New Tax Bill Benefits

[John Cuthber]

On 30/01/2018 at 2:49 PM, waitforufo said:

If you would just drop your envy of the "rich" your life would be a lot happier.  Try practicing saying "well good for them" any time you hear that good fortune befalls anyone. 

That's like saying that when a burglar steals your property, you should say "good for them".

It's not their "good fortune"

when they take stuff that's yours without asking

[Phi for All]

27 minutes ago, John Cuthber said:

It's not their "good fortune"

when they take stuff that's yours without asking

This implies it's not the job of public funding to make the rich richer. This goes against mainstream American economics, where the middle and working classes are just supposed to be thankful someone wealthy allows them to work. Only job creators matter in the US, because Republican.

[Ten oz]

32 minutes ago, Phi for All said:

This implies it's not the job of public funding to make the rich richer. This goes against mainstream American economics, where the middle and working classes are just supposed to be thankful someone wealthy allows them to work. Only job creators matter in the US, because Republican.

Unfortunately many average people do not realize how markedly different the best interest of wealthy is from their own. The belief is a rising tide lifts all ships. That the same forces which enable the wealthy to get wealthier will also enable middle income people to advance too. It is a huge error. For those who have capital recessions are buying opportunities. Depending on how one makes their money recessions are extremely useful. When the economy is bad it creates more renters. Those who own property are able to use those renters to subsidizes their real estate ventures and make money. What's good for billion dollar business vs small business; big box stores and Walmart thrive in bad economies because people can't afford to shop at small local Deli's, Cafe's, Bakeries, and etc  where the quality is better but the prices are a bit more. Walmart wins when price is the primary focus of consumers rather than quality. What's good for Walmart is terrible for small business. The Walton Family is worth 145 billion dollars. Same goes for fast food. More people eat out at McDonald's when their wallets are tight and are less likely to try some family owned Thai restaurant or whatever. 

That doesn't make wealthy people evil. That isn't my point. Rather people need to understand that what's good for some isn't good for all. There are industries and people who are better off in a bad income than in a good one. People who make their living buying foreclosed homes on the cheap, renting them out till their investment is covered, and then selling for full price. Every market doesn't want to see a strong middle class. So when policy is being discussed we have to be mindful of how the people taking make their money. Identify if whats good for Nurse or Teacher would also be good for them rather than just assume if would be.

Edited January 31, 2018 by Ten oz
Typo

[Phi for All]

12 minutes ago, Ten oz said:

Unfortunately many average people do not realize how markedly different the best interest of wealthy is from their own. The belief is a rising tide lifts all ship. That the same forces which enable the wealthy to get wealthier will also enable middle income people to advance too. It is a huge error. For those who have capital recessions are buying opportunities. Depending on home one makes their money recessions are extremely useful. When the economy is bad it creates more renters. Those who own property are able to use those renters to subsidizes their real estate ventures and make money. What's good for billion dollar business vs small business; big box stores and Walmart thrive in bad economies because people can't afford to shop at small local Deli's, Cafe's, Bakeries, and etc  where the quality is better but the prices are a big more. Walmart wins when price is the primary focus of consumers rather than quality. What's good for Walmart is terrible for small business. The Walton Family is worth 145 billion dollars. Same goes for fast food. More people eat out at McDonald's when their wallets are tight and are less likely to try some family owned Thai restaurant or whatever. 

That doesn't make wealthy people evil. That isn't my point. Rather people need to understand that what's good for some isn't good for all. There are industries and people who are better off in a bad income than in a good one. People who make their living buying foreclosed homes on the cheap, renting them out till their investment is covered, and then selling for full price. Every market doesn't want to see a strong middle class. So when policy is being discussed we have to be mindful of how the people taking make their money. Identify if whats good for Nurse or Teacher would also be good for them rather than just assume if would be.

It's not the fault of the bean counters if the government allows them to make more by hoarding than by investing. That's the main reason this new tax bill is bogus. It doesn't encourage any of these wealthy folks to get off those huge piles of cash they've been sitting on since before Obama and invest them in the US economy. I know plenty of wealthy folks, really wealthy, and they all tell me the tax structure dictates a lot of what's done with their money. If the taxes are too high, they shift savings to where it's more profitable, and that's traditionally into more business ventures. 

This tax cut wasn't about a break for the wealthy. It seems to be more about purposely investing less in the US, by freeing up tax dollars to either invest overseas, or transfer someplace where you can sit on that cash and brag about it.

