Tax cuts will explode the deficit

Discussion in 'West Mall' started by Horn6721, Jul 12, 2018.

  1. Horn6721

    Horn6721 10,000+ Posts

    According to Pelosi Nov 2017
    Pelosi on tax cuts
    ""This thing will explode the deficit, the national debt. "

    From Investors Business D
    Income Tax Revenues Are Up 9% This Year — Is Trump Tax Cut Paying Fo
    • 7/11/2018
    Supply-Side Economics: Democrats scoffed at Republicans who said the Trump tax cuts would at least partially pay for themselves through higher economic growth. But it looks like the GOP had it right all along, as revenues climb.

    The latest monthly budget report from the nonpartisan Congressional Budget Office finds that revenues from federal income taxes were $76 billion higher in the first half of this year, compared with the first half of 2017. That's a 9% jump, even though the lower income tax withholding schedules went into effect in February.

    The CBO says the gain "largely reflects increases in wages and salaries."
    https://www.investors.com/politics/editorials/income-tax-revenues-trump-tax-cuts-economic-growth/

    Maybe I am wrong but an increase in revenue will decrease the deficit against the budget in place.
    On another note Pelosi also complained that the tax cuts would give an incentive for Companies to move jobs overseas. There may have been some who moved jobs off shore but IIRC nothing substanial. There have been many companies who brought jobs back.

    Dem also complained about2.9 Triilion in profits companies have parked overseas and the tax cuts would do nothing for that.
    From Bloomberg
    "Before 2018, U.S. nonfinancial corporations tended to add about $50 billion to earnings held abroad every three months. But in the first three months of 2018, that number turned to a negative $158 billion, according to the Federal Reserve. That's the biggest reversal on records going back to 1946, and much more than companies brought back in 2005, the last time the government tried something similar. "
    https://www.bloomberg.com/view/arti...at-u-s-companies-are-bringing-their-cash-home

    I guess Dems will call all this "crumbs".
     
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  2. Garmel

    Garmel 1,000+ Posts

    When I mentioned this a few months ago I remember many people were telling me it was "too soon" for it to be happening even though we were having record returns then as well.
     
    Last edited: Jul 12, 2018
  3. Horn6721

    Horn6721 10,000+ Posts

    Garel
    those people didn't want it to be true. Hate that the data is there
    that takes away their whine.
     
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  4. bystander

    bystander 2,500+ Posts

    No comment from Pelosi on the spend side I guess...
     
  5. Phil Elliott

    Phil Elliott 1,000+ Posts

    This has always been true - when taxes are cut, revenues go up. I guess there is not enough times for this to happen that the left won't scream the same thing every time cuts are proposed.
     
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  6. bystander

    bystander 2,500+ Posts

    Looks like Reagan had one year where the revenues dropped but they rebounded quite nicely the rest of the way...

    https://www.thebalance.com/current-u-s-federal-government-tax-revenue-3305762

    • FY 1988 - $909 billion.
    • FY 1987 - $854 billion.
    • FY 1986 - $769 billion.
    • FY 1985 - $734 billion.
    • FY 1984 - $666 billion.
    • FY 1983 - $601 billion.
    • FY 1982 - $618 billion.
    • FY 1981 - $599 billion.
    • FY 1980 - $517 billion.
     
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  7. Vol Horn 4 Life

    Vol Horn 4 Life 5,000+ Posts

    So can we call them deniers? :popcorn:
     
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  8. ProdigalHorn

    ProdigalHorn 10,000+ Posts

    And what's interesting is a big part of that is apparently from income. I'm curious about this because I'm seeing lefties post that salary is still stagnant and citing stats to prove it. (I'm skeptical if that's true, and I've heard anecdotal evidence otherwise) but basically they're arguing that companies are playing Scrooge McDuck by piling their money in giant vaults where it sits there doing absolutely nothing.

    This from what I can tell is where we miss the point about the whole "supply side" economic theory. It's been pitched that companies make money, and then they give employees raises and everyone's happy. I'm not sure that's necessarily the case. Income increases are more indirect, because those employers don't just decide to raise salaries because they're nice. They do it because the economy adