1. Extremely doubtful that this would lead to 3% growth rate. On what theory? Corporations would have more money. What are they going to do with it? The DOW has tripled in value since 2009. So where's all that money going? Investment? Hiring workers? Why would you think Corporations having more money are going to do anything more than stock buybacks, paying executives more money, or giving dividends to wealthy shareholders? Where is the logic that it will boost the economy from 1.5 to 3% growth? If we're going to get economic growth we need to boost productivity or boost consumer demand. A corporate tax cut will not do either of these two things. At least if you cut middle-income taxes you might get more consumer demand, leading to higher growth. This is just a giveaway to the wealthy, ultimately.

This article was done before we had the full plan but the outlines were pretty clear so it's still on point.

"But even those examples of strong economic growth following tax tweaks come with some caveats. The U.S. entered recessions in 1969 and 1990, so even if they helped spur growth in the short-term, the tax overhauls didn't exactly guard against an economic slowdown, either. And given that the U.S. is already more than eight years into an economic recovery, there's some concern that rocking the boat with tax reform at this point would ultimately send the stock market and the economy into dangerous territory.

"You have to come back to the maxim that economic recoveries don’t die of old age. But like all of us, they don’t walk as fast as they used to," says Mark Hamrick, a senior economic analyst at Bankrate.com. "What you don't want to do is exacerbate the sustainability of the [economic] expansion by injecting an elderly athlete with adrenaline, which causes him to have a heart attack."

Among more independent analysts like Hamrick, however, the response has been more muted. Michael Gapen, a managing director and chief U.S. economist at Barclays Investment Bank, speculated in an interview Thursday with CNBC that the GOP-led reform effort "can help the supply-side [and businesses] a bit."

But he cautioned that "getting things up to 3 percent" annual economic growth would be "very difficult." The proposed tax overhaul may give the economy a jolt, but reaching the Trump administration's growth target could be a steep task.

"I mean, potential [annual economic] growth right now, we all estimate it kind of around 1.5 [percent] to 1.7 [percent], so you're talking about a doubling of potential growth," he said. "You're talking about needing to get productivity back to where we were in the 1990s for a sustained period of time. I think that's very low probability at this point."

More likely in his mind, Gapen said, would be a situation in which the tax overhaul generates "a four to five quarter impulse to growth, and then it fades."

https://www.google.com/amp/s/www.usnews ... ontext=amp

Politico examined cutting the history of cutting top tax rates and found "changing the top income tax rate does not have a predictable effect on economic growth."

https://www.politico.com/interactives/2 ... t-wealthy/

2. 12% repatriation. First, is that cash really overseas? Secondly, last time we did that the money was just used to increase stock prices. See #1. You know, if you just taxed corporations on their world-wide profits...you wouldn't have this recurring issue.

3. No idea.

4. Highest rate would go down for those making $400,00 to 1 million.

5. Doesn't sound that unreasonable but I don't really buy into the tax cuts elsewhere so no need to do it. Also, upper middle-class people making $200,000 who buy a 1 million dollar home in LA to get into a good school district aren't rich so that hurts them. Why should they sacrifice so that the very wealthy benefit?

6. I don't buy lowering estate taxes at all. People should have to make it on their own merits.

7. This hurts lower and mide-income people which we off-set by giving more money to the rich. Makes it harder to afford an education, which is the vehicle of advancement.

8. This is just horrible. Why should someone who owns a business pay less tax than someone who makes a salary? Totally unfair. And will be endlessly manipulated. And according to Ricky....already is. Will just get worse.

9. Cherry on top.

All in all...hand-out to the rich, sticks it to people living in liberal states like New York, California, Pennsylvania, etc who won't get deductions on state and local taxes and can't deduct full amount of loans for living in high-priced housing markets. Increases the deficit, making it hard for government to spend money on infrastructure, education, investment. Puts more pressure to cut Medicaid and Medicare at some point. For what? What's not to hate?

freeman3 wrote:8. This is just horrible. Why should someone who owns a business pay less tax than someone who makes a salary? Totally unfair. And will be endlessly manipulated. And according to Ricky....already is. Will just get worse.

