodology.
Title: Re: Republican Tax Plan
Post by: Seriati on November 28, 2017, 04:34:03 PM
Quote
massive corporate tax burden
According to GAO and IRS numbers, almost nobody alive today and still working in corporate governance has ever experienced either a lower statutory or effective rates on capital income in the USA (with the exception of a couple of years post 2008 when the tax bailout was in place).

And?  How does that respond to what I said?  Go luck, US corporate rates are top 3 highest in the world, and even on a "effective tax rate" measure (which is not necessarily the one that drives capital movements) are still higher than most everyone else's.  Meanwhile, everyone else in the globe lowers their rates to drive investment, and we pursue the dark ages repressive tax regime because "corporations make too much" without any real thought about what that means.

Quote
Putting aside your misstatement, given that the modern USA economy has never seen lower corporate rates, it is extremely speculative to make any claims on the effects of further reducing the effective rates.

The only "misstatement" is your misstatement of what I said.
Title: Re: Republican Tax Plan
Post by: Seriati on November 28, 2017, 04:46:36 PM
The links talked about how increased corporate taxes were borne by labor, but they did not address how decreased corporate taxes would benefit labor.

I take your point, though I think the studies on this topic pretty much flat out demonstrate that linkage works in both ways (take a look again at the references to the data driven studies, a bunch of them are based on reductions in tax rates), the authors did describe it in the opposite terms.  It's theorehtically possible that while labor may bear up to 100% of the costs of increasing the corporate tax rate, they bear none of the benefits, it's just incredibly unlikely.  For that to be the true, the increase in money would have to be pulled out and wasted (not invested or reinvested, not used to increase competitiveness or wages).  It would literally have to go under the mattress to have no economic impact.

Quote
The only study cited that talked about benefits to labor (that I noticed) was in the National Review article, which talked about how "workers at a fully unionized firm capture roughly 54 percent of the benefits of low tax rates."  But notice that the paper limited it to "fully unionized firm"s, not firms in general.

The paper didn't limit it, the study was based on that data.  I didn't claim this is an economic law, just that recent research indicates the very strong likelihood that corporate tax rate changes flow through to worker wages (even more strongly than to shareholder profits), most of them indicate this is true in the short term and especially in the long run.  Taking a position that lowering the corporate tax rate is bad, is almost certainly anti-worker.

Quote
While it is logical that corporations hit with higher taxes would cut expenses by cutting labor expenses, it does not follow that those same corporations would increase their labor expenses if they had lower taxes (unless forced to by union negotiations).

It actually does follow.  Increasing profits in that manner is almost directly linked historically to increasing investment, both in equipment and labor (and labor wages also benefit directly from equipment investment as a historical manner).

Quote
When you consider that these same corporations have seen record profits in the past few years and have shown no increase it wages, your links simply do not show that tax cuts to corporations will increase wages.

Well, the confounder, as I pointed out, is that these "record" profits are heavily tied into non-US growth (which is the proverbial mattress I referred to above, at least with respect to the US economy).  They are not being taxed now.  They are not being used to benefit American workers or mainland capital improvements (because bringing them back is subject to punitive taxation).  You broke the historical link to reinvestment with the current tax policies.  What do you think the whole inversion stink has been about? 

Quote
Perhaps you have some other links that show that?

Could, of course so could you.  I find it hard to fathom how anyone could have a valid opinion on tax policy and not have seen some of this on their own.  What exactly are you guys basing your opinions on?  Is literally just corporate profits = bad?
Title: Re: Republican Tax Plan
Post by: DonaldD on November 28, 2017, 10:57:55 PM
Quote
How does that respond to what I said?
Your argument is based at least in part, on the belief that corporations are behaving uncharacteristically due to their "massive" tax burden.  I showed you that corporate tax burdens in the USA are at a 70 year (at least) low.
Quote
US corporate rates are top 3 highest in the world, and even on a "effective tax rate" measure (which is not necessarily the one that drives capital movements) are still higher than most everyone else's
The statutory rates are lower than they have been historically, so even using that as a metric, without taking into account that basically no corporations actually pay the statutory rate, doesn't support your position.  But we know that all corporations do take advantage of tax credits, deductions and other tax avoidance mechanisms, so basing any argument on that statutory rate is silly, unless also taking into account the specifics of the deduction mechanisms as well.
Quote
we pursue the dark ages repressive tax regime because "corporations make too much"
You keep repeating this, so I have to ask: why do you think corporations make too much, and why do you think corporate profit is an inherently bad thing?
Title: Re: Republican Tax Plan
Post by: yossarian22c on November 29, 2017, 09:41:10 AM
Could, of course so could you.  I find it hard to fathom how anyone could have a valid opinion on tax policy and not have seen some of this on their own.  What exactly are you guys basing your opinions on?  Is literally just corporate profits = bad?

No it's that corporations prioritize shareholders (as is their fiduciary responsibility) and executives over the average worker. I have never made the argument that corporate profits are bad, I simply disagreed with your claim that when a big corporation gets more money (in this case through a tax cut) that it automatically ends up as raises for the common worker in that corporation. Wall street seems to think that reduced corporate taxes are going to lead to increased returns for shareholders, hence the accelerated stock market rally in the past year. So they obviously think a large chunk of those increased profits will be realized by the shareholders instead of the workers of the corporation.

I agree that some of the money would trickle down to wages, but I see no evidence that the majority would. I think from your links the highest % that went to workers was 54% in fully unionized workplaces.
Title: Re: Republican Tax Plan
Post by: Wayward Son on November 30, 2017, 11:23:40 AM
Quote
Could, of course so could you.  I find it hard to fathom how anyone could have a valid opinion on tax policy and not have seen some of this on their own. I find it hard to fathom how anyone could have a valid opinion on tax policy and not have seen some of this on their own.  What exactly are you guys basing your opinions on?

Seriati, I'm basing my opinion on analyses like this one (https://www.pbs.org/newshour/economy/analysis-would-cutting-corporate-taxes-raise-incomes-for-workers), along with the general consensus among economists.

Quote
While there is uncertainty and debate regarding the extent to which lowering statutory corporate taxes to 20 percent might boost worker wages, the CEA’s claim that workers’ income would rise by $4,000 to $9,000 is well above the top of the range of consensus estimates. And one can recount examples of countries that lowered corporate tax rates without a resulting rise in wages, such as the experience of the United Kingdom, which, as a large open economy, is in many ways comparable to the United States. If one goal of tax reform is to raise worker incomes, there are much more direct ways to go about doing so. We know that workers pay all of the payroll tax and that they receive most of the benefit from the Earned Income Tax Credit, so focusing on those areas provides a more direct benefit to workers.

Still, there are good reasons to reform the United States corporate tax system. Ideally, corporate tax reform should not have an adverse effect on government revenue, should reduce distortions that make people respond to tax incentives rather than underlying economic considerations, and should eliminate current incentives that discourage companies from distributing their profits to their shareholders. An ideal corporate tax reform would likely combine a lower tax rate with a broader tax base (including steps to combat profit shifting) and a more even treatment of different types of investment. But deficit-financed corporate tax cuts are more likely to hurt workers than help them.

But, of course, what I was trying to find out was what you based your opinion on, which is why I asked for better references (since the ones you linked to I found to be somewhat lacking).
Title: Re: Republican Tax Plan
Post by: Wayward Son on November 30, 2017, 11:28:24 AM
Also of interest, apparently this GOP tax cut are the least popular in recent history (https://fivethirtyeight.com/features/the-gop-tax-cuts-are-even-more-unpopular-than-past-tax-hikes/), even less popular than Bush I's tax increase, which helped him lose his re-election campaign.  (Remember "Read my lips.  No new taxes"? :) )

Which is neither here nor there as far as the merits of the tax bill (whatever it is at the moment), but does affect whether it will pass or not.
Title: Re: Republican Tax Plan
Post by: D.W. on November 30, 2017, 11:40:07 AM
I think it will pass.  As much as even the Republican congress is loath to give Trump a win, and alienate large swaths of the country who don't like this bill...

They MUST pass something of note soon or they're all toast.
Title: Re: Republican Tax Plan
Post by: Wayward Son on November 30, 2017, 12:17:23 PM
My gut tells me it is going to pass, too (although my gut has been very wrong in the past).

But if those numbers are correct, it may mean that they might just be toast if they pass it, too. 

Especially when they get around to "starving the beast" because of it. ;)
Title: Re: Republican Tax Plan
Post by: Seriati on November 30, 2017, 12:54:53 PM
Quote
How does that respond to what I said?
Your argument is based at least in part, on the belief that corporations are behaving uncharacteristically due to their "massive" tax burden.  I showed you that corporate tax burdens in the USA are at a 70 year (at least) low.

My argument is not is not remotely based on an absolute tax burden, it's based on a relative one.  Your point doesn't even remotely address that.

Meanwhile, the global economy has been for years increasing and the level of international trade exceeds anything remotely present in history.  International capital movements are both easier and more frequent than they have ever been.  You seem fixated on looking at the American tax rate as if America is a closed system, when it's not only less closed than it's ever been, the rate of "openness" has been fairly consistently accelerating for our entire lives.

So no, your point isn't at all responsive to my argument that the US tax rate is too high and that lowering it will lead to more investment and better wages.

Quote
The statutory rates are lower than they have been historically, so even using that as a metric, without taking into account that basically no corporations actually pay the statutory rate, doesn't support your position.

Again it does, but more importantly, the statutory rate does influence decision making.  In fact part of the reason the effective rate is lower (and still generally higher than other places in the world) is specifically because the statutory rate has influenced decisions.  It's caused massive amounts of channeling investment into tax preferred manners and any number of results that are horrid for the American people.

Keeping profit over seas (I saw that for instance that Apple alone is holding over $200 billion overseas), means it's neither taxed or used to invest in America.

Tax inversions are a direct response to the US taxing global income, while virtually everyone else only taxes on a local basis.

Have you even heard of how US multinationals load down their US entities with debt while spending the money over seas?  The interest payments are fully  deductible, notwithstanding that the gains the debt generate are not often taxed in the US (and won't be unless repatriated).

Quote
But we know that all corporations do take advantage of tax credits, deductions and other tax avoidance mechanisms, so basing any argument on that statutory rate is silly, unless also taking into account the specifics of the deduction mechanisms as well.

Well I agree, but not understanding that the two concepts are directly linked and how we got here in the first place is even sillier.

Quote
Quote
we pursue the dark ages repressive tax regime because "corporations make too much"
You keep repeating this, so I have to ask: why do you think corporations make too much, and why do you think corporate profit is an inherently bad thing?

I don't, did you misunderstand the purpose of putting that phrase in quotes?  You know that I'm attributing to others.
Title: Re: Republican Tax Plan
Post by: DonaldD on November 30, 2017, 12:59:33 PM
Agree with WS - the simplistic "get rid of Obamacare" and "reduce the crap out of taxes" got the current set of Republicans nominated, but was far less responsible for getting the majority of them elected.

Now they're in a position of either breaking their Obamacare promises, or excluding millions of people from accessing healthcare; of either breaking their tax promises, or of pushing through the most ill-timed and ill-conceived tax cuts in generations - the stock market is at its highest level ever, the job market is currently above what is considered full employment, and the tax cuts will create a record setting increase in the structural deficit.  Short term, this increases the risk of unmanaged inflation; long term, when the economic cycle inevitably turns downward, there will be nowhere to go with deficit spending to ease the fall.
Title: Re: Republican Tax Plan
Post by: DonaldD on November 30, 2017, 01:03:29 PM
Quote
You know that I'm attributing to others.
Yes, and I was pointing out to you that none of your interlocutors holds that position, so continuing to harp on it even after being corrected is just stubbornly creating repetitive straw men.
Title: Re: Republican Tax Plan
Post by: Seriati on November 30, 2017, 01:23:23 PM
Seriati, I'm basing my opinion on analyses like this one (https://www.pbs.org/newshour/economy/analysis-would-cutting-corporate-taxes-raise-incomes-for-workers), along with the general consensus among economists.

