Why cut taxes?

[BlueK]

Wow. And you call me condescending.

I don't like the tax bill, and I've said it from the start. I don't think it will spur economic growth as much as other tax reforms could, and I'm certainly not saying it will pay for itself. But to say it will have no offsetting economic effect is a stretch. The CBO didn't use a dynamic scoring method in this estimate, ie they didn't consider the tax revenues from economic growth, the the price tag will be somewhere south of their predictions. The breakeven growth increase on this bill is somewhere around .75%.

Increasing GDP growth from 2% to 2.75% isn't likely, but it isn't out of the question, either. While the labor pool is growing more slowly, I don't believe it is as much a limiting factor as others may. The economy can continue to expand at full employment with productivity increases. Investor confidence is a far larger factor than labor pool in economic growth, imo.

Any fear this may actually push the economy into Jimmy Carter era type inflation?

[cowboy]

Any fear this may actually push the economy into Jimmy Carter era type inflation?

That's certainly a possibility. There's a lot of money out there, and as people start looking to invest and grow, there could certainly be more than the Fed can reign in before we see inflation. We have two things in our favor that could keep that from happening though:

1) Tax rates are lower and there is more incentive to invest in productivity-increasing technology. As long as we produce enough stuff to absorb the money supply, the economy should stay out of double-digit inflation. Productivity is really the key to our problems. If we can be productive, we can grow the economy at a rate high enough to stay ahead of our debt, and we can also overcome the labor constraints coming down the pike.

2) Fed policy is far different now. The 70's was the end of an era where the Fed targeted interest rates instead of inflation and growth. The result was a huge money supply that kept growing even in inflationary conditions. Jimmy Carter's one good call as a president was nominating Paul Volcker to chair the Fed and target inflation with interest rates. Short-term, it was painful, with 15%-20% interest rates, but long-term, it helped save the economy. Now, I think the Fed will act faster to stop inflation before it really gets whipped up. The disclaimer to all of this is that I'm assuming we don't have to default on the federal debt.

This is getting out of my wheelhouse, and I'd like to hear from Pelagius. Also, Old Gregg may have some thoughts, since he has obviously has some sort of economic/finance background (as much as he tries to hide it.)

[Uncle Ted]

Wow. That is some impressive spin.

They project it over 10 years because that is required by law. Don't kid yourself, it is a big number either way. And some people thing the real number is bigger.

Yes, taken to the extreme a tax cut would have to raise the deficit. Between the extremes, it could increase or decrease the deficit. Saying "there is very little correlation between tax rates and tax receipts" is a clever way of admitting that we don't know where we are on that curve. But it is a Republican article of faith that a tax cut always magically results in revenue growth that outstrips the revenue loss. Let's just spend that money and hope for the best!



http://beta.latimes.com/business/la-...018-story.html

I fed your analysis of the republican tax bill into the computer...

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Hey, I got a better idea... Let's throw a couple trillion into "shovel ready" projects to raise the GDP!

[Jeff Lebowski]

I feed your analysis of the republican tax bill into the computer...

Hey, I got a better idea... Let's throw a couple trillion into "shovel ready" projects to raise the GDP!

#whataboutobama

[Uncle Ted]

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[Moliere]

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But what about the poor rich people!!!


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[Mormon Red Death]

https://twitter.com/EasterbrookG/status/942741754217947138

[Moliere]

One tax calculator I used showed I’d save over $7k in taxes under the new plan. Trump 2020!!!


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[Donuthole]

Link to the calculator?

[BigFatMeanie]

Link to the calculator?

https://www.nytimes.com/interactive/...alculator.html

Shows that I would save $5720

[Moliere]

Link to the calculator?

https://www.marketwatch.com/graphics/2017/trump-tax-calculator/

This is probably the best calculator I've seen.



On a different note, I find stuff like this hilariously dumb: http://www.cnn.com/2017/12/19/politi...ows/index.html

Two-thirds see the bill as doing more to benefit the wealthy than the middle class (66%, vs. 27% who say it'll do more to benefit the middle class) and almost four in 10 (37%) say that if the bill becomes law, their own family will be worse off. That's grown five points since early November. Just 21% say they'll be better off if the bill becomes law.

Now, I know I'm being an accounting nerd, but I can guarantee you that half of Americans really have no idea how this tax bill will affect. I'd wager that 25% think they know, but really don't and the remaining 25% are educated enough to know how it will impact them. I'm not saying the bill won't benefit the rich more than the middle class, it definitely will if you are counting dollars. However, the rich already pay a disproportionate share of the taxes (top 20% earners pay 85% of total federal income taxes) so any tax cut at all is always going to benefit them more unless people want the rich to pay an even more disproportionate share of the taxes.

[Uncle Ted]

Folks are rioting in the streets over the tax bill...

[Jeff Lebowski]

https://www.marketwatch.com/graphics...ax-calculator/

This is probably the best calculator I've seen.

$8K tax increase for me based on last year's taxes. :swear:

[Moliere]

$8K tax increase for me based on last year's taxes. :swear:

You need to have a couple more kids. My child tax credit phased out under the current tax plan. Under Trump's tax plan, I think I'll get hte full amount as a credit. That swings me from paying $3k more to saving $7k in taxes. Of course, I have 3 more years before I start losing my walking tax credits.

[beefytee]

The child tax credit makes the difference for me too. Without it, my taxes go up about $1000 because of the cap on state and local taxes. With the ctc, they go down about $5000. As you can guess we have 3 kids.