This is a fair criticism. I've always thought that pass through income tax rate should be close to corporate income tax rate. But how is it done in other countries that have a big difference in personal and corporate income tax rates? Do they also do this?

I have a solution for cutting the corporate tax rate that should satisfy most people on the ideological spectrum. Have the CBO prepare estimated corporate tax revenues based on a 35% tax rate and an estimated growth rate of 1.7%. Corporation rate will be cut to 20% but with an important caveat: corporations will send in their taxes at the 20% rate and if at the end of the year corporate taxes equal projected taxes at the 35% rate then great. RJ is proven right. Otherwise, they will get a tax bill to make up for the lost revenue. So corporations get their tax cut, they got money to play around with December 31. But if they haven't produced that 3% growth...then fork over the money.

I noticed that "carried interest" has been untouched....
Wow.
If there is anything that is unfair it is treating income made by hedge fund managers in this fashion.
Hedge fund managers get paid a salary from the 2% (usual) management fee on a fund. Then, they share in any income earned. Sometimes only after a threshold return.
Still, they have no real skin in the game. Its like gambling with house money. And yet this income is treated like capital gains. Where someone has actually risked their own capital... These guys get to gamble with someone else's money and only share in the profits, not the losses. Then what they earn is taxed at a lower rate..
In the bag for wall Street I guess.

Carried interest is the portion of a fund’s profit -- usually a 20 percent share -- that’s paid to investment managers. Currently, tax authorities treat that income as capital gains, making it eligible for a rate as low as 23.8 percent. The top tax rate for ordinary income is currently 39.6 percent.

https://www.bloomberg.com/news/articles ... n-tax-bill

Geo:

I don't believe that even if it's not revenue neutral that this change will lead to 3% a year growth through 2020. I don't see how that's possible without a pretty massive increase in productivity or immigration, since we're already at full employment and the labor force is not effectively growing. From where would that growth come?

3% growth is not extraordinary. In fact, it's the average over the last 70 years. The question of whether we are at full employment is complicated. Yes, the headline unemployment rate is 4%, but there is something like 10 - 20% of able bodied individuals who don't show up in the data. The question is why not: Are they (1) incapable of employment (2) part of the underground economy, often benefiting from public resources who cannot report their income, or (3) discouraged who can be lured back into the workforce. If it's 1 or 2 your point is well taken. I also agree with your point on immigration. I do think that labor shortage becomes a bottle neck to growth. It's important to keep in mind that Trump's view is that wages for the working class will rise if we have growth and limited immigration. That's part of the reason he is President and we are not.

Freeman:

Politico examined cutting the history of cutting top tax rates and found "changing the top income tax rate does not have a predictable effect on economic growth."

https://www.politico.com/interactives/2 ... t-wealthy/

The article is about individual tax rates which the House plan does not touch. The House plan cuts corporate tax rates which is a necessity. Corporations are mobile and are leaving the US, forming elsewhere, or shifting their activity elsewhere. More corporate activity in the US vs. elsewhere is better for the US. It's that simple.

Freeman:

2. 12% repatriation. First, is that cash really overseas? Secondly, last time we did that the money was just used to increase stock prices. See #1. You know, if you just taxed corporations on their world-wide profits...you wouldn't have this recurring issue.

We do tax corporations on world-wide profits which is precisely why we have this problem. The US is virtually the only country that does this. Generating 12% of $1 trillion or more, or over $100 billion is not bad in a days work. What's the cost? Free lunches are rare, but this is one of them.

Freeman:

4. Highest rate would go down for those making $400,00 (sic) to 1 million.

5. Doesn't sound that unreasonable but I don't really buy into the tax cuts elsewhere so no need to do it. Also, upper middle-class people making $200,000 who buy a 1 million dollar home in LA to get into a good school district aren't rich so that hurts them. Why should they sacrifice so that the very wealthy benefit?