Well, I don't find it terribly impressive.  Maybe because it's trivially easy to find "experts" who will state their own views persuasively while not really responding to the other side on point.

Let's think about what she said (and, she's definitely a progressive based on her history).  She said that she thinks the claims of how much the wages would increase are overstated, not that they aren't true.  She admits that how much of the benefits go to wages versus shareholders is a topic of debate among economists (by the way I never said otherwise), yet she doesn't even try to directly refute the connection.  She acknowledges both the high tax rates and the repatriation problem.

Her primary argument for why wages may not increase is summarized as follows, "There are important reasons to doubt that these mechanisms will be particularly strong at present, and there is little empirical evidence to suggest that these effects will contribute much to wages."  That's pretty much an acknowledgment of the link, and an opinion based argument on how big the swing will be (the reference to lack of empirical evidence, is what in left leaning causes would be rephrased, as "promising research shows reasons for optimism and a need for more study").

She questions that lower taxes will lead to new investment.  Her argument, we subsidize debt and corporations already borrow.  They sure do, as I mentioned above, they use US debt to boost global tax advantaged profits and reduce troubling tax disadvantaged profits, this accelerates the investment of capital outside the US.  She cites to record corporate profits (with reference to GDP, a favorite to create misleading statistics), which should increase wages (and by the way, most predictions are that wages will increase in the near future as a result of the profit levels), without really acknowledging any of the policy decisions that have caused actual corporate decision makers not to reinvest.  The regulatory climate of the Obama administration certainly contributed to the "war chest" phenomenum.

She has a fair point that greater investment may put more people out of work.  Of course that doesn't answer that those remaining will have higher wages (which is the claim that was made).  Nor does it answer the fact that as the economy has been increasing unemployment has been heading down.  But it is fair to consider whether the historically proven link between investment and employee wages will continue in the future.  Do you not however find it curious that this proposition - for which there is even less empirical evidence - is something that shows up as worthy of consideration by her, but the politically less advantageous one (from her view point) doesn't have enough empirical evidence?  She's not writing a paper here, she's writing an opinion piece.

So end of day her conclusion is that the scale of the worker benefit is disputable.  Like wow.  Almost all economic predictions are disputable.  She didn't do anything though to undermine the claims that the two concepts are linked.

Quote
But, of course, what I was trying to find out was what you based your opinion on, which is why I asked for better references (since the ones you linked to I found to be somewhat lacking).

Well generally I pick references for clarity, and if possible for clarity.  Opinions are based on extensive reading, as well as some research into the bias of the sources and into critiques of studies and opinion pieces that I strongly agree with or strongly disagree with.  In this case, I found the research interesting and surprising and worth sharing since it's initially counter intuitive (though not really after you think about it).  Didn't really expect the dogmatic responses of some.

I mean really, denying any link seems silly, questioning the scale seems reasonable.  Refusing to acknowledge that our current system has over time come to be massively anti-competitive on a global scale seems almost insane to me.
Title: Re: Republican Tax Plan
Post by: Seriati on November 30, 2017, 01:34:04 PM
Could, of course so could you.  I find it hard to fathom how anyone could have a valid opinion on tax policy and not have seen some of this on their own.  What exactly are you guys basing your opinions on?  Is literally just corporate profits = bad?

No it's that corporations prioritize shareholders (as is their fiduciary responsibility) and executives over the average worker.

Well agreed they do prioritize shareholders.  But take the next step and examine what that really means.  I'll tell you what it doesn't mean.  It doesn't mean that the company pays massive dividends.  Very few companies take the obligation to return profits to shareholders seriously.  In almost all cases the shareholders don't want them to return capital, they want them to reinvest in.  The beauty of a function stock market is that shareholder's gain from the reinvestment (through capital gains) even more easily that through a dividend. 

What does that retention of capital get used for?  Companies expand, they reinvest, they get better employees and conduct more research. 

Profits are not disbursements, they are capital that is available to put to a new use.

Quote
I have never made the argument that corporate profits are bad, I simply disagreed with your claim that when a big corporation gets more money (in this case through a tax cut) that it automatically ends up as raises for the common worker in that corporation.

It's not my claim, its the claim of certain economists based on both empirical and theorehtical research.  It makes sense to me though.

Quote
Wall street seems to think that reduced corporate taxes are going to lead to increased returns for shareholders, hence the accelerated stock market rally in the past year. So they obviously think a large chunk of those increased profits will be realized by the shareholders instead of the workers of the corporation.

See above.  Profits don't disappear, in most cases the company doesn't even release them.  How exactly will that money be transferred to the shareholders in your view if it's not paid by a dividend.  Shareholder's may profit in sales of the appreciated stock, but that's only because another shareholder is paying them, that causes no harm at all for the employees, meanwhile the company they work for is spending that profit on useful things including them.

Quote
I agree that some of the money would trickle down to wages, but I see no evidence that the majority would. I think from your links the highest % that went to workers was 54% in fully unionized workplaces.

Actually, some of them project that 250% or more of a dollar cut in taxes ends up in increase wages. 

Seriously, examine what profit actually is and tell me if you might want to reconsider.
Title: Re: Republican Tax Plan
Post by: Seriati on November 30, 2017, 01:36:51 PM
Quote
You know that I'm attributing to others.
Yes, and I was pointing out to you that none of your interlocutors holds that position, so continuing to harp on it even after being corrected is just stubbornly creating repetitive straw men.

DonaldD, I honestly can't tell why any of you are oppositionally opposed to what seems to be a rational concept that seems to have some evidence behind it.  And several people have made statements to the effect that corporate profits are too high or large enough, or that taxes shouldn't be lower.  What am I to think?
Title: Re: Republican Tax Plan
Post by: rightleft22 on November 30, 2017, 02:44:20 PM
Dance Seriati Dance
Title: Re: Republican Tax Plan
Post by: Seriati on November 30, 2017, 03:57:28 PM
Lol, nothing like a substantive rejoinder to get the blood pumping, or I guess in this case the feet moving.
Title: Re: Republican Tax Plan
Post by: D.W. on November 30, 2017, 04:11:41 PM
It's a perception problem.  Wouldn't it be possible to write the tax code in such a way that allowed them to get deductions for raising wages? 

There is no public trust in trickle-down economics.  Citing it as a sure thing is ridiculous, even if economic theory makes a well reasoned case for it.

If the objective is to help out the middle class "average working American" there are more strait forward ways. 

Even if we get a best case scenario outcome on this, which seems fanciful to most, the optics on it are terrible.  If the PR on this bill was a movie trailer, I think everyone walking out of the theater would be wondering WTF they just watched.  Then we hope that 5-10 years later there will be a cult following of fans and everyone will forget the BS trailer used to lure some in for opening weekend numbers?  :)
Title: Re: Republican Tax Plan
Post by: Seriati on November 30, 2017, 06:16:03 PM
I don't view cutting the corporate tax rate as "trickle down" economics.  Corporations generally have to do something with the money they take in as profits, heck they actually spend a bunch of money that isn't profit as well.  The goal is to make a good use of that money to pay better wages, and honestly if you've worked for any company, you'd already know raises show up in "boom" years in much larger amounts and with much greater frequency.  When the company is doing well they really do pay more.  I'm not sure you're correct that there are more "straight forward ways" at least when it comes to getting raises to the middle class.  I'm not terrible inclined to support paying more taxes to provide more redistributed benefits either.

The point about optics really bothers me.  It seems like everything these days is decided based on the simplest surface understanding (ie optics).  People vote against their own interests everyday because of "optics."  What we ought to be doing is engaging in education, but I feel like half the time you can't out educate the rate of deliberate mis-education.  I mean here, one could dispute how much a corporate tax benefit benefits workers versus shareholders, but arguing that it doesn't benefit workers?  That's just bad science.
Title: Re: Republican Tax Plan
Post by: TheDrake on November 30, 2017, 06:42:54 PM
I think it is more interesting to ask "which workers might benefit" and where you're going to make up the shortfall (I don't believe all the missing corporate tax is going to be covered by growth).

Skilled workers benefit more than unskilled workers
Union workers benefit more than non-union
Possibly H1B workers benefit more than citizens (there aren't a bunch of out of work skilled people waiting for more investment.
Workers in an industry that produces exports benefit more

Other than exports, it is unclear to me how cutting corporate taxes would provide any more benefit than cutting personal income tax with respect to existing businesses. It is possible that new businesses may choose to locate in the US based on a tax advantage, but that's going to take a while before it really kicks in which is harder to measure. You'd cut tax, then two years later a business might grow enough to help move the needle. Larger companies looking to expand offices are going to take as long as Amazon to figure it out.

So if your goal is to benefit workers, why not chop out that $150B per year by cutting middle class taxes directly? After all, they'll have to spend that money on something - just like corporations, so that becomes revenue to corporations for the most part, right?
Title: Re: Republican Tax Plan
Post by: NobleHunter on November 30, 2017, 06:46:54 PM
You could also go after payroll taxes. Since we expect corporations to provide jobs, it makes no sense that we tax them by the number of jobs.
Title: Re: Republican Tax Plan
Post by: Wayward Son on December 05, 2017, 12:55:33 PM
Because of the sober and careful pace that the Senate went through to write their version of the tax bill, they accidently eliminated all corporate deductions. (http://nymag.com/daily/intelligencer/2017/12/senate-gop-accidentally-killed-all-corporate-tax-deductions.html) :)

Quote
Mitch McConnell never subjected his blueprint for restructuring the world’s largest economy to a single hearing. His caucus never invited experts to offer insight into the bill’s implications for housing, health care, higher education, outsourcing, or tax evasion. This haste had an upside for the Senate GOP: It allowed the party to pass deeply unpopular changes to the tax code before the public had time to learn about them.

But approaching major legislation like an Adderall-addled sophomore approaches an overdue term paper came with a minor drawback: It forced the party to pass a tax bill before they had time to read it.

In hindsight, McConnell should have asked for an extension. While Republicans were manically outlining their plans to take from the poor to give to the Trumps, they also, accidentally, nullified all of their corporate donors’ favorite deductions.

This screwup — like most of the tax plan’s oddest features — was born of a math problem. Due to arcane Senate rules, the Trump tax cuts can only add $1.5 trillion to the deficit over the next decade. Last Thursday, the Senate tax bill already cost about that sum, and then McConnell started making expensive promises to his few holdouts....  This left the Senate Majority Leader searching under the tax code’s couch cushions for new sources of revenue.

Eventually, he came upon the corporate alternative minimum tax (AMT). At present, most corporations face a 35 percent (statutory) rate on their income. But by availing themselves of various tax credits and deductions, most companies can get their actual rates down far below that figure. To put a limit on just how far, the corporate AMT prevents companies from paying any less than 20 percent on their profits...

The GOP had originally intended to abolish the AMT. But on Friday, with the clock running out — and money running short — Senate Republicans put the AMT back into their bill. Unfortunately for McConnell, they forgot to lower the AMT after doing so.

This is a big problem. The Senate bill brings the normal corporate rate down to 20 percent — while leaving the alternative minimum rate at … 20 percent. The legislation would still allow corporations to claim a wide variety of tax credits and deductions — it just renders all them completely worthless. Companies can either take no deductions, and pay a 20 percent rate — or take lots of deductions … and pay a 20 percent rate.

