Slashing corporate tax “a Trillion-Dollar Blunder’

Corporate tax rates and rates of tax for the rich have long been argued about.

In New Zealand major changes in the 1980s were supposed to result in ‘trickle down’ and benefit everyone, with more jobs and more pay. Instead it delivered more profits and more inequality and more hardship for many.

The tax rate argument is raging in the US right now with Donald Trump’s massive tax shift progressing through the Republican led Congress and Senate.

Michael Bloomberg writes: This Tax Bill Is a Trillion-Dollar Blunder

CEOs aren’t waiting on a tax cut to “jump-start the economy” — a favorite phrase of politicians who have never run a company — or to hand out raises. It’s pure fantasy to think that the tax bill will lead to significantly higher wages and growth, as Republicans have promised. Had Congress actually listened to executives, or economists who study these issues carefully, it might have realized that.

Instead, Congress did what it always does: It put politics first. After spending the first nine months of the year trying to jam through a repeal of Obamacare without holding hearings, heeding independent analysis or seeking Democratic input, Republicans took the same approach to tax “reform” — and it shows.

The largest economic challenges we face include a skills crisis that our public schools are not addressing, crumbling infrastructure that imperils our global competitiveness, wage stagnation coupled with growing wealth inequality, and rising deficits that will worsen as more baby boomers retire.

The tax bill does nothing to address these challenges. In fact, it makes each of them worse.

The bill’s cost — $1 trillion to $1.5 trillion — makes it more difficult for taxpayers to afford Medicare and Social Security for the baby boom generation, which is now hitting retirement.

In effect, the tax bill achieves four main things:

  • It takes money away from schools and students.
  • It restricts our ability to invest in infrastructure.
  • It does nothing to boost real wages while making health insurance more expensive.
  • It makes it harder to control the costs of Medicare and Social Security without cutting defense and other spending — or further exploding the deficit.

To what end? To hand corporations big tax cuts they don’t need, while lowering the tax rate paid by those of us in the top bracket, and allowing the wealthy to shelter more of their estates.

Republicans in Congress will have to take responsibility for the bill’s harmful effects, but blame also falls on its cheerleader-in-chief, President Trump.

The tax bill is an economically indefensible blunder that will harm our future. The Republicans in Congress who must surely know it — and who have bucked party leaders before — should vote no.

A harsh critique.

 

25 Comments

  1. Alan Wilkinson

     /  December 16, 2017

    Bloomberg is a wannabe Democrat presidential candidate who has spent the last two years attacking Trump. By all accounts the US tax system is an unholy mess and long overdue for reform and simplification. Whether this Bill does that I don’t know but Bloomberg is the last person to give an objective opinion on it.

    • “Whether this Bill does that I don’t know but Bloomberg is the last person to give an objective opinion on it.”

      Bloomberg has offered an informed and clearly argued case against. He’s a multi-billionaire like Trump (well credentialed for those who wish to worship the rich). He rejected a run for president as not in the interests of the country (he believed his run would further Trump’s chances).

      You on the other hand are, by your own admission, ill-informed and merely partisan. There’s no contest over whose advice should be accepted.

      • Alan Wilkinson

         /  December 16, 2017

        I could shoot holes all thru Bloomberg’s crap but why bother? Less partisan experts will do it for us. Suffice to say US corporate tax has forced profits and jobs overseas and that profits otherwise fund growth or become taxable in shareholders’ hands.

        Furthermore my advice was to seek unbiased expertise while yours is to believe a Democrat political shill.

        • But you’re not arguing against what he said, simply dissing who said it. I could shoot holes through that approach.

          • wackAmole

             /  December 16, 2017

            All you do Pete is copy paste anti Trump hit pieces from your favourite Globalist propaganda departments and attach a few nodding approvingly liberal boomer comments.

            I could shoot holes through that approach.

            • You didn’t fire let alone shoot holes.

              And you’re making stupid assertions again. Just like Trumpenreich did.

            • Patzcuaro

               /  December 16, 2017

              Sounds a bit like the gunfight at the O.K. Corral

          • Alan Wilkinson

             /  December 16, 2017

            I did just make the obvious rebuttals to what he said.

        • artcroft

           /  December 16, 2017

          “But why bother” = I have no actual argument.

