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Old 01-11-2018, 01:19 PM
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whell whell is offline
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Quote:
Originally Posted by finnbow View Post
Here's the truth of the matter. The consensus of non-partisan economists and researchers is that ~20% of such tax increases actually help employees. The rest goes to shareholders.
https://www.cbpp.org/research/federa...administration

Target raised their minimum wage last year to $11 far before the GOP's tax plan was finalized. It could be argued that labor market forces compelled Walmart to act and they chose to throw (the ever-needy) Trump a bone by attributing it to the tax bill.
Give me an F-ing break. The CBPP is a bunch of non-partisan leftists. The only reason they're non-partisan is that their membership is likely equally distributed between those who vote Democrat, Green Party, Communist Party USA or Social Democrats. Linking to that bunch and calling them "non-partisan" is laughable. I'll see your CBPP blather and raise you something similar from the Tax Foundation.

According to the Tax Foundation’s Taxes and Growth Model, the Tax Cuts and Jobs Act would increase the long-run size of the U.S. economy by 1.7 percent (Table 3). The larger economy would result in 1.5 percent higher wages and a 4.8 percent larger capital stock. The plan would also result in 339,000 additional full-time equivalent jobs.

The larger economy and higher wages are due chiefly to the significantly lower cost of capital under the proposal, which reduces the corporate income tax rate and accelerates expensing of capital investment for short-lived assets.


Of course the bulk of the benefits of a reduction in corporate tax rates will be retained by the business and its shareholders. Hell, shareholders of a nice chunk of US corporations have benefited mightily just from the anticipation of this tax cut.

The question is where that money goes. It doesn't just sit inside the business and do nothing. Businesses reinvest and grow the business which creates jobs, increases demand for labor (thus increasing the upward pressure on wages) broadens the tax base.

What really floors my about the CBPP article you cited, and demonstrates the intellectual deficit behind it, is this:

Further, corporate rate cuts could ultimately hurt the majority of Americans, depending on how they are paid for. If, as in the Administration’s tax proposals, corporate rate cuts are not offset by spending cuts or increases in other taxes, any assumed increase in domestic investment — and therefore benefit for workers in the form of higher productivity and wages — won’t be sustained. The higher deficits would reduce national saving, meaning less capital would be available for investment in the economy and interest rates could rise. Higher interest rates, in turn, would reduce and ultimately reverse the increase in investment necessary for workers to gain (in the form of higher productivity and wages) from a corporate rate cut.

So we have the usual "the economy is static" argument. Tax cuts equal less revenue for government, and that's bad. Increased economic growth and broadening that tax base are not taken into account when determining the impact of a corp tax rate cut. No, the money is just going to sit in corporate coffers and not be returned to the economy. Somehow, this is all going to result in no one saving any money so interest rates will rise and we'll all get screwed.

What a load of crap this is. For example, the pressure to increase interest rates are stimulated by a variety of factors. One of those factors is economic growth. Interest rates are already nosing upward a bit because of this. So, I guess we shouldn't have economic growth because that's bad for interest rates?

Spare me.
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