With this blunder, Senate Republicans have achieved the unthinkable: They’ve written a giant corporate tax cut that many of their corporate donors do not like.

It actually increases the taxes of some of those corporations. :)

And this is just the first one.  Remember the bad wording in Obamacare that allowed states to opt-out of providing state-run sites to choose insurers?  This bill must be riddled with such errors, although the others will be less blatant and take longer to discover.

Great going, McConnell.  You guys sure know how to run a country. :D
Title: Re: Republican Tax Plan
Post by: Mynnion on December 05, 2017, 02:46:40 PM
Any thoughts on how the increase in the standard deduction will impact charitable giving?  I have been wondering what if any change in giving patterns will occur when much of the benefit of itemizing is removed.
Title: Re: Republican Tax Plan
Post by: yossarian22c on December 05, 2017, 03:06:40 PM
Any thoughts on how the increase in the standard deduction will impact charitable giving?  I have been wondering what if any change in giving patterns will occur when much of the benefit of itemizing is removed.

I've wondered this as well, killing/limiting any of the major deductions (mortgage interest or state/local/property taxes) basically nullifies the others as well with the larger standard deduction. It makes filing taxes a little simpler but really impacts a lot of economic decisions. It's worrisome how rushed this bill was and how little public debate there was on it. It will be interesting to see what emerges from the conference committee and if it can still pass both houses. It seems likely that whatever comes out will pass but this is a real dud politically (and I would argue economically) for a tax cut.
Title: Re: Republican Tax Plan
Post by: Seriati on December 05, 2017, 03:31:00 PM
It may impact some charitable donations, but it's not likely to make a huge difference.  The big charitable deduction people are wealthy enough that they will still be itemizing.  It doesn't take that much for the charitable deduction alone to exceed to exceed the standardized deduction.  It also still works for estate planning.

You're really talking about a fairly narrow range of people, who were getting fairly modest benefits (granted a couple thousand each really adds up), but it's not clear that most of them weren't donating because they supported the causes and the deductions were a secondary interest.  I mean, what are the most common?  Museum memberships?  Goodwill donations?  Friends charity efforts?  Pretty much all things that will continue.

It may impact churches, but I'm not sure that most of their donors are itemizing.
Title: Re: Republican Tax Plan
Post by: D.W. on December 06, 2017, 11:21:51 AM
Anyone up to speed on the corporate minimum tax?  It sounded like this may be ironed out when the two bills get reconciled.  Was this intentional?  Cut the tax rate but maintain the minimum (which is almost the same as the top now)?
Title: Re: Republican Tax Plan
Post by: Wayward Son on December 07, 2017, 03:45:57 PM
Here's a lovely bit of news I didn't find out until now.

You may have heard about the increase in the Standard Deduction for everyone.  Going from $6,350 for individual and $12,700 for families to $12,000 and $24,000, respectively.  I've been comforting myself, knowing that no matter what else, at least I'm at least getting that decrease in my taxes.

Not so fast...

They are also eliminating the Personal Exemption of $4,050 per person.  :o

So my small family loses $12,150 in exemptions while only getting $11,300 in an increase in the Standard Deduction.  I'll be paying $850 more in taxes.  >:(

A single person will be paying $1600 less in taxes (not $5,650 less as you'd expect).  A married couple will pay $3,200 less.  But give the couple one child and they only pay $150 less.  A second child means they pay $2,900 more each year (as long as the children are under 17 and gets the additional $1000 in the child tax credit*).  And they get hit with a $3,050 tax increase for each additional child.

The Mormons are going to love this.  ;D

The Los Angeles Times has a good break down on it. (http://www.latimes.com/business/la-fi-trump-taxes-standard-deduction-20170928-story.html)  (The article is a couple of months old, but Forbes seems to indicate the changes are still there. (https://www.forbes.com/sites/anthonynitti/2017/12/02/winners-and-losers-of-the-senate-tax-bill/#2bfeeba3254d))

The bottom line, though, is if you thought the GOP tax cut was going to cut your taxes significantly, look again.  You may be surprised...

*As long as they are not poor, since the Child Tax Credit is limited to up to 15 percent of their income over $3000.
Title: Re: Republican Tax Plan
Post by: TheDrake on December 07, 2017, 04:06:06 PM
I'm glad we're finally getting rid of the baby subsidy. It never made sense to me why we would create incentives to have a big family, unless it is to prop up social security...  Being facetious, I know this was about "poverty level" and roughly trying to make sure that there wasn't federal income tax on basic subsistence.

I don't see how a $4,050 deduction is turning into a $3,050 tax increase, wayward. It seems that this is an increase in taxable income, not tax. Tax itself would be at the highest rate for the individual filing.

Title: Re: Republican Tax Plan
Post by: Wayward Son on December 07, 2017, 04:23:20 PM
I am speaking about how much an individual or a family actually pays in taxes.  How that is termed, and how it comes about--as a "tax increase" or whatever--is not my point.  If there is a tax cut and you end up paying more in taxes, it ain't no tax cut to you. ;)
Title: Re: Republican Tax Plan
Post by: yossarian22c on December 07, 2017, 05:02:42 PM
I am speaking about how much an individual or a family actually pays in taxes.  How that is termed, and how it comes about--as a "tax increase" or whatever--is not my point.  If there is a tax cut and you end up paying more in taxes, it ain't no tax cut to you. ;)

There is a difference in taxable income and taxes paid.
Title: Re: Republican Tax Plan
Post by: Pete at Home on December 08, 2017, 11:52:56 AM
Ever since the election, I have been fighting the lies, the hyperbole, the sophistry being laid against Trump and the Republicans. I tried to make clear that I was not paying pro-republican so much as anti lies anti hyperbole and anti sophistry. When someone started shooting Congressman on a baseball field, I said that this was because of the awful things being said about Trump, the people were being brainwashed.

But here, Trump and the Republicans have done something everything as bad as all the lies and hyperbole about them has been for months. If someone were to go shooting at them on a field today, I would shrug and say that someone had accepted their declaration of war against the American people. I personally want nothing to do with sedition or violence. I'm looking into leaving the country. Not out of protest not out of lack of love for my country but simply because I want to survive without killing or being part of a killing machine. We're facing an era of violence where neither side is right, like the Spanish Civil War we're Stalin's pawns fought Hitler's pawns. The only way to win is not to play
Title: Re: Republican Tax Plan
Post by: Pete at Home on December 08, 2017, 12:06:06 PM
Eliminating the child tax benefit, eliminating tax breaks on student loan interest, and trying to cut off any immigration bonus for this with American families... This is the most anti-family regime in IS history
Title: Re: Republican Tax Plan
Post by: Seriati on December 12, 2017, 10:53:53 AM
Interesting follow-up on the international response to the tax bills:

https://www.wsj.com/articles/european-finance-chiefs-hit-out-at-u-s-tax-plans-1513000469 (https://www.wsj.com/articles/european-finance-chiefs-hit-out-at-u-s-tax-plans-1513000469)

Fairly balanced as well.  Nut shell is that both Europe and China are panicking and preparing tax responses to prevent investment from flocking to the US.  Seems an odd response if you guys are correct and I'm completely wrong.
Title: Re: Republican Tax Plan
Post by: yossarian22c on December 12, 2017, 11:47:57 AM
Interesting follow-up on the international response to the tax bills:

https://www.wsj.com/articles/european-finance-chiefs-hit-out-at-u-s-tax-plans-1513000469 (https://www.wsj.com/articles/european-finance-chiefs-hit-out-at-u-s-tax-plans-1513000469)

Fairly balanced as well.  Nut shell is that both Europe and China are panicking and preparing tax responses to prevent investment from flocking to the US.  Seems an odd response if you guys are correct and I'm completely wrong.

I don’t think anyone here has argued that the tax cuts aren’t good for businesses and the wealthy. The argument I have been making is that the tax cuts do not benefit the average person (particularly those in blue states). Taxing tuition wavers and eliminating the tax deduction for medical expenses seriously hurts a lot of low income people.
Title: Re: Republican Tax Plan
Post by: TheDrake on December 12, 2017, 04:29:26 PM
Fairly balanced as well.  Nut shell is that both Europe and China are panicking and preparing tax responses to prevent investment from flocking to the US.  Seems an odd response if you guys are correct and I'm completely wrong.

As Yossarian said, GDP and dividends can go up sharply without making a dent in a particular person's hourly wage. Additionally, I made the point a couple of eons ago in this thread that attractive export economics are a big result of reducing corporate tax. That says very little about how different subgroups will fare, or the specific claim that it will "raise wages".
Title: Re: Republican Tax Plan
Post by: D.W. on December 12, 2017, 05:09:42 PM
I read something about this plan driving up the value of the dollar, which in turn hurts exports.  Is this just a minor "won't be as good as you hope" nay-saying?  Or is their any merit to this line of thinking? 

On the wages front, our market is already as competitive and qualified as ever, yet wage growth hasn't reflected this.  As unemployment numbers go down, you would think compensations should go up.  But maybe this is going to be the silver bullet.  Maybe this town trickle down economics will save the day...    ::)

I'm not against making us more attractive from a global perspective, but the sham salesmanship BS on this bill is annoying. 
Title: Re: Republican Tax Plan
Post by: Wayward Son on December 15, 2017, 12:33:36 PM
FiveThirtyEight had an interesting article on the effectiveness of the GOP tax plan to stimulate the economy. (https://fivethirtyeight.com/features/the-gops-corporate-tax-cut-may-not-be-as-big-as-it-looks/)

Quote
Gary Cohn, director of the National Economic Council and one of the “Big Six” Republicans behind President Trump’s tax rewrite, was on stage at The Wall Street Journal’s annual gathering of business executives in Washington last month defending the plan...

The host from the Journal asked the audience for a show of hands: Who would use the tax windfall to invest more in their companies?...

[T]he response from the impromptu focus group at the Journal event was muted; only a smattering of the assembly’s members indicated they would use the proceeds from a tax cut in a way that would produce a stimulative effect.

“Why aren’t the other hands up?” Cohn asked.

Here’s one answer: Cohn and others in the Trump administration might have oversold the potential benefits of their tax plan. One big reason that the legislation won’t supercharge the economy is that the tax cut isn’t as big as it looks on paper.

The articles goes on to explain:

Quote
[T]hanks to a bevy of deductions, few American corporations actually pay 39 or even 35 percent. Estimates vary, but Kent Smetters, the Wharton School professor who runs the Penn Wharton Budget Model, said in an interview that he reckons the average effective rate that U.S. corporations pay is around 22 percent...

The average rate paid by money-making, publicly traded companies at the start of the year was about 26 percent, according to calculations by Aswath Damodaran, a finance professor at New York University’s Stern business school. Most of the rates ranged from about 7 percent for software companies to just under 39 percent for the retail sector.

Therefore, the change in the statutory rate is a crude way to estimate how companies would respond to the proposed tax law: Some industries would see a sizable windfall, others a small gain, and some companies would see no gains at all.

Another complicating factor is that companies that pay the corporate rate account for only about half of total business income. The rest is generated by “pass-through companies,” which tend to be smaller businesses where the owner or owners are taxed at personal rates...

The five biggest banks would have saved more than $11 billion in 2016 if they paid an effective tax rate of 20 percent, which was the rate originally proposed in the bills passed by the House and Senate. That was significantly more than any other group of publicly traded companies would have saved, according to an analysis by S&P Global Market Intelligence.

