As predicted, as usual, the Tax Cuts and Jobs Act of 2017 a dud for you and I

Discussion in 'Politics' started by JoeNation, May 22, 2020.

  1. JoeNation
    Angelic

    JoeNation Patron Saint of Idiots

    Who could have seen this coming? Everybody because it has always happened but the Republicans keep telling us that we will be so much better of if we just give money to those that already are very comfortable. The deficit will magically disappear through high tax revenues, and the national debt will begin to plummet and sunshine and rainbows will be coming out of everybody's ass. How dumb do you really have to be to believe this over and over? You know the definition of insanity is right?

    The Economic Effects of the 2017 Tax Revision: Preliminary Observations

    The 2017 tax revision, P.L. 115-97, often referred to as the Tax Cuts and Jobs Act, and referred to subsequently as the Act, substantially revised the U.S. tax system. The Act permanently reduced the corporate tax rate to 21%, made a number of revisions in business tax deductions (including limits on interest deductions), and provided a major revision in the international tax rules. It also substantially revised individual income taxes, including an increase in the standard deduction and child credit largely offset by eliminating personal exemptions, along with rate cuts, limits on itemized deductions (primarily a dollar cap on the state and local tax deduction), and a 20% deduction for pass-through businesses (businesses taxed under the individual rather than the corporate tax, such as partnerships). These individual provisions are temporary and are scheduled to expire after 2025. The Act also adopted temporary provisions allowing the immediate deduction for equipment investment and an increase in the exemption for estate and gift taxes. The Joint Committee on Taxation (JCT) estimated that these changes would reduce tax revenue by $1.5 trillion over 10 years.

    In 2018, gross domestic product (GDP) grew at 2.9%. On the whole, the growth effects tend to show a relatively small (if any) first-year effect on the economy. Although growth rates cannot indicate the tax cut’s effects on GDP, they tend to rule out very large effects particularly in the short run. Although investment grew significantly, the growth patterns for different types of assets do not appear to be consistent with the direction and size of the supply-side incentive effects one would expect from the tax changes. This potential outcome may raise questions about how much longer-run growth will result from the tax revision.

    CBO, in its first baseline update post enactment, initially estimated that the Act would reduce individual income taxes by $65 billion, corporate income taxes by $94 billion, and other taxes by $3 billion, for a total reduction of $163 billion in FY2018. Corporate revenues were about $40 billion less than projected whereas individual revenues were higher, with an overall revenue reduction of about $9 billion. From 2017 to 2018, the estimated average corporate tax rate fell from 23.4% to 12.1% and individual income taxes as a percentage of personal income fell slightly from 9.6% to 9.2%.

    Real wages grew more slowly than GDP: at 2.0% (adjusted by the GDP deflator) compared with 2.9% for overall real GDP. Such slower growth has occurred in the past. The real wage rate for production and nonsupervisory workers grew by 1.2%.

    Although significant amounts of dividends were repatriated in 2018 compared with previous years, the data do not appear to show a significant increase in investment flows from abroad. While evidence does indicate significant repurchases of shares, either from tax cuts or repatriated revenues, relatively little was directed to paying worker bonuses, which had been announced by some firms.

    Although the legislation contained a number of provisions that discouraged inversions (shifting headquarters of U.S. firms abroad), these inversions had apparently already been significantly slowed by regulations adopted in 2014, 2015, and 2016.

    https://www.everycrsreport.com/reports/R45736.html
     
  2. Mopar Dude

    Mopar Dude Well-Known Member

    Well Joe.... I always like to respond from a personal perspective. I readily admit that the 2017 revision was beneficial to my business. I used the added revenue to build a new office space and staff it with two young folks. And these aren't menial jobs either. They are well compensated positions with health care provided. Speaking personally the 2017 tax reform did exactly what it was designed to do and I was not personally enriched one cent. However I have reduced my daily work schedule from twelve hours to ten.
     
  3. GeneWright

    GeneWright Well-Known Member

    I'm glad you've done the right thing with it, but the data shows you are in the minority. You may have helped those 2 people with good jobs, but for the 2 you helped many more people just like them were hurt by this provision.

    So, if the majority of businesses use it to enrich themselves and, the program costs taxpayers 1.5 trillion dollars, is it worth it in your opinion?
     
  4. Mopar Dude

    Mopar Dude Well-Known Member

    Without hesitation, I would answer unequivocally yes. And for two reasons;
    • First reason is again my personal observation. As a businessman I stay very in tune with our nations economic health. And prior to Covid-19 the economy was humming like a finely tuned racing engine.
    • Secondly, I know that data is frequently manipulated to favor the authors view. Now I am not saying that Joe manipulated the information, however the manner in which it was presented to him likely was skewed in a manner to make it appear favorable to a left leaning view.
    I will go to my grave believing that humans by nature want to do the right thing. I fully concede that there are greedy, unethical businessmen out there. Those are the people you hear about because they create the best drama. But I would bet my bottom dollar that a vast, vast majority are much more like me and choose to lead their businesses with a strong moral compass.
     
    Last edited: May 22, 2020

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