[Ten oz]

"Treasury Department: The federal government is on track to borrow nearly $1 trillion this fiscal year — Trump's first full year in charge of the budget. That's almost double what the government borrowed in fiscal year 2017. Here are the exact figures: The U.S. Treasury expects to borrow $955 billion this fiscal year, according to a documents released Wednesday. It's the highest amount of borrowing in six years, and a big jump from the $519 billion the federal government borrowed last year."

"Trump's Treasury forecasts borrowing over $1 trillion in 2019 and over $1.1 trillion in 2020. Before taking office, Trump described himself as the “king of debt,” although he campaigned on reducing the national debt. The Committee for a Responsible Federal Budget predicts the U.S. deficit will hit $1 trillion by 2019 and stay there for a while. The latest borrowing figure — $955 billion — released this week was determined from a survey of bond market participants, who tend to be even faster to react to the changing policy landscape and change their forecasts."

https://www.washingtonpost.com/news/wonk/wp/2018/02/03/the-u-s-government-is-set-to-borrow-nearly-1-trillion-this-year/?utm_term=.40a7bbe29e23

Trump's Treasury forecasts see trillion dollar deficits for the foreseeable future. It is fair to say their forecast are a best case scenario. I put this article here because taxes are where the govt get money. At a time when spending is up 84% Congress and Trump have cut taxes. It is fiscally irresponsible. 

[MigL]

Sigh...

I remember when the Republicans almost shut down government because they were opposed to exceeding the borrowing limit  ( in 2011-12, don't quite remember )
Now trillion dollar yearly deficits are the norm ?

[iNow]

1 hour ago, MigL said:

Now trillion dollar yearly deficits are the norm ?

Always have been. Borrowing = okay when ones own party is in power. Borrowing = bad when the “other” party is in power. 

For extra credit, despite full GOP control of the executive, judicial, legislative branches, and also state houses and governorships right now... the talking point during the next several elections will be that “tax and spend”... yep, you guessed it... “liberals” can’t be trusted to manage the nations money wisely. 

 

[Ten oz]

1 hour ago, iNow said:

Always have been. Borrowing = okay when ones own party is in power. Borrowing = bad when the “other” party is in power. 

True, though I'd argue Democrats include how things should be paid for (taxes) into the discuss when they borrow. The ACA was paid for by mandating people have insurance and penalties. The Tax Cuts however were passed with the complete understand they will increase the national debt. 

It is one reason, of many, why electing business people to run a country isn't a good idea. Many companies leverage all revenue to support more credit/debt to cover operating costs. There are billion dollar companies out there like Twitter, Netflix, and etc that have yet to actually make more money than they spend. It works because if push comes to shove they can sell off assists, lay off employees, move overseas, merge, or restructure as needed when times are rough. The Govt cannot or at least should not follow that blue print. In the event of a national disaster the federal govt can't just sell off the Grand Canyon to raise money for relief. If next years hurricane season is bad the Govt can't just move half of all federal employees to India to reduce costs. 

Taxes simply need to go up. Cutting spending is an option but paradoxically those who advocate the loudest for spending cuts are unwilling to address Defense spending which alone is half of all discretionary spending. We can eliminate entry non-defense related agencies and it would only pennies of the dollar compared to what we spend on defense. In my pipe dream scenario Congress would pass a law requiring taxes automatically rise across the board to cover the cost of all foreign military operations. What we are spending in Iraq, Afghanistan, Syria, Yemen, the DMZ, and etc would be directly applied to a equal percentage increase in capital gains, income, corporate, inheritance, and etc taxes. That would both reduce annual deficits and discourage those who hate taxes from support foreign endeavors that cost trillions of dollars.        

[Ten oz]

"Investors' main concern is the selloff in the bond market. The 10-year Treasury yield, which moves opposite price, spiked to a four-year high of 2.85% on Friday. It's a dramatic swing from 2.4% at the start of 2018. Higher yields could make normally boring bonds look more attractive when compared with risky stocks.

The U.S. economy looks very healthy right now. Friday's jobs report showed that wages grew at the fastest pace since 2009. That's a welcome shift by workers who have been dealing with anemic raises for years.