And it turns out that the banks are an excellent example of why there’s so much skepticism about the Republican tax plan. American corporations have been piling up profits in recent years, yet labor’s share of corporate income has been on a steady decline. There is academic support for the view that reducing corporate taxes could trigger job and wage growth. But in the real world, it seems unlikely that banks would use their tax cut to go on a hiring spree, as they have reduced their headcounts over the past decade. They might instead choose to take those billions and do more lending. Or they might give most of it back to their investors.

Bank of America chief executive officer Brian Moynihan, for one, noted in his letter to shareholders this year that the company had raised its minimum wage to $15 an hour. But his priority clearly was to use profits to repurchase the shares the company issued when it needed money to survive the financial crisis. “We need to continue to reduce the number of shares outstanding,” Moynihan said. “This is essential if we want our stock price to exceed the record highs we have achieved...”

Advocates such as Cohn say individuals will benefit when corporations come back to the United States once the corporate tax rate is more in line with that of the rest of the developed world. “I would like to get the tax rate as low as possible so that businesses want to create jobs here,” he told the Financial Times in August. But even the tax cuts in the GOP bill may do little to help achieve that, as the companies that left are probably already paying rates of around 20 percent.

According to an analysis by the Congressional Budget Office using for data for 2012, the median of the average corporate rate paid in 17 big economies was 20.4 percent.

There is one other factor that hasn't gotten enough attention:  inflation.  With this sudden influx of money into the American economic system, prices may increase greatly, especially if companies decide to invest their windfall in real property rather than in innovation and salaries.

What really worries me right now is how many companies will repurchase stock to raise their "stock price to exceed the record highs we have achieved."  This could create a stock price bubble, which it feels like we are having right now.  (What is the current stock price/company value ration?)
Title: Re: Republican Tax Plan
Post by: Crunch on December 15, 2017, 01:50:03 PM
There is one other factor that hasn't gotten enough attention:  inflation.  With this sudden influx of money into the American economic system, prices may increase greatly, especially if companies decide to invest their windfall in real property rather than in innovation and salaries.

If the vast cash injections of QE1 and QE2 didn't cause inflation, I'm hardly concerned about a corporate tax cut causing it.

What really worries me right now is how many companies will repurchase stock to raise their "stock price to exceed the record highs we have achieved."  This could create a stock price bubble, which it feels like we are having right now.  (What is the current stock price/company value ration?)

This has been happening since QE1 and QE2, that's what a lot of companies did with the money. That's why, while the Obama economy was flat, stock prices continued to go up after the initial shock. None of these companies will want to buy so fast they make the stock unaffordable for their buyback. They'll slowly buy back over a period of years. But, if you think it's a bubble about to burst, you can time it and short stocks and get rich. Kind of a win for you either way they go if you want to take advantage of it - I'm sure those that are in a position to do so, will. Assuming this scenario comes to pass. The beauty of the market is it's self correcting as long as the government doesn't artificially manipulate it.
Title: Re: Republican Tax Plan
Post by: Wayward Son on December 15, 2017, 02:04:22 PM
There is one other factor that hasn't gotten enough attention:  inflation.  With this sudden influx of money into the American economic system, prices may increase greatly, especially if companies decide to invest their windfall in real property rather than in innovation and salaries.

If the vast cash injections of QE1 and QE2 didn't cause inflation, I'm hardly concerned about a corporate tax cut causing it.

As I understand it, QE1 and QE2 occurred during the recession, which is a different environment than today.

Quote
What really worries me right now is how many companies will repurchase stock to raise their "stock price to exceed the record highs we have achieved."  This could create a stock price bubble, which it feels like we are having right now.  (What is the current stock price/company value ration?)

This has been happening since QE1 and QE2, that's what a lot of companies did with the money. That's why, while the Obama economy was flat, stock prices continued to go up after the initial shock. None of these companies will want to buy so fast they make the stock unaffordable for their buyback. They'll slowly buy back over a period of years. But, if you think it's a bubble about to burst, you can time it and short stocks and get rich. Kind of a win for you either way they go if you want to take advantage of it - I'm sure those that are in a position to do so, will. Assuming this scenario comes to pass. The beauty of the market is it's self correcting as long as the government doesn't artificially manipulate it.

Yes, and those who can afford to short stocks are doubtlessly counting on it.

But what about all those workers who have their 401Ks invested in stocks?  They probably will be the ones who will suffer the loses.

Which doubtlessly is what some people are counting on. ;)
Title: Re: Republican Tax Plan
Post by: Crunch on December 17, 2017, 04:13:18 PM
There is one other factor that hasn't gotten enough attention:  inflation.  With this sudden influx of money into the American economic system, prices may increase greatly, especially if companies decide to invest their windfall in real property rather than in innovation and salaries.

If the vast cash injections of QE1 and QE2 didn't cause inflation, I'm hardly concerned about a corporate tax cut causing it.

As I understand it, QE1 and QE2 occurred during the recession, which is a different environment than today.
There were actually a total of three QE efforts amounting to about $12.3 trillion and then some (https://www.cnbc.com/2016/06/13/12-trillion-of-qe-and-the-lowest-rates-in-5000-years-for-this.html) total with QE3 ending on October 29, 2014. The recession officially ended in 2012, while QE3 remained in full force. I don’t think the tax cut will put that much capital into play over that length of time.


Quote
What really worries me right now is how many companies will repurchase stock to raise their "stock price to exceed the record highs we have achieved."  This could create a stock price bubble, which it feels like we are having right now.  (What is the current stock price/company value ration?)

This has been happening since QE1 and QE2, that's what a lot of companies did with the money. That's why, while the Obama economy was flat, stock prices continued to go up after the initial shock. None of these companies will want to buy so fast they make the stock unaffordable for their buyback. They'll slowly buy back over a period of years. But, if you think it's a bubble about to burst, you can time it and short stocks and get rich. Kind of a win for you either way they go if you want to take advantage of it - I'm sure those that are in a position to do so, will. Assuming this scenario comes to pass. The beauty of the market is it's self correcting as long as the government doesn't artificially manipulate it.

Yes, and those who can afford to short stocks are doubtlessly counting on it.

But what about all those workers who have their 401Ks invested in stocks?  They probably will be the ones who will suffer the loses.

Which doubtlessly is what some people are counting on. ;)

They can rebalance their 401k anytime thry want, choosing funds that manage to the market, even move them into cash positions. I’ve done this with mine several times. 8)
Title: Re: Republican Tax Plan
Post by: TheDrake on December 18, 2017, 09:33:33 AM
But what about all those workers who have their 401Ks invested in stocks?  They probably will be the ones who will suffer the loses.

Anyone who has a 401k has not only access to professional advice, but also has a very limited set of funds to choose from. It's investment-lite. Each fund is stamped with "Growth", "Risk", "Income".

Index funds rarely do poorly over the long run, but even so there are bond funds and other hedges even available to the unsophisticated investor in a restricted 401k.

The vast majority of Americans, however, have little to no savings of any kind. Others, like the saps at Enron, left their retirement undiversified in their own company stock. It is up to them to either invest wisely on their own, or seek advice from someone more knowledgeable. Any CPA can help someone with that, and if you have tens of thousands of dollars in savings, you probably can pay the $150 for them to explain your options.
Title: Re: Republican Tax Plan
Post by: Wayward Son on December 18, 2017, 11:07:18 AM
Quote
They can rebalance their 401k anytime thry want, choosing funds that manage to the market, even move them into cash positions. I’ve done this with mine several times. 8)

Sure, Crunch, but how quickly can you do it? ;)

If the stock market suddenly takes a dive, how quickly can you move those funds?  Mine takes a couple of weeks, at a minimum.

Rich individual investors, anticipating a bubble burst, can tell (or simply program) their brokers to sell once the market hits a certain low, getting out before it drops too much.  You, on the other hand (unless your 401K is more responsive than mine), will only get out after most of the drop has occurred.

Until that time, the 401Ks will be buying those stocks that the rich investors are dumping. :)

So unless you get out now (basically short selling your stock in anticipation of a plunge), you're going to be financing the rich investor's profits.

Which the new tax bill now limits to 23.8% tax rate. :)
Title: Re: Republican Tax Plan
Post by: TheDrake on December 18, 2017, 01:09:34 PM
So you're good at timing the market on a daily basis, Wayward? All the science I've seen on it suggests that people who leave all their money alone in a broad index fund fare better than the wizardly fund managers. I'm not sure why you think that the guys managing a Vanguard 401K fund are somehow less attuned to market risk than some goofy rich individual investors. Believe me, they have stop losses in there as well as derivatives for protection. The only handicap they have is the inertia of a large fund, getting out of substantial positions poses a market liquidity problem.

Short selling stock is a fantastic way to lose your money, especially if you're timing it to a near term event. Since you said "get out now", I'm assuming that you are not really short selling, but rather just selling.

Most 401k allow for close to daily moves in their mutual funds. I'm not sure why a 401k asset reallocation should take days let alone weeks. Prudential and other bigger boys are practically etrade. If you are filling out a paper form and giving it to HR, your company is doing it wrong.
Title: Re: Republican Tax Plan
Post by: Seriati on December 20, 2017, 10:56:48 AM
Has anyone noticed how much this debate has been influenced by media manipulation?  I was reading today, that in some polls more than half the country is "against" it, and that over a third of the country think their taxes "will go up".  The objective measures indicate that 80% of people are getting a tax cut, and that somewhere around 5% will see an increase. That means that 95% of people are getting either a cut or no material difference, how then do over a third have the view that their taxes are going up?

Pretty much because they've been reading misleading media sources, or even ones that are flat out lying.  CNN has been ultra focused on the sunset clause, as if the idea that someone's taxes will reset at some future date to what they pay now should be seen as a "tax increase" that should be scaring them away from potentially 10 years of cuts. 

Uniformly they undersell the impact of growth that is expected to be generated from lower taxes in all projections of the impact on the debt.  They ignore most research on this point.  They completely ignore the international response, which not only is based on treating such research as fact rather than as theory, but the international projections of "responses" to the situation.  Is global consensus and cutting edge science only relevant in environmental debates (where I note, unlike in this debate, most countries pay lip service to the science but do not set their policies in a manner treating it as fact)?

I'd be interested on thoughts in two scenarios.  First, what if I'm correct, and this delivers tax cuts to 80% of the population, sustained economic growth and raises, what's the impact going to be on national politics and your own view of the situation?

Second, what if you don't think I'm correct, where is this going to go off the rails, how's it going to hurt and who's it going to hurt (particularly interested if you dispute the tax benefit to 80% of the population, what vector you identify for that)?
Title: Re: Republican Tax Plan
Post by: TheDrake on December 20, 2017, 11:20:48 AM
Part of the perception problem is lag and selective propagation of bad news vs good.

The media correctly reported that proposed legislation was going to tax graduate students more. Then grad students and supporters blasted the internet of the terrifying consequences. When it was removed from the final bill, those same people were not as motivated to propagate the good news that it had been pulled out. That's not the only provision that was in there, SALT had been proposed as an elimination rather than a cap, and child tax credit was improved in the final bill.

So, everyone remembers the news they heard that scared them. This is a well known phenomenon called the “loss aversion” principle. And, people don't have up to date information. Part of rushing a bill through is a lack of time to communicate what is in the final legislation, some blame resides in that process for why people have a negative opinion.

I think that people will continue to believe what they want to believe. If they think the cuts were a bad idea, they will find data to explain any upside as independent or they will focus on the people who were on the losing end of the equation - no matter what their numbers versus the winners. Or they will focus on how much bigger the win was for the billionaire class. Or they will talk about how the ensuing tax war has ruined our relations with other countries.