Aren't your two points contradictory? Either you care about the married couple making between $470,000 and $1m or you don't. Obama didn't as he kept referring to them as millionaires and billionaires when he raised their taxes to 39.6% (and 42% on unearned income).

freeman3 wrote:I have a solution for cutting the corporate tax rate that should satisfy most people on the ideological spectrum. Have the CBO prepare estimated corporate tax revenues based on a 35% tax rate and an estimated growth rate of 1.7%. Corporation rate will be cut to 20% but with an important caveat: corporations will send in their taxes at the 20% rate and if at the end of the year corporate taxes equal projected taxes at the 35% rate then great. RJ is proven right. Otherwise, they will get a tax bill to make up for the lost revenue. So corporations get their tax cut, they got money to play around with December 31. But if they haven't produced that 3% growth...then fork over the money.

The reduced corporate income tax revenue of going from 35% to 20% may not be covered by corporate income taxes alone. Some will, but also it will be covered because increased economic activity will result in all sorts of other tax receipts such as increased individual income and payroll taxes.

BTW, in the 80's when Reagan cut the corporate tax rate it did result in more corporate tax receipts AND increased economic activity leading to more tax revenue across the board.

rickyp wrote:I noticed that "carried interest" has been untouched....
Wow.
If there is anything that is unfair it is treating income made by hedge fund managers in this fashion.
Hedge fund managers get paid a salary from the 2% (usual) management fee on a fund. Then, they share in any income earned. Sometimes only after a threshold return.
Still, they have no real skin in the game. Its like gambling with house money. And yet this income is treated like capital gains. Where someone has actually risked their own capital... These guys get to gamble with someone else's money and only share in the profits, not the losses. Then what they earn is taxed at a lower rate..
In the bag for wall Street I guess.

Carried interest is the portion of a fund’s profit -- usually a 20 percent share -- that’s paid to investment managers. Currently, tax authorities treat that income as capital gains, making it eligible for a rate as low as 23.8 percent. The top tax rate for ordinary income is currently 39.6 percent.

https://www.bloomberg.com/news/articles ... n-tax-bill

I agree. The swamp fights back.

rickyp wrote:

In an initial analysis of the nine-page framework for tax reform, the Urban Institute and Brookings Institution's Tax Policy Center found that Americans among the top 1% of earners would see the bulk of the plan's benefits, while lower- and middle-class Americans — even most upper-class people — would see few benefits.

http://www.businessinsider.com/trump-ta ... tes-2017-9

The analysis also estimates the plan would increase the federal deficit by $2.4 trillion in the first decade after its implementation.

That's the Trump plan not the house plan. you should read the articles that you post; you embarrass yourself.

rickyp wrote:I noticed that "carried interest" has been untouched....
Wow.

Amazing. Isn't the queen not taxed in UK? It's like American royalty.

Ray Jay wrote:3% growth is not extraordinary

in a growing labor market.

The problem with growth over the next 10 years is entirely demographic. People turning 65 next year were born in 1953, which was the last year that births were under 4 million in the USA, until 1964, that is. After which births didn't reach that total again until 1989.

The pig is reaching the end of the python:

https://www.census.gov/prod/2014pubs/p25-1141.pdf

I gave an example of a couple making $200,000 a year combined who might carry a loan over $500,000. I then noted that the tax rate dropped for those making $400,000 to a million. I don't think those two points are contradictory as those are significantly different income levels.

I finally went back to take a look at this corporate tax cut of 1986. It was actually designed to raise corporate taxes. How? Because corporations were getting huge tax benefits from investment tax credits and other deductions corporations were taking it was not a magic panacea that caused such great economic growth that it was revenue neutral. The plan itself was supposed to raise corporate tax revenues 120 billion dollars over five years. Corporate tax receipts increased about 150 billion dollar dollars, a modest increase in corporate tax receipts over what the plan expected given the economic boom during those years.

Anyway, the corporate tax cut of 1986 was not a tax cut...it raised taxes on corporations. It was tax reform, however.

https://taxfoundation.org/tax-reform-an ... tion-1986/

The current corporate tax plan is a tax cut so trying to use the corporate tax increase plan of 1986 to argue that we will get great growth and it will be revenue neutral...is extremely dubious. If the corporate tax increase of 1986 caused economic growth...then we're doing the opposite thing here. Here, we are just cutting corporate taxes and hoping that will get some of that back in increased tax receipts. The supply-sider's dream...that never works.