However, Wall Street is starting to get worried that the "goldilocks" environment of slow growth and mysteriously low inflation may be ending. Stronger inflation would force the Federal Reserve to raise rates more aggressively than investors may be comfortable with. And more robust wage gains could eat into record-high corporate profits."

http://money.cnn.com/2018/02/05/investing/stock-market-today-dow-jones/index.html

For some it might seem counterintuitive but one of the reasons the market is currently selling off is because of the strength of the economy. It is important to understand this when buying into the sales pitches presented by those who insist tax cuts will boost wages and GDP. The forces which boost wage growth are different than the ones that boost productive and industry growth. Moderate growth over time with slow wage growth is the most stabilizing model over time. Fast growth in wages or industry leads to boom and bust which weakens the economy over time. 

[swansont]

1 hour ago, Ten oz said:

"Investors' main concern is the selloff in the bond market. The 10-year Treasury yield, which moves opposite price, spiked to a four-year high of 2.85% on Friday. It's a dramatic swing from 2.4% at the start of 2018. Higher yields could make normally boring bonds look more attractive when compared with risky stocks.

That's why stocks and bonds tend to move in opposite directions.

1 hour ago, Ten oz said:

The U.S. economy looks very healthy right now. Friday's jobs report showed that wages grew at the fastest pace since 2009. That's a welcome shift by workers who have been dealing with anemic raises for years.

Any reports happen to mention that 18 states raised their minimum wages on Jan 1? (Though some were small increases)

2009, BTW, was the last time the federal minimum wage was increased.

 

 

[iNow]

It does seem like we may be due for a sell-off soon, but with that said, the bears have been consistently wrong for almost a full decade now. Only tangentially related, but great quote:

"The stock market has predicted nine of the last five recessions." ~Paul Samuelson

[Ten oz]

1 hour ago, iNow said:

It does seem like we may be due for a sell-off soon, but with that said, the bears have been consistently wrong for almost a full decade now. Only tangentially related, but great quote:

"The stock market has predicted nine of the last five recessions." ~Paul Samuelson

I don't believe this is the beginning of a recession. I think it is a long over due correction. I only posted it because it is a learning opportunity with regards to how different force in the economy work.

[Ten oz]

From write offs to subsidise most companies have not been paying their full tax rates. So the tax cut doesn't actually have the impact many believe. Many companies are either not impacted or the impact is nominal. Other forces interest and bond rates matter as well. Hopefully everyone continues to read and follow along as the Market continues to decline. 

Profits are not equal to a companies total value. A company can make lots of money but unless it has assets (patients, real estate, equipment, etc) it isn't worth anymore than the cash it has on hand. Many profitable companies actually have low liquidity values. As a result many companies are over valued by the stock market. One big reason for their over valuations is that stocks values are often projects of future earnings. Similar to credit. Money is provided on the premise it will be returned as a greater amount.

The below is a good read. Not every assumption but the overall analyse:

https://www.hussmanfunds.com/comment

[Ten oz]

@Raider5678, so we are a year on from when you created this thread to address Trump's tax plan. The annual deficit rose 17% in 2018. That was anticipated to some extent but the claim was that increases in GDP would offset the spend. However the deficit rose against GDP as well up to levels not seen since 2012 when we were still coming out of a depression. How is a link from Treasury Department.  

Stock market had its worst year since the economic collapse 10yrs ago. All major index's were down for the year, Link. This not only hurts businesses but many average peope have their retirements savings in 401k's and other market associated accounts. People lost trillions in 2018. 

After starting down in the first quarter GDP was up around 2014 levels in the 2nd and 3rd quarters. Here are the final numbers for the first 3 quarters from Dept. of Commerce . Estimates for the 4th quarter are low, Link. Trump promised 6% GDP  when Congress was writing up his for his plan. GDP for the year was only 3%. 

So a year later and deficits are up, the stock market is down, and GDP is flat. Do you feel the tax cut was worthwhile? 

[Ten oz]

Quote

 

A little more than a year after President Trump signed his tax-cut bill into law, most firms haven't altered their hiring or investment plans as a result of the measure, according to a survey released Monday.

Eighty-four percent of respondents in the the National Association for Business Economics (NABE) poll said the tax law hasn't caused their firm to make changes to hiring or investment. That figure is slightly higher than the 81 percent in the October survey. Link

 

A year on since Trump's tax plan went into effect costing trillions. Are there examples of positive impacts yet?

[StringJunky]

8 minutes ago, Ten oz said:

A year on since Trump's tax plan went into effect costing trillions. Are there examples of positive impacts yet?