I'm personally rather lukewarm on the bill. I don't see anything in it that I truly hate, my personal tax situation is unlikely to change dramatically, and I doubt there will be any significant near-term impact.
Title: Re: Republican Tax Plan
Post by: Seriati on December 20, 2017, 12:23:46 PM
Here's a perfect example, the lead opinion piece on the NYT https://www.nytimes.com/2017/12/20/opinion/tax-bill-gop-democracy.html?action=click&pgtype=Homepage&clickSource=story-heading&module=opinion-c-col-left-region&region=opinion-c-col-left-region&WT.nav=opinion-c-col-left-region (https://www.nytimes.com/2017/12/20/opinion/tax-bill-gop-democracy.html?action=click&pgtype=Homepage&clickSource=story-heading&module=opinion-c-col-left-region&region=opinion-c-col-left-region&WT.nav=opinion-c-col-left-region).

Unless I'm misreading this, the opinion piece is a giant diatribe arguing that supporting tax cuts means you hate Democracy.  You read that right, letting people keep their money, frustrates the "democratic" goal of redistributing all existing property to the proleteriate, I mean the people, interfering with their right to "vote" to take others property, and hence, Republicans have proven they hate "democracy" by supporting tax cuts.  Pretty much an exercise in linguistic sophistry, propaganda and 1984 style argumentation.
Title: Re: Republican Tax Plan
Post by: TheDrake on December 20, 2017, 01:49:03 PM
You found an opinionated Op-Ed contribution. Congrats.
Title: Re: Republican Tax Plan
Post by: NobleHunter on December 20, 2017, 01:50:21 PM
And manages to miss the key reason why the tax cut bill represent utter contempt for democracy.
Title: Re: Republican Tax Plan
Post by: Wayward Son on December 20, 2017, 04:49:06 PM
It wasn't so much the media's fault that most Americans think they won't get a tax decrease, it's the Republicans' fault. (https://www.theatlantic.com/politics/archive/2017/12/why-dont-63-percent-of-americans-realize-theyre-getting-a-tax-cut-for-christmas/548852/)

Quote
A more likely factor is that many people don’t understand the bill very well. Compared to other legislation of similar scope, including previous changes to the tax code, this bill moved through Congress at a breakneck pace. That was a political calculation, in two ways: First, Republicans were eager to notch a legislative victory before the end of the year, after a chaotic and frustrating 2017, and they wanted to meet Trump’s deadline for a tax cut before the end of the year. Second, GOP leaders figured that moving the legislation quickly would make it hard for the bill’s opponents to rally against the bill. They’d watched Democrats sink repeated attempts at Obamacare reform, and they recalled their own months-long battle to undermine Obamacare at its inception.

The rush succeeded, defying the widespread conventional wisdom that passing legislation by the end of the year was impossible. But while it solved some political problems, it created others. First, there’s been little time for anyone to understand what’s in the bill, much less how it will affect their own pocketbooks. It’s hard to blame ordinary Americans: Even Republicans involved in the drafting don’t understand it. On Tuesday, HuffPost’s Matt Fuller asked 18 members before he was able to get one to name the brackets in the new bill; House Ways and Means Chair Kevin Brady said he knew them but wouldn’t say what they were. Senator Bob Corker, accused of flipping to support the bill after a provision was added that would personally benefit him, defended himself by saying he hadn’t read the bill. If the people who passed the bill haven’t read it and can’t understand it, it’s no wonder that the public doesn’t either.

Another consequence of the contracted legislative process was that the bill contained, at various times, a range of improbable or politically ill-advised provisions. This included, for example, eliminating the ability to deduct taxes paid to state and local governments, a provision that would have slammed graduate students, and another that would have eliminated a deduction for teachers who purchase classroom supplies. The latter two of these ideas encountered harsh pushback and were ultimately dropped from the final bill, while the final bill opted for a $10,000 cap on the state-and-local tax deduction. The focus on these provisions and others like them hurt the bill’s approval and fostered the impression among various parts of the populace that they might be punished rather than rewarded by the new tax code.

Though Democrats could not stop the bill, their messaging, much maligned in recent months, won the day. They were successfully able to convince the public that the bill was geared toward giving corporations a huge, permanent tax cut, while giving individuals only a temporary one; and that the benefits of the bill would accrue overwhelmingly to wealthy taxpayers. This message had the virtue of being true, and it drowned out the GOP message of a tax cut for nearly everyone, at least in the immediate term. In the NBC/WSJ poll, respondents were correctly able to say that wealthy Americans and corporations would pay lower taxes, but pluralities believed that both their own families and middle-class families in general would actually pay more.

Republicans complained that Nancy Pelosi said that you had to read the completed ACA to know what was in it, and it took months to write that bill, not weeks for this GOP tax bill.  We really had no idea what was in the bill until the final vote.

And it has not simplified taxes at all.  Sure, they almost doubled the standard deduction, but then they eliminated the $4050 personal deduction, which took most, if not all and more, of the standard deduction decrease.  If not for the reduction in the various tax brackets, I would be paying more in taxes in 2018 because of this tax cut.  (As it is, it looks like I might save a couple of thousand in taxes next year, if my understanding of the bill and my calculations are correct.)

If the Republicans wanted the American people to understand this tax bill and how it would have benefitted them, they would have given us time to understand it before voting on it.  But they didn't give us time, so don't blame the media for not reporting correctly on a bill that in flux the entire time and no one understood until it was passed.  Because you can't correctly report on something no one understands.
Title: Re: Republican Tax Plan
Post by: Seriati on December 20, 2017, 05:47:02 PM
Lol, if you didn't know what was in the bill it wasn't because of secrecy.  There have been dozens of write-ups on the provisions, including of the House Bill, the Senate Bill and the Conference Bill.  Almost nothing in the final bill wasn't signaled multiple times and in multiple places.  You know what's been constant through out?  A tax decrease for the majority of citizens.  This is nothing like Obamacare where it was done in secrecy.  Don't fall for spin, if you didn't know the details it isn't because they weren't available, or even because they changed to too fast, it's because you read media sources that didn't want you to know them.

The real issue about why it didn't stay simple has to do with the complete unwillingness of a handful of Democrats to cross the aisle.  5 Democrats being reasonable would have prevented most of the back room horse trading that was required to bring in the last five most unreasonable Republicans.  You can't tell me someone like Joe Manchin voted his constituents best interests
Title: Re: Republican Tax Plan
Post by: LetterRip on December 20, 2017, 05:59:19 PM
Seriati,

Quote
Lol, if you didn't know what was in the bill it wasn't because of secrecy.

It was a 1000 page bill with final changes shortly before the Senate vote.  I looked and there wasn't a version online prior to the vote.  There were only vague claims about what was in the bill.  It certainly wasn't available for any reasonable amount of time for public scrutiny.
Title: Re: Republican Tax Plan
Post by: TheDrake on December 20, 2017, 06:16:49 PM
I guess you nailed us. You've totally proven that the only way anybody might respond negatively to this bill is through the malevolent manipulation of the media or willful ignorance.  ::)
Title: Re: Republican Tax Plan
Post by: DonaldD on December 20, 2017, 08:00:45 PM
Quote
The real issue about why it didn't stay simple has to do with the complete unwillingness of a handful of Democrats to cross the aisle.  5 Democrats being reasonable would have prevented most of the back room horse trading that was required to bring in the last five most unreasonable Republicans.
This presupposes that the effects of the "back room horse trading" are worse than the fundamentals of the budget proposal, whereas the truth is that the billed is fundamentally flawed, kowtowing as it does to ridiculous electoral promises, and being rationalized only by voodoo economics and even then still leading to massive increases in structural deficits.
Title: Re: Republican Tax Plan
Post by: TheDrake on December 21, 2017, 09:32:50 AM
34. Businesses won't be able to write off sexual harassment settlements.
New Jersey Democratic Senator Bob Menendez's amendment born of the #MeToo moment made it all the way through. Companies can no longer deduct any settlements, payouts or attorney's fees related to sexual harassment if the payments are subject to non-disclosure agreements.

That one I didn't know about. I like it.
Title: Re: Republican Tax Plan
Post by: Seriati on December 21, 2017, 09:47:01 AM
I may have to book mark this thread so you guys can't slip away from the statements you've made.

So let me get this straight.  Notwithstanding that an overwhelming majority of Americans are getting a tax cut or at worst no worse off, you seem to think that they will have taxes rise?

It's "voodoo" economics that the corporate tax rate will help the economy, keep in mind, in less that 12 hours from passage we'd already had almost a billion dollars in bonuses, raises and reinvestments announced.  Nevermind that if you know any one in management of a major company they have been saying the same thing.  Nevermind, that international opinion is uniformly of the view that they will have to respond to stay competitive.  It's all your conclusions that this is some kind of Republican trick?

Lol, by the way, just saw an article on Joe Manchin having to defend his vote in his home state because the law actually benefits virtually everyone there (just like I pointed out yesterday). 

Not sure why you couldn't find accurate information, both the house and senate bills were publically available, as were conference reports.  I had multiple real time updates based on changes (granted some were speculative) but overall the principal concepts as well as the direction and big goals have been in there a really long time.  Maybe the difference is that i was not relying on news sources, but that just proves the point doesn't it?  LR search for "conference reports" on the tax bill.

What am I misunderstanding?  What are you opposed to?  Lower taxes?  Economic growth?
Title: Re: Republican Tax Plan
Post by: rightleft22 on December 21, 2017, 10:47:26 AM
I'll gladly repay you Tuesday for a hamburger today – Wimpy
The ground work for the next financial melt down is firmly in place – not to worry though a democrat will be president when that bill will have to be payed.  How shocked we will all be, how could this happen… again...

A fool and his money will soon be parted. Live it up now, get yours now, for gods sakes don’t delay any possible immediate gratification for tomorrow… our children will deal with it.
Title: Re: Republican Tax Plan
Post by: Wayward Son on December 21, 2017, 10:48:39 AM
Quote
This is nothing like Obamacare where it was done in secrecy.

Pop quiz, Seriati: how many hearings were held for the Affordable Care Act?  How many months was the process of public discussion and negotiation?

Now, how many hearings were held for this tax cut bill?  How many months was the process of public discussion and negotiation?

Look it up, Seriati, since you've seen to have forgotten them.  Let the numbers speak for themselves.

You are right, this is nothing like the secrecy of the development of Obamacare.  This was done SO much more secretly, there is no comparison.

Republicans don't give a **** about letting people know what they are doing.  They want to get it done before anyone notices or knows what they are doing.  They don't even know what they've done.

And any criticism of Democratic secrecy is obviously pure partisan, hypocritical BS.
Title: Re: Republican Tax Plan
Post by: Seriati on December 21, 2017, 10:54:39 AM
Obamacare secrecy was an issue because it highlighted a big lie by the new administration.  You know the promise to be the most transparent administration in history (lol) and to publish the final text of a bill in advance for the American people to review.  Pretending that this bill is more secret because it moved faster is just ridiculous.  Point out to me the provisions that are in the final bill that were a great big surprise.

Do you trust CNN?  They didn't tell you much of the details, but they still managed to find the time to use the bill to generate a calculator so you could see the impact (and to focus on the future expiration provisions to try and sell you that the tax cut was hurting you).   How did they know enough to be able to produce a mini-app, but not enough to accurately report it?
Title: Re: Republican Tax Plan
Post by: TheDrake on December 21, 2017, 10:56:07 AM
Quote
What am I misunderstanding?  What are you opposed to?  Lower taxes?  Economic growth?

For myself, I've stated that I'm lukewarm about this. From a growth side, I'm fearful that many companies will spend the windfall on stock buyback and dividends that will please investors but not materially increase opportunity, with the net impact of increasing savings that will be even easier to pass on to descendants with the raising of estate tax limits.

