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| Blogs > redmustang91 > Wild Red Mustang thoughts! |
2017 GOP tax cut
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2017 GOP tax cut If you did not get a cut when the Federal taxes were cut in 2017, you are not alone. Remember those one-time bonuses some big companies announced at the start of 2018, when a large corporate tax cut went into effect? They added up to $28 per American worker. Other aspects of the Trump tax cuts were barely more generous to ordinary workers in 2018, according to new analysis by the nonpartisan Congressional Research Service. The law slashed the average corporate tax rate companies actually pay by 48%, while cutting the average rate for individuals by just 4%. The tax cuts had a minimal impact on GDP growth last year, and overall incomes rose just 2% when adjusted for inflation. “On the whole,” CRS found, “the growth effects [of the tax cuts] tend to show a relatively small (if any) first-year effect on the economy.” The Tax Cuts and Jobs Act, passed at the end of 2017, cut the corporate tax rate from 35% to 21%, while lowering the marginal tax rates most individuals pay. It also changed the way taxpayers itemize deductions, including the controversial new cap of $10,000 on the deductibility of state and local taxes. The overall cost will be about $1.5 trillion in foregone federal revenue through 2027, with annual deficits already soaring toward $1 trillion. About two-thirds of Americans got a tax cut in 2018, but most of the gains went to the highest earners. That’s partly because they pay the most in taxes. The law, which passed with only Republican votes, could have kept the top brackets intact instead of lowering them, while directing larger tax cuts toward the middle class. But it didn’t, with the bill’s backers arguing more money in the wallets of the wealthy would stimulate spending and growth. Many economists dispute such “trickle-down” theory, and the CRS report finds no such stimulus in 2018. There was broad agreement that the top U.S. corporate rate of 35% was too high, since it’s much lower in other developed countries. But it probably didn’t need to go as low as 21%. White House economists said lowering the corporate rate to that level would eventually boost household incomes by $4,000 to $9,000 per year. Treasury Secretary Steven Mnuchin and other Republicans argued the tax cuts would generate so much growth and new tax revenue that they’d pay for themselves. There’s no sign either of those things is happening. The biggest effect of the tax cut in its first year was a record-breaking surge in corporate stock buybacks. Public companies repurchased $806 billion worth of shares in 2018, 55% more than the year before. Buybacks could go even higher this year. There’s nothing inherently wrong with buybacks, but nobody touted the Trump tax cuts as a needed buyback stimulator. Companies buy back shares when they think it’s a better use of capital than spending it on equipment purchases or research and development or new investments. That doesn’t mean corporate investing has stopped. Nonresidential fixed investment grew 7% in 2018, which sounds good. But it’s not a notable increase from prior years; other factors explain some or most of it. “It would be premature to conclude that the higher rate of growth of nonresidential fixed investment was due to the tax changes,” CRS found. Wages picked up in 2019, but there’s little evidence companies are passing tax savings along to their employees. About 1,900 companies announced one-time bonuses related to the tax cuts last year, according to Americans for Tax Fairness. In total, they committed about $4.4 billion to bonuses for about 5.4 million workers, or about $815 per worker. That’s real money, but not enough to change the picture nationally. When averaged across the entire U.S. workforce, the bonuses were only $28. One-time bonuses can work against workers if they come in lieu of annual raises, since they don’t boost base pay or compound future earnings. |
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It has been speculated that one reason for the recent import tariffs is to generate revenue to offset the tax cuts outlined above and less about China.
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I got a tax increase out of the 2017 GOP version of tax cutting.
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6/19/2019 4:44 pm |
Marginal tax rates need to increase to 70% on the wealthy 1%. No more tax cuts for the wealthy.
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Most of the benefits of the GOP tax cut went to the corporations and top 10% of income earners. Welfare for the rich I call it. Government should comfort the afflicted and afflict the comfortable. Instead the rich get richer and poor suffer. Time to change that deal. The economy is rigged, by Trump and his rich cronies.
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The way to change things is elect Democrats to the Senate and the Presidency. That is the entire plan.
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