This from Reuters yesterday:

Quote

$1.5 trillion U.S. tax cut has no major impact on business capex plans: survey

WASHINGTON (Reuters) - The Trump administration’s $1.5 trillion cut tax package appeared to have no major impact on businesses’ capital investment or hiring plans, according to a survey released a year after the biggest overhaul of the U.S. tax code in more than 30 years.

The National Association of Business Economics’ (NABE) quarterly business conditions poll published on Monday found that while some companies reported accelerating investments because of lower corporate taxes, 84 percent of respondents said they had not changed plans. That compares to 81 percent in the previous survey published in October.

<snip>

“A large majority of respondents, 84 percent, indicate that one year after its passage, the corporate tax reform has not caused their firms to change hiring or investment plans,” said NABE President Kevin Swift.

The lower tax rates, however, had an impact in the goods producing sector, with 50 percent of respondents from that sector reporting increased investments at their companies, and 20 percent saying they redirected hiring and investments to the United States from abroad.

https://www.reuters.com/article/us-usa-economy-investment/1-5-trillion-u-s-tax-cut-has-no-major-impact-on-business-capex-plans-survey-idUSKCN1PM0B0

 

[CharonY]

I think one of the more concise descriptions is that it is essentially a stimulus at the wrong time. Since the economy was already going strong, beneficial effects would mostly evaporate in the growing economy with little to no sustained effects. Meanwhile I have not seen a good case for it being worth the increased debt. Some of the negative aspects as outlined by the Brookings institute include raised health care premiums and reduced insurance coverage.

[Ten oz]

44 minutes ago, CharonY said:

I think one of the more concise descriptions is that it is essentially a stimulus at the wrong time. Since the economy was already going strong, beneficial effects would mostly evaporate in the growing economy with little to no sustained effects. Meanwhile I have not seen a good case for it being worth the increased debt. Some of the negative aspects as outlined by the Brookings institute include raised health care premiums and reduced insurance coverage.

I agree but with the caveat that tax cuts are a weak from of stimulus even when the economy is doing bad. People with capital nearly always come out  of recessions ahead. When things are cheap it is a great time to buy. 

[Huckleberry of Yore]

On ‎1‎/‎23‎/‎2019 at 6:30 AM, Ten oz said:

So a year later and deficits are up, the stock market is down, and GDP is flat. Do you feel the tax cut was worthwhile? 

GDP stats for 2018 Q4 are due out this week; expected to be around 2.9%.  The average GDP growth under Trump is also 2.9%.  The average for Obama was 2.1%.  So Trump would argue his policies have increased GDP growth by about 38%.

Why is the stock market down?  Competition from other asset classes (e.g. increasing interest rates), reduced corporate earnings, and/or reductions in growth of earnings.  It is my assertion that the drop in the stock market seen in late last summer was most likely primarily the result of increasing probabilities of democrats making gains in the upcoming elections.  Democratic influence is a negative factor economically, obviously due to their tendencies toward higher taxation and regulation.  The massive stock crash in 08 was in fact caused by the subprime mortgage fiasco (directly attributed to democrats - Carter and Clinton et al) and made worse by the increased likelihood of Obama winning the presidency.  Ironically, Obama didn't inherit a bad economy, he helped create it, first by supporting policies leading to the mortgage crisis, and then by getting elected.

[swansont]

 

33 minutes ago, Huckleberry of Yore said:

 Democratic influence is a negative factor economically, obviously due to their tendencies toward higher taxation and regulation

!

Moderator Note

We try and deal in facts here, not BS talking points. Don’t claim it you can’t (and don’t) back it up. (Apply as needed to all of your post)

 

 

[CharonY]

Specifically regarding the tax cut, what you would like to see is not a continuation of growth but a bump due to the stimulus. Using various measures there seems to be a only a very short-lived effect if at all, as mentioned above. Taking of averages of GDP growth over long periods is problematic as they fluctuate a lot. The economic downturn at the beginning of Obama's presidency, for example. Trump's office has used quarterly gains (the highest reported ones being 4.2 in the second quarter 2018), but under Obama there were higher gains (up to 5.1) throughout his presidency. Toward 2015 there was a bit of decline, especially during the election year but under Trump it still has not reached the highest levels of the years under Obama.

One interesting measure, especially for fiscal conservatives is the ratio between GDP and deficit. The highest levels were obviously during the recession, where the stimulus was passed (9.9%), which was reduced to ~2.1 in 2015. Since then it has been climbing up to ~3.9, which indicates that while the economy is doing well,  folks are outspending the benefits. Or put it differently, the tax cut and other measures did not improve the economy more than they cost and thus yielding no net benefits.