I'm generally fearful of the higher deficits, but possibly even more fearful that these higher deficits in turn will be used to justify draconian cuts in various government agencies and programs (never military or border patrol of course)

And as far as secrecy goes, remember all the Obamacare townhalls, discussion of death panels and the like? Did I miss a bunch of these inviting feedback about the tax bill? No, because there wouldn't have been time to book the flight and have the discussion before voting. :D
Title: Re: Republican Tax Plan
Post by: Seriati on December 21, 2017, 11:00:40 AM
TheDrake, and what do you mean by "savings"?  Walk me through it, how are they going to be passed on to another generation?  In mattresses?  Boxes of gold?   How do these savings survive the next 10, 20, 40 years until they are passed on?  Do you think, maybe, that those who recieve them may use them like they do now?  You know, with the majority going into new investments that generate return?

Deficits concern everyone (though not mentioned when the Dems want to spend more), the entire argument though is that its a false claim.  There's almost no uncertainty that the corporate tax cuts are going to result in a non-zero amount of new investment and a non-zero amount of real wage increases.
Title: Re: Republican Tax Plan
Post by: Seriati on December 21, 2017, 11:03:03 AM
As far as townhalls, don't think they are going to be a part of future Republican plans.  The blatant manipulation by activists and the anti-Republican bent of the media makes it far too easy, as demonstrated by this Tax bill, to turn a big chunk of the population against things that expressly to their benefit.  Bad photo-ops are not the same thing as bad policy, but only a fool would continue to try and get a fair treatment from town halls after the way they have been manipulated.
Title: Re: Republican Tax Plan
Post by: Crunch on December 21, 2017, 11:11:19 AM
What are you opposed to?  Lower taxes?  Economic growth?

It’s very hard to get the full measure of this tax reform. It’s always complicated when things run into the 1000+ pages that amend the tens of thousands of pages of the current tax code. Add in the rabid hysteria in the media and the left and it’s impossible to get a straight answer. By the way, anybody see where Rosie O’donnel tried to bribe senators? She should be arrested.

The latest analysis I saw was that 80% of Americans will see a reduced tax burden with middle class taxpayers seeing the biggest benefit, some as much as 20%  - lower classes than that pay little or no federal income taxes so kind of hard to cut but they are set for deductions that will give them a bonus at tax time. Because of the way the tiered system works, by definition a tax cut for lower brackets applies to upper brackets (impossible to change that really) but the top tiers are seeing cuts around 1%.

Given the hysterics from the media and the left, this must be pretty good for America.
Title: Re: Republican Tax Plan
Post by: DonaldD on December 21, 2017, 11:12:21 AM
create schedule for production


Quote
It's "voodoo" economics that the corporate tax rate will help the economy, keep in mind, in less that 12 hours from passage we'd already had almost a billion dollars in bonuses, raises and reinvestments announced.  Nevermind that if you know any one in management of a major company they have been saying the same thing.

https://www.washingtonpost.com/news/wonk/wp/2017/11/14/why-arent-the-other-hands-up-a-top-trump-advisers-startling-response-to-ceos-not-doing-what-hed-expect/?utm_term=.f6806b17d245 (https://www.washingtonpost.com/news/wonk/wp/2017/11/14/why-arent-the-other-hands-up-a-top-trump-advisers-startling-response-to-ceos-not-doing-what-hed-expect/?utm_term=.f6806b17d245)
Quote
President Trump's top economic adviser, Gary Cohn, looked out from the stage at a sea of CEOs and top executives in the audience Tuesday for the Wall Street Journal's CEO Council meeting. As Cohn sat comfortably onstage, a Journal editor asked the crowd to raise their hands if their company plans to invest more if the tax reform bill passes.

Very few hands went up.

Cohn looked surprised. “Why aren't the other hands up?” he said.
Do I know these people personally?  No.  But this was a friendly room that came to listen to Cohn, so...
Title: Re: Republican Tax Plan
Post by: Seriati on December 21, 2017, 11:19:54 AM
Lol, that same article has been cited for weeks as if it were proof. Corporate leaders are looking for certainty, they got some and have started to respond.  Of course, those on the left are trying their best to undermine it. Notwithstanding even the great Obama admitted corporate rates were too high, darling Bernie has promised to raise them back when the Dems are back in control. 

Face it, Dems - as a block - voted against the middle class.  There's no way around that other to lie about what they were doing.
Title: Re: Republican Tax Plan
Post by: DonaldD on December 21, 2017, 11:21:47 AM
What seems to be consistently ignored is the other part of the equation.

Yes, in general, lowering taxes will have some beneficial effect on the economy (although some taxes have the effect of reducing rent seeking, so are themselves beneficial to the economy and removing them could in fact be a negative.)

But never has a US tax reduction paid for itself from the perspective of government deficits.  Which brings us to the other side of the equation: deficits.  Long term, who will be most affected by the resulting clawback of services and entitlements?  What other effects might there be (for instance, with the removal of the ACA mandate/penalty)? 

It's pretty clear that the negative effects of this tax plan are not going to be borne by the wealthy.
Title: Re: Republican Tax Plan
Post by: TheDrake on December 21, 2017, 11:22:15 AM
TheDrake, and what do you mean by "savings"?  Walk me through it, how are they going to be passed on to another generation?  In mattresses?  Boxes of gold?   How do these savings survive the next 10, 20, 40 years until they are passed on?  Do you think, maybe, that those who recieve them may use them like they do now?  You know, with the majority going into new investments that generate return?

Deficits concern everyone (though not mentioned when the Dems want to spend more), the entire argument though is that its a false claim.  There's almost no uncertainty that the corporate tax cuts are going to result in a non-zero amount of new investment and a non-zero amount of real wage increases.

0.1% is a non-zero amount, size matters.

An investment that generates return is not necessarily capital investment that generates jobs.

Apple buys back its stock, and money goes to people who were holding that stock. They use that money to buy other stocks. Unless it gets to a company performing an IPO or raising debts through bonds, its just savings generating investment return but not jobs. Typically this would manifest as high P/E ratios. This is a very real scenario, but just like your example, size matters. I don't have a great concept of how much this might happen, but it is a concern. This is especially likely for companies (like Apple) that already had plenty of cash and cash equivalents and have chosen not to use it for organic growth or greenfield expansion (or increased wages, for that matter).

There are a non-zero amount of companies that will pocket the cash, increase executive compensation, and other reactions that will not generally improve economic conditions for the majority of Americans.

Luckily, we'll be able to measure this impact on publicly traded entities. Capital investment is easily identified vs cash and cash equivalent. You may be fully right, or you might even be underestimating the even better outcome we're going to enjoy. I'm only trying to say that there is room for a reasonable person to be skeptical.
Title: Re: Republican Tax Plan
Post by: DonaldD on December 21, 2017, 11:27:12 AM
Move the goal posts much, Seriati?  Who said it was proof - it is an example of CEOs saying exactly what you were asking about "any one in management of a major company they have been saying the same thing"

But the point is not whether there will be zero hiring or salary increases as a result of tax decreases - of course, there will be.  It just won't be significant.

Here are some more examples of what you were asking for:
Quote
Robert Bradway, chief executive of Amgen Inc., said in an Oct. 25 earnings call that the company has been “actively returning capital in the form of growing dividend and buyback and I’d expect us to continue that.” Executives including Coca-Cola CEO James Quincey, Pfizer Chief Financial Officer Frank D’Amelio and Cisco CFO Kelly Kramer have recently made similar statements.

“We’ll be able to get much more aggressive on the share buyback” after a tax cut, Kramer said in a Nov. 16 interview.
Title: Re: Republican Tax Plan
Post by: Seriati on December 21, 2017, 01:11:03 PM
Move the goal posts much, Seriati?  Who said it was proof - it is an example of CEOs saying exactly what you were asking about "any one in management of a major company they have been saying the same thing"

My problem with it is that it's an anecdote.  It's a single event with a single story that has been repeated for weeks, notwithstanding that anyone with real knowledge could tell you its not the case.  I suspect that the sole reason it's really out there is for the purpose you've put it too.  It's a convenient citation to "settle" the point, nothing more.  Do some actual research and come back to me. 

The point is nonsense.  The only reality that is working against the tax cuts having the impact I laid out is uncertainty.  Specifically uncertainty about whether corporate America can trust the tax cuts to stay in place and apply long term.  Go read on this point, and you'll find tons of confirmation.

I feel like I'm arguing with know nothings on this point.

Quote
But the point is not whether there will be zero hiring or salary increases as a result of tax decreases - of course, there will be.  It just won't be significant.

Perfect.  Thanks for committing, we can check in see at end of next year.

Quote
Here are some more examples of what you were asking for:
Quote
Robert Bradway, chief executive of Amgen Inc., said in an Oct. 25 earnings call that the company has been “actively returning capital in the form of growing dividend and buyback and I’d expect us to continue that.” Executives including Coca-Cola CEO James Quincey, Pfizer Chief Financial Officer Frank D’Amelio and Cisco CFO Kelly Kramer have recently made similar statements.

“We’ll be able to get much more aggressive on the share buyback” after a tax cut, Kramer said in a Nov. 16 interview.

That will certainly occur as well.  Some companies have no better use for cash than to return it.  That's actually a good thing, as people who are invested in one company will be looking for new investments when the cash is returned.  Freeing up equity is great.

You can also go out and read about companies that are carrying excessive debt who are less happy than other companies (while some of these were legit, a bunch of them got into these positions expressly as a tax avoidance strategy).  They'll be looking for equity as well, which while a bit of a replacement (debt with equity) will also provide some benefit, and free up leverage in the system to seek out better uses.
Title: Re: Republican Tax Plan
Post by: Fenring on December 21, 2017, 01:55:55 PM
Perfect.  Thanks for committing, we can check in see at end of next year.

I'll lay down my own commitment to the prediction that no matter what the economic results are it won't be possible in a thread here to establish what the actual facts are, to say nothing of us agreeing that someone was 'right' or 'wrong' about it  :P
Title: Re: Republican Tax Plan
Post by: yossarian22c on December 21, 2017, 07:39:23 PM
How about at least a baseline definition of what success is for the tax cuts economically. The economy has grown at 2+% since the recession and unemployment has trended steadily downward. So for the tax plan to be a success economically we should see 2+ years of 3+% gdp growth, a continued decline in unemployment, and significant (2% greater than inflation) wage growth (for non executives).

A second metric for success would be for the government to continue to have sufficient revenue to provide services and invest in infrastructure. If the next policy priority for republicans is to tell us we have to cut services and entitlements for the poor then the poor and lower middle class will end up losing big from the tax cut bill.
Title: Re: Republican Tax Plan
Post by: TheDrake on December 24, 2017, 11:24:51 AM
Baseline success, a rise in median income adjusted for inflation. Largely flat over the past 15 years.

This group makes $50 per year, roughly, so we're not talking unskilled workers. This is the group that is supposed to get all the benefits of growth, including higher wages and better jobs.

Move that needle, and I'm on board. If gdp grows a bunch and median income doesn't rise - well we know who got all the benefit then, don't we?

The second question would be - when do we measure? It takes time to react to new policy, etc. Are we really going to see meaningful improvement at the employment level by then? I still wonder how much of the Clinton boom years were really long-term effects of Reagan and Bush policies. If you leave it loose, then you just cherry pick the good or bad year.

