The Republican Tax Cut is a Big Fat Failure

Mark

Old news to most of you here but raise your hand, unless you need them both for shoveling more money toward the government, if you didn't see this coming. And of course it's also everyone else's fault and not those in charge.

https://www.washingtonpost.com/opinions/the-republican-tax-cut-is-a-big-fat-failure/2018/10/22/41c6cc5e-d62f-11e8-aeb7-ddcad4a0a54e_story.html?utm_term=.18ae2f92bfcf&wpisrc=nl_headlines&wpmm=1

Old_Skeet

I feel that the President had to get the tax cuts in place before he could start dealing with the inbalance in trade with outher countries that have tariffs on our goods sold in their countries but did not want tariffs on their goods being sold in the US. So be thankful the tax cuts being put in place. It seems to me the FOMC needs to get on board and put their rate increase campaign on hold until the tariff issues are concluded. I bet the President now wishes he had left Janet in charge. I'm thinking the FOMC is going to break what it tooks years to fix and at great expense.

Mark

Well I'm as dumb as a rock when it comes to large scale economics and economic policy (ices) but tell me when large scale tax cuts for the already obscenely wealthy have ever done anything to affect trade tariffs and trade imbalances. No thanks.

davidrmoran

@OS,

Trade imbalance is not what you seem to think it is, not even close.

https://www.nytimes.com/2018/03/05/us/politics/trade-deficit-tariffs-economists-trump.html

And other than properly adjusting some business rates, there is nothing to be thankful for in the tax cuts, and the timing was even worse, with a recovering economy.

https://www.brookings.edu/research/effects-of-the-tax-cuts-and-jobs-act-a-preliminary-analysis/

Old_Skeet

Hi @davidrmoran: Thanks for making comment on my above statement. From my perspective tax cuts put dollars in my pocket that would have otherwise gone into the United States Treasury. Tariff receipts are paid to the United States Treasury as goods enter the Country but usually get passed on in the form of a higher price for the imported goods purchased. So tariffs are a form of a consumption based tax that are most often paid for by the consumer. In this case I am thankful for the income tax cuts as they put dollars in my pocket that I would not otherwise have and now these dollars can be used to cover some of the pass through tariffs now associated with some imported goods. So, what our Government gave us in the form of an income tax cut has now been taken away because of increase tariffs and a form of a consumption based tax.

Have I missed something? If my thinking on this is so wrong please let me know. Again form my thinking I understand it pretty darn well. Thank goodness for the tax cuts.

Tarwheel

The problem is that the tax cuts overwhelmingly benefited the wealthy. However, higher prices from tariffs— which are also taxes— hurt everyone but more so for the poor and middle class.

hank

“Have I missed something?”

Maybe. Those extra dollars in your pocket didn’t have to go into the U.S. Treasury. They might have been used for any number of worthwhile purposes for the benefit of all. I believe that educating children, building up infrastructure, helping those less fortunate than us, etc. do on balance make all of us better off.

Circuitous reasoning on my part I guess.

New news: Trump announces new additional 10% tax cut: https://www.cnn.com/2018/10/23/politics/donald-trump-middle-class-tax-cut/index.html

Just endured another TV campaign ad. This one by some yo-yo (not sure which party) who says he has “a plan” to fix up our state’s crumbling roads “without raising your taxes.”. Yep - and elephants can fly.

davidrmoran

@OS,

not quite how it works ('tax on consumer goods')

https://www.nytimes.com/2018/07/07/opinion/how-to-lose-a-trade-war.html

and there is lots more of this sort of analysis.

But yes, if the taxcuts actually helped your situation (did they? how so, specifically? because you are upper-income? or more like the >3-4%+ reduction shown here 2018: https://cdn.vox-cdn.com/thumbor/XYl2lyQib751fqttBj_W4kOpO3E=/0x0:1184x644/920x0/filters:focal(0x0:1184x644):format(webp):no_upscale()/cdn.vox-cdn.com/uploads/chorus_asset/file/11674703/Tax_cut_savings_as_a_proportion_of_income_2012_2018.png)

then they might be considered to go toward any increased prices, if any of those increases impact your purchasing.

davidrmoran

and how the 'taxcut' is actually working:

https://www.nytimes.com/2018/11/12/business/economy/trumps-tax-cut-was-supposed-to-change-corporate-behavior-heres-what-happened.html

rono

Howdy folks,

Couple of issues here. First of all the tax cuts went predominately to the corporations and top 1%. More supply side nonsense that does little for aggregate demand.

As for trade deficits. Geez, if we're running a trade deficit, it simply means that WE HAVE MORE STUFF. Nationalist politicians for centuries have fretted and stewed about 'sending our gold overseas' and it's simply bullshit. We get goods and services in exchange for our 'gold'.

One of the lies they told was that the tax cuts would pay for themselves. Folks, there is no economist on the planet that would agree. At best some small percentage (10-15%) of the lost revenue is replaced. Nopers, tax cuts are meant to INCREASE the deficit so Mitch can come out last week proposing cuts to all entitlement programs to address the deficit.

and so it goes,

peace,

rono

davidrmoran

and, oops, its relationship to business behaviors and to economic vitality is beyond sketchy:

https://www.nytimes.com/2018/11/15/opinion/tax-cut-fail-trump.html

davidrmoran

and finally

https://www.ft.com/content/960ec8ec-5c36-11e9-9dde-7aedca0a081a

oops, will to see how to open privately, as this is blocked

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