The rest is not really worth responding to, as it is far in the "not even wrong category".

[Huckleberry of Yore]

1 hour ago, swansont said:

 

!

Moderator Note

We try and deal in facts here, not BS talking points. Don’t claim it you can’t (and don’t) back it up. (Apply as needed to all of your post)

 

 

My pleasure, glad to oblige.  I was just afraid you might chide me for going off topic again.

https://www.investors.com/politics/commentary/best-run-states-are-all-solidly-republican-worst-run-mostly-democratic-study-finds/
https://www.washingtonexaminer.com/opinion/exclusive-new-study-finds-red-states-have-best-economic-outlook-in-2018

[Ten oz]

43 minutes ago, Huckleberry of Yore said:

https://www.investors.com/politics/commentary/best-run-states-are-all-solidly-republican-worst-run-mostly-democratic-study-finds/

Bottom five states specifically listed in the study your link cites are Kentucky (#46), Massachusetts (#47), New Jersey (#48), Connecticut (#49), and Illinois (#50). 

Kentucky & Massachusetts have had a Republican Governor since 2015, New Jersey's Governor was Republican Chris Christie from 2010 up till just 2 weeks ago, and Illinois Governor was Republican Bruce Rauner up till 2 just 2 weeks ago.  

4 of the 5 states were Republican led at the time of the study. Of course that is a meaningless fact because the study your link cites didn't look at  political party affiliation or tax policy as factors it analysed. Your link is gross misrepresentation of the study it cites.

Quote

 

The study analyzes state finances according to five dimensions. These dimensions combine to produce an overall ranking of state fiscal solvency. 

1 - Cash solvency. Does a state have enough cash on hand to cover its short-term bills?

2 - Budget solvency. Can a state cover its fiscal year spending with revenues, or does it have a budget short-
fall?

3 - Long-run solvency. Can a state meet its long-term spending commitments? Will there be enough money to cushion it from economic shocks or other long-term fiscal risks?

4 - Service-level solvency. How large a percentage of personal income are taxes, revenue, and spending? How much “fiscal slack” does a state have to increase spending if citizens demand more services?

5 - Trust fund solvency. How much debt does a state have? How large are its unfunded pension and healthcare liabilities?

https://www.mercatus.org/statefiscalrankings

 

 

1 hour ago, Huckleberry of Yore said:

https://www.washingtonexaminer.com/opinion/exclusive-new-study-finds-red-states-have-best-economic-outlook-in-2018

This link clearly identifies itself as an opinion piece and cites research done by  American Legislative Exchange Council (ALEC) which is a well known conservative activist group. 

[Huckleberry of Yore]

 

8 minutes ago, Ten oz said:

New Jersey's Governor was Republican Chris Christie from 2010 up till just 2 weeks ago, and Illinois Governor was Republican

Having a Republican governor doesn't guarantee a Red state.  I don't think anyone would claim either Illinois or New Jersey as red.  I just looked at those two and their legislatures are comprised of near super majorities by democrats.  I live in state where past governors with R beside their names were "in name only".

11 minutes ago, Ten oz said:

This link clearly identifies itself as an opinion piece and cites research done by  American Legislative Exchange Council (ALEC) which is a well known conservative activist group. 

Since it is opinion it is to be rejected out of hand?

Per the moderator's request, I added information backing my position.  But the same moderator has chided me for not staying on topic, so feel free to start another topic.

On topic: according to CNBC this morning, 74% of companies reporting profits recently are beating estimates.  That is regarded as positive economic news.  As I write, I see Apple reported earnings, and the stock is up 4% in after hours.  And as I have shared previously, GDP growth is expected soon, and is expected to be a healthy 2.9%.

[Ten oz]

22 minutes ago, Ten oz said:

Of course that is a meaningless fact because the study your link cites didn't look at  political party affiliation or tax policy as factors it analysed. Your link is gross misrepresentation of the study it cites.

3 minutes ago, Huckleberry of Yore said:

Having a Republican governor doesn't guarantee a Red state.  I don't think anyone would claim either Illinois or New Jersey as red.  I just looked at those two and their legislatures are comprised of near super majorities by democrats.  I live in state where past governors with R beside their names were "in name only".

As for the rest of your post this link illistrates that the stock market value under Obama out performed Trump through the same period. 

Can we get back on topic now?