This still leaves the potential impact of major events to obfuscate any effects. What happens if NK becomes a shooting war? It pretty much obliterates any ability to separate impacts. Did the tax break make it "less bad" than it would have been?
Title: Re: Republican Tax Plan
Post by: TheDrake on December 27, 2017, 01:15:12 PM
Man, CNN continues to lower my already low opinion. Top three headlines on the tax change:

Homeowners scramble to pre-pay property taxes
Residents in high-tax states could lose thousands of dollars due to new tax rules starting in 2018
Apple finally got its tax break. Will billions of jobs follow?

WTF?

The first two are just deeply skewed, but the last one borders on illucid.

So yeah, if this is your sole go-to news source I can absolutely see why you'd have an uninformed negative opinion no matter how methodical the process might have been.
Title: Re: Republican Tax Plan
Post by: DonaldD on December 27, 2017, 02:28:24 PM
Without getting into the accuracy of your characterization, the "billions of jobs" bit is a headline typo - in the headline and lead statement within the article itself, it is clear that the "billions" refers to dollars, not jobs.

It doesn't mean that CNN is not biased, I'm simply pointing out that sometimes, people are just stupid, not evil.
Title: Re: Republican Tax Plan
Post by: Seriati on December 27, 2017, 02:48:58 PM
The CNN article on Apple is pretty funny.  Somehow they think it's a good "test" case to pick a tech company that has the largest cash hoard on the planet.  It's pretty clear that if they could invest the cash in any reasonable profit generating endeavor they already would have.  Microsoft was the same way for the longest time.  Tech companies number one assets are highly skilled employees.  And sure they may use the money to try to raid each others' top end staff.

But it's almost certainly a fact that the best use of Apple's money (when they don't actually need anything) is to return to their owners, who themselves can reinvest it in other ventures.  It's either that or a return to the era pre-80's where company's empire built and acquired completed unrelated ventures. 

Who exactly would Apple create jobs for?  Are they going to hire farm hands?  Or build cars?  Rationale analysis is informed by the object of the study.

The pre-payment of taxes idea probably impacts less than the breathless reporters imply.  Many many people in High Tax states who make enough to get a benefit from pre-paying SALT will actually get no benefit from doing so because their SALT deductions were already high enough to force them to pay the AMT and anymore SALT is therefore already a complete waste.
Title: Re: Republican Tax Plan
Post by: TheDrake on December 27, 2017, 03:10:28 PM
The pre-payment of taxes idea probably impacts less than the breathless reporters imply.  Many many people in High Tax states who make enough to get a benefit from pre-paying SALT will actually get no benefit from doing so because their SALT deductions were already high enough to force them to pay the AMT and anymore SALT is therefore already a complete waste.

It isn't even clear if you can deduct pre-paid SALT. This is all speculative, and you wanna bet the IRS ruling is that you can't? This is going to screw up people's escrow handling and cause a big headache for no return. I will also predict that rather than saving the prepaid taxes, at least some of these local governments will squander it and then choke on it a year later. They're really just not wired for having wads of extra cash on hand.
Title: Re: Republican Tax Plan
Post by: Greg Davidson on December 30, 2017, 11:45:32 AM
This is a decent-sized economic stimulus - there should be a relative increase in the rate of growth up to half a percent above the average for the past two years, particularly for the next 1-1.5 years (in subsequent years the size of the stimulus to most Americans begins its decline).  That's what happens when you insert an extra $1-2T of stimulus into the economy (over many years). Of course, the relative value of economic stimulus is at its lowest when unemployment is relatively low. Put differently, this is the most wasteful way to use economic stimulus (ie; least return in growth given the increase in debt).  But it probably will help the economy through the 2018 midterm elections.
Title: Re: Republican Tax Plan
Post by: Seriati on January 02, 2018, 11:06:00 AM
It isn't even clear if you can deduct pre-paid SALT. This is all speculative, and you wanna bet the IRS ruling is that you can't?

It's actually fairly clear, the IRS has guidance on it.  You can only deduct that portion of the pre-paid tax which has been assessed.  It's too late to make a difference now, but alot of people rushed down to pay unassessed taxes which are not deductible.  A number of my neighbors rushed in to pay their taxes then found out that it's a waste of time if you paid the AMT cause they only read the headlines and the panic posts.

This is a decent-sized economic stimulus - there should be a relative increase in the rate of growth up to half a percent above the average for the past two years, particularly for the next 1-1.5 years (in subsequent years the size of the stimulus to most Americans begins its decline).  That's what happens when you insert an extra $1-2T of stimulus into the economy (over many years). Of course, the relative value of economic stimulus is at its lowest when unemployment is relatively low. Put differently, this is the most wasteful way to use economic stimulus (ie; least return in growth given the increase in debt).  But it probably will help the economy through the 2018 midterm elections.

Lol.  Talk about looking for a bad side.  Employment is not the only relevant factor in evaluating the impact of a stimulus.  The vast majority of Americans live pay check to pay check, tax relief that puts money in their hands can have a big impact even in times of high employment.  In fact that can be the best way to increase spending.

Putting capital in the hands of investors is also the best way to generate investment in new businesses and expansions. 
Title: Re: Republican Tax Plan
Post by: TheDrake on January 02, 2018, 12:37:46 PM
Quote
Putting capital in the hands of investors is also the best way to generate investment in new businesses and expansions.

Or fuel speculation on Bitcoin.
Title: Re: Republican Tax Plan
Post by: Seriati on January 02, 2018, 01:03:45 PM
In fairness that could certainly be one result.  Of course that'll provide a massive influx for initial coin offerings.
Title: Re: Republican Tax Plan
Post by: Greg Davidson on January 02, 2018, 09:23:47 PM
Quote
The vast majority of Americans live pay check to pay check, tax relief that puts money in their hands can have a big impact even in times of high employment.  In fact that can be the best way to increase spending.

Putting capital in the hands of investors is also the best way to generate investment in new businesses and expansions.

With regard to your first point, I agree but then why is that relevant to this tax cut which probably puts a much greater share of the cuts to the rich?

With regard to your second point, you have quoted a principle of faith among the right wing but I am certain that you cannot show comprehensive evidence that tax cuts lead to higher investment in new businesses and expansions (because the historical record for at least the past 30-40 years does not support that hypothesis).
Title: Re: Republican Tax Plan
Post by: Seriati on January 03, 2018, 10:27:56 AM
Quote
The vast majority of Americans live pay check to pay check, tax relief that puts money in their hands can have a big impact even in times of high employment.  In fact that can be the best way to increase spending.

Putting capital in the hands of investors is also the best way to generate investment in new businesses and expansions.

With regard to your first point, I agree but then why is that relevant to this tax cut which probably puts a much greater share of the cuts to the rich?

Because this tax cut specifically is a tax cut for the majority of Americans.  Focus on the rich is just a liberal bogey man.  The majority of people in this country are going to have more money in their pockets as a result of this cut.

It will also generate new investments, as a result of your loathed tax cuts on the rich, which themselves will generate better paying opportunities for others.  In an era of underemployment, that too is a welcome consequence.

Quote
With regard to your second point, you have quoted a principle of faith among the right wing but I am certain that you cannot show comprehensive evidence that tax cuts lead to higher investment in new businesses and expansions (because the historical record for at least the past 30-40 years does not support that hypothesis).

If you say so.  Of course, the rest of the world is so convinced that that they are considering slashing rates themselves, filing complaints with the WTO (as they view this as an unfair trade practice to encourage capital to invest in the US) or even entering into attempts to freeze capital in their own countries to prevent it from being reinvested in the US.  Here's a link the ultra ultra ultra conservative NYT (sarcasm off) that shows some of this initial response and talk.  https://www.nytimes.com/2017/12/22/business/tax-bill-global-profits.html (https://www.nytimes.com/2017/12/22/business/tax-bill-global-profits.html)

Maybe you are correct, but no one in the world (other than Democratic politicians) seems to believe that you are correct.

As to whether it could be showed?  Almost all the most current and interesting research is showing that tax cuts to corporations lead to reinvestment and better wages (granted they have other impacts as well).  And we've seen deliberate anti-investment tax restructuring as a direct response to the previous tax system, which is direct evidence how smart people with money view the competitiveness.

Is it possible to tank the gains?  Sure.  Bernie's already started trying with a promise to raise corporate taxes when he can.  The Dems may be able to create enough uncertainty to prevent companies from trusting there has been a long term change.  Some blue state governors may try to do what they did last time there was a federal tax cut and "capture" the tax savings for themselves - though killing SALT makes that so much more obvious this time than it was last time.
Title: Re: Republican Tax Plan
Post by: Seriati on January 03, 2018, 10:45:59 AM
This one really is from a conservative group, but it's clips and reviews of pieces from around the world.  Again demonstrating that other countries are taking the impact seriously (and treating it as a settled fact).  http://www.nationalreview.com/article/454958/gop-tax-cuts-forcing-other-countries-compete (http://www.nationalreview.com/article/454958/gop-tax-cuts-forcing-other-countries-compete)
Title: Re: Republican Tax Plan
Post by: TheDrake on January 03, 2018, 10:56:24 AM
There are two questions - will it lead to reinvestment, more high end jobs, more GDP? Absolutely. No question, which is why as Seriati states, other countries are going to try to combat the US advantage (or improvement).

The other question is, will anyone below the median income see higher wages, more jobs that they are _qualified_ for? A lot less certain. More capital could easily mean more automation, more outsourcing, and increases in executive compensation. All of which can be called a better economy - but for whom?

Decreased corporate tax isn't going to help the person who wants to start a food truck business, open a restaurant, or haul freight independently. In fact, it makes it less viable as a restaurant group opens another location, etc.

In my opinion, the overwhelming gains go to people with brokerage accounts (less than half of all Americans have them), college educated or self taught people with skills in high demand (much less than half), and perhaps self-employed professionals.

Depending on your philosophy and politics, that could be a good thing or a bad thing. But I don't think we should kid ourselves that this is some kind of universal boon for everyone. The last time everybody won was when Oprah was on TV. You can make an argument, certainly, that no one is worse off than they were before - until we start looking at programs like CHIP that are under fire for being too expensive, especially now with higher deficits.

Title: Re: Republican Tax Plan
Post by: rightleft22 on January 03, 2018, 01:37:47 PM
It's the deregulation that will undo any benefit from the tax changes - it will just be a bigger fall
Title: Re: Republican Tax Plan
Post by: Seriati on January 03, 2018, 01:50:41 PM
You're going to have to explain that one.  It's widely acknowledged that the Obama administration's regulations added a large amount of cost to doing business, and it's generally acknowledged in the business community that efforts to lift that regulatory burden will spark growth.  Do you have some reason to believe that contrary to most commentators and virtually all evidence the reverse will be true?
Title: Re: Republican Tax Plan
Post by: TheDrake on January 03, 2018, 04:05:26 PM
Of course deregulation spurs growth. Just picking one example, worker safety standards, could also result in increased costs for health care, workers compensation claims, and other costs related to injured workers. These are not able to be measured in an appreciable way, so its hard to prove empirically what the effect was.

Just one of those quickly googled at random - lowering the limit for silica exposure, resulted in industry complaining that it was too hard to measure and comply. I'm sure if you eliminated OSHA altogether, you'd create a giant surge in business profit at the expense of injuries and long term health issues.

Policy isn't always about creating the greatest growth imaginable. When shady operators skirt safety issues - where is the check and balance? Unions often pushed for such things in a previous era, but it has been fairly clear that business does not handle this on their own. So, you wind up with an anarcho-capitalist view that says "well, it was up to the worker. They can always not work there." Assuming that they even knew what risks were in place. I'm kind of okay with safety rules, but it is obviously possible to swing too far and make it impossible to do business.