          Even I can do better than that and I don’t agree with your position. Here goes.

          American corporate tax rate is set at 40%. This is far higher than the 30% international average. This discourages American firms from declaring profits in America. The rate should be brought into line with the rest of the world.

          For the counter argument see Bloomberg, but sadly not Allan. Reasoning and facts are not his thing.

          • Alan Wilkinson

             /  December 16, 2017

            Except I already noted: “US corporate tax has forced profits and jobs overseas”. If you can’t read and comprehend that is not my problem.

      • wackAmole

         /  December 16, 2017

        “Bloomberg has offered an informed and clearly argued case against.”

        Bloomberg’s team ran US government debt north of 20 trillion in a few short years to save their fellow Wall Street swamp creatures from being lynched or fleeing the country.

        Globalists have no credibility.

  2. Blazer

     /  December 16, 2017

    tax cuts=the rights..default panacea…for ..everything.

  3. Trevors_elbow

     /  December 16, 2017

    NZ under high tax rates…. Muldoon years….. lets go back there!!!!! Brilliant.

    The Left always think Tax, Tax and redistribute is the panecea…..

    Problem is its inefficient recycling money through Wellington… plus the rich find ways to avoid it…. so those in the middle and on salary/wages suffer…and of course the squalour at the bottom end doesnt really change…. i remember working class conditions on the 70’s…nothing to get nostalgic for at all

    Flat lower taxes. And let merit and personal choice drive outcomes…..

    P.I.N.T.R.W.E. 😀

    • Blazer

       /  December 16, 2017

      Joyce has some spurious ways of spending taxpayers …money….filed under..’good work..if you can get it’!
      http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11960761

      • Blazer

         /  December 16, 2017

        to be fair…some of these consultants only charged $1100 an Hour,while others ,were on $12,000 a day.Commercially sensitive=the going..’rate’.. 😉 ..under Joyce another ‘safe pair of hands’ the number of employees at M.B.I.E on $200,000 plus only increased by 400% in the last…4 years.. to total 94 hardworking..battlers.

        • Gezza

           /  December 16, 2017

          Not surprised to hear this about MBIE. Making Departments super ministries always seems to just be another excuse for downsizing & sacking talent & experienced staff at the bottom & middle that still they need. Wouldn’t be surprised if the some of the Consultants haven’t a clue how all the various different business units work & are a waste of time & money, & if some are former employees who now know what they’re really worth & are charging them a fortune seeing they got made redundant & it’s only open-ended “contract work” they’re doing.

          • Blazer

             /  December 16, 2017

            at least they’re keeping people off the…dole.M.B.I.E extravagant spending has been a hallmark of Joyce’s…tenure.Just don’t mention the Thiel..deal to that sound economic…manager.

    • Gerrit

       /  December 16, 2017

      Too true,

      When taxation was high we work to maximise income but minimise taxation. With the then secondary tax rate so high it was easy to work out how much overtime to work versus the maximium benefit.

      Anymore than one double shift a week meant that virtually all of the extra money earned by working overtime went in tax. So no one bothered. Productivity fell. Employment did not increase as the cost of employment was too high for many businesses.

      Lessons learned by previous generations not being headed by the new generation.

  4. Gezza

     /  December 16, 2017

    Fark I’m glad we’ve got Grant so there won’t be any of this overspending & massive borrowing nonsense here! Who knows – we might even get a few two lane bridges in Northland & a decent bridge over to the Waitangi Treaty Grounds. (Looking forward to Jacinda’s visit on Waidangee Day.)

    • Gezza

       /  December 16, 2017

      😡 *Wydangee

    • Alan Wilkinson

       /  December 16, 2017

      At the rate NZTA do construction projects no Waitangi bridge replacement will be completed in our lifetime.

      • Gezza

         /  December 16, 2017

        Fukem. Do it yourself then. Organise it please Al.

        • Alan Wilkinson

           /  December 16, 2017

          Waiting for climate change to sweep it away, Sir Gerald. Doing my bit for both methane and CO2 emissions. You too?

  5. David

     /  December 16, 2017

    The US tax system is awful, even the lowest paid have to get an agent to file their returns. The corporate rate has seen on some estimates a trillion dollars held offshore . I doubt the tax reform will be anywhere near as good as say ours but at least parts are finally being addressed.