I'm sure if I took everything line-by-line, I'd agree with some regulations and not think others were warranted.
Title: Re: Republican Tax Plan
Post by: Seriati on January 03, 2018, 04:28:47 PM
Again, we live in an era of crazy levels of over-regulation.  If you missed, here's great recent write up from the NYT's of just one place https://www.nytimes.com/2017/12/27/business/picking-apples-on-a-farm-with-5000-rules-watch-out-for-the-ladders.html (https://www.nytimes.com/2017/12/27/business/picking-apples-on-a-farm-with-5000-rules-watch-out-for-the-ladders.html).

It's very easy to see how meaning well leads to a ridiculous burden.  Open a small business and come back and tell me you think we have the correct amount of regulations.
Title: Re: Republican Tax Plan
Post by: TheDrake on January 03, 2018, 04:54:40 PM
That's a good article, and it does lay some things out worth discussing. But those ladder rules didn't come up because nobody was falling off of them. You'd like to say, "isn't this just common sense, what a waste!". Until somebody doesn't train their workers on the correct way to set a ladder, or how high to climb safely, or other such regulations. I'd like to see that come out in suits against the small business owners, but the owners will say "there is no standard for this training, therefore how could we fail to meet it?" They rightly would point out that accidents do happen and too bad about that, but at what point are employers negligent?

Food safety regulations have been cited as stopping people from donating prepared food. But what are you going to do when somebody changes the baby and doesn't wash their hands before going back to the kitchen? They're going to get a lot of people sick. The worst losers are the people who already know what to do safely, but then suddenly have to prove that they do because of regulation.

Even from the article, note that on top of the government, large customers are asking for more compliance documentation, not less than the government. Why would that be? Because they have a big reputation to lose if there is a supplier skirting safety or labor regulations.

I'd rather a blanket assertion, "Ensure that adequate safety is in place" and then fine the employer for any workplace injury - regardless of cause. If you hired them, you own their decisions and their actions and take the burden of their risk. That would dump the red tape, but leave incentives to keep people safe.
Title: Re: Republican Tax Plan
Post by: Greg Davidson on January 05, 2018, 12:54:17 AM
Quote
There are two questions - will it lead to reinvestment, more high end jobs, more GDP? Absolutely. No question, which is why as Seriati states, other countries are going to try to combat the US advantage (or improvement).

Quote
It's widely acknowledged that the Obama administration's regulations added a large amount of cost to doing business, and it's generally acknowledged in the business community that efforts to lift that regulatory burden will spark growth.  Do you have some reason to believe that contrary to most commentators and virtually all evidence the reverse will be true?

These are faith-based assertions - if you are a conservative, you are ideologically bound to accept them as a matter of faith (and Austrian economics uses a complicated word to make that very claim - there are some things you have to take on faith).

While it is possible that tax cuts and deregulation can increase growth, the track record of the US economy over the last 30 years is that rates of economic growth have gotten worse when taxes on the wealthy have been cut and industry has been deregulated (that is, under Republicans) and has improved when steps in the other direction have been taken (under Democrats). 


Your assertion that your faith-based creed is fact because "most commentators and virtually all evidence" agrees with you merely indicate that you live in a comfortable bubble
Title: Re: Republican Tax Plan
Post by: Fenring on January 05, 2018, 10:46:01 AM
I think that if an alien were to observe this economic debate it would have to conclude that either (a) one of these two sides (or both) are insane to believe something so wrong, or (b) that both sides are missing something. I have a hard time believing that one entire side of the argument is insane or stupid because frankly I see a lot of logic in the position of the so-called Austrian school of economics. And yet I also know they're wrong in practice despite the fact that I find the arguments very compelling. Emotionally I agree with the sentiments expressed by Murray Rothbard or Ron Paul, and yet intellectually I recognize that Kynes' arguments are functionally sound. My conclusion is that the current ecology doesn't permit for either system to function properly and that the economic difficulties we're experiencing aren't due to systemic mismanagement but rather due to obsolescence. I don't think anyone will go very far in a debate like this; it's like arguing whether it's better to use slave labor or use mules to farm a field: the answer is neither, you should buy new machinery. And I'm quite convinced that both sides of the issue honestlybelieve that their model is correct, so Greg I don't agree with you that the conviction from the other side comes from being conservative and therefore biased. The Austrian school is far closer to the intention of the Founders and also is more aligned with constitutional principles so I completely understand why it has intellectual appeal. Functionally I believe that any free system degrades inevitably into tyrannical oligarchy, but the spirit of the argument is very libertarian and I like it. To me this is a good example where they're arguing something good but the implementation won't go the way they intend, but likewise the alternative shouldn't be to scrap the ideal behind that system along with the mechanism. There seems to me to be something equally wrong with punishing those who create jobs in order to 'level the playing field' so that they aren't too successful. Even the idea of that sounds silly, and for those who love Ayn Rand's books there's a reason why they most likely recoil at the idea of the industrious and successful being told they're bad for doing well.
Title: Re: Republican Tax Plan
Post by: rightleft22 on January 05, 2018, 11:05:57 AM
 We often don’t experience the long-term effects of an Administration policy until the administration is no longer in power. I think the difference is a perspective of short term verses long term gratification.

If the Past is the best predictor of the future under the Republican administration – government control and size will grow, business freedom unregulated and white color crime increase, while personal freedoms are regulated… eventually the bill for the short-term gains come due.
Not to worry though when the bill comes due we blame the other guy, and no one will be held to account, so the cycle continues.  We don’t learn from history
Title: Re: Republican Tax Plan
Post by: Fenring on January 05, 2018, 11:16:22 AM
If the Past is the best predictor of the future under the Republican administration – government control and size will grow, business freedom unregulated and white color crime increase, while personal freedoms are regulated… eventually the bill for the short-term gains come due.

That's the thing, though: neither party really believes in their stated principles, and both cater primarily to special interests. Do you really think the Republicans are in the business of implementing an Austrian economic approach? Actual Republican policy is as far from Seriati's views as Greg's are. There's a big difference between your fiscal policy being a failure and simply being corrupt, and the two don't really have anything to do with each other. I'll put one proviso on that, though, which is that unregulated environments will be more amenable to corruption than correctly regulated environments. Contrariwise, what we see now is that both parties believe in certain kinds of regulation, and for the most part it's geared towards cementing the corruption into being unalterably systemic. It's a problem: deregulate and the wolves move in, but if you let the wolves design the regulation it's even worse.
Title: Re: Republican Tax Plan
Post by: TheDrake on January 05, 2018, 01:01:37 PM
Quote
for those who love Ayn Rand's books there's a reason why they most likely recoil at the idea of the industrious and successful being told they're bad for doing well.

We would also recoil at the idea of an all-powerful oligarchy. Her books depict man qua man, and so the very ideas of price fixing, giving your nephew a million bucks to invest in property, and other behaviour observed with "capitalism in the wild" would be rejected along with those who practice it.

She depicted competitors battling on the strength of their ideas, not colluding to crush their opposition. She depicted employers compelled by morality to pay a fair wage and reward merit.

Would that our system operated on Objectivist principles, and there would be no need for regulation.

None of this stops 80% of business folks to hand out copies of Atlas Shrugged and use it to justify behaviour in total opposition to Objectivist values.
Title: Re: Republican Tax Plan
Post by: Fenring on January 05, 2018, 01:37:46 PM
She depicted competitors battling on the strength of their ideas, not colluding to crush their opposition. She depicted employers compelled by morality to pay a fair wage and reward merit.

Would that our system operated on Objectivist principles, and there would be no need for regulation.

That's nice, and who enforces this moral economic system? And if it's not enforced, how are the 'moral entrepreneurs' expected to compete against Amazon and Walmart and avoid their fair system being crushed? You end up in a contradiction, where you desire an unregulated environment which can only function under the auspices of intense regulation. The game rules will determine the quality of play in the long run, not the attitude of the players. With a small group, like your family, you might get by on house etiquette, but the larger the player base (a nation) and the higher the stakes (life and death) and the etiquette will be replaced by 'optimal play' as determined by the ecosystem. Nothing will change this, making it all the more important to establish a healthy game ecosystem in order to make possible a moral axis of behavior within the system. It has to be either equally successful or more successful to survive, so immoral behavior has to become also inefficient behavior in a well-designed system. I doubt that without a hive-mind technology that can be achieved without intense regulations determining the rules of play.
Title: Re: Republican Tax Plan
Post by: TheDrake on January 05, 2018, 02:00:59 PM
Fenring, I never said it was a viable political system. It never has been, really, which is why I support regulation in the attempt to cage the unprincipled animals that dominate the majority of US businesses (and probably elsewhere).

How it could be "enforced" without government is that the men of the mind refuse to do business with the people who are shady, unethical turds. Suppliers would just pass on doing business with Walmart and sign up with Costco. When the government messed up Roark's project he blew the damn thing up. When Rearden was ordered to hand over his patent, he (at first) simply refuses. Wyatt sets fire to his oil fields. While those are dramatic examples, there are more subtle ones in the book. The principle is not to live exclusively for profit, but rather to live for self-interest. These are not the same thing, although they are intertwined. Roark turns down lots of jobs and makes less money in the name of his self-interest.

#1 It should be recognized in their own self interest - Costco regularly gets beaten up by analysts who say that they ought to compensate their employees less so the profit can be sweeter. Costco knows better. Costco has a P/E of 27.7, walmart 17.2. Growth is higher for Costco. It is in Walmarts personal best interest to change their model from crushing employees into the ground to lift them up, but they don't recognize it.

Which is #2, don't work for unethical companies and don't buy their products. We've seen some of this sentiment lately but it needs to go a lot farther. I've had my personal battle with Wells Fargo. I should have cut ties with them over their widespread fraudulent account opening. I haven't, and may not. Partly because I prefer a large bank to credit unions for their various amenties, including great online interface and available ATMs. I already avoid Chase, B ofA, and Citi for previous ethical flaws.

#3, if you're inside a company and spot unethical behaviour, blow the whistle. Put it in the paper, smash their stock prices. Change the optimization strategy and the risk profile by making it really, really painful to blow the rules.

And so, in the meantime, yes I'm going to support a lot of regulation. I want the government crawling through WF looking for more bull*censored*. I want fraud held truly accountable, like when investment firms tell customers to buy a product while they are selling it off. I want Dodd-Frank, Sarbanes-Oxley, and every other damn thing we can throw at them until they straighten up and fly right.
Title: Re: Republican Tax Plan
Post by: Seriati on March 13, 2018, 05:44:49 PM
Thought you might be interested in this Article, it confirms that business leaders are in fact influenced by the tax reform and generally far more positive about the Trump economy than they were about the prior economies.

https://www.wsj.com/articles/tax-revamp-drives-corporate-ceos-economic-outlook-to-15-year-high-1520963290 (https://www.wsj.com/articles/tax-revamp-drives-corporate-ceos-economic-outlook-to-15-year-high-1520963290)

Of course it also underscores the risk the tariff regime is imposing.
Title: Re: Republican Tax Plan
Post by: TheDrake on March 13, 2018, 06:28:55 PM
Interesting, but I don't know how much to weight CEOs who are members of Business Roundtable who self-reported on a survey where I can't read the way the questions were delivered.

That said, I'm willing to believe they are a somewhat representative group.

Quote
The share expecting sales to increase shot up to 93% this quarter from 76%

Does that seem like a realistic assessment? CEOs as a group tend to be pretty enthusiastic overall, and they are usually poor predictors of their own success. This includes some very smart people with proven track records, like Elon Musk who promises the moon and other celestial bodies, but whose companies flirt with bankruptcy amid cost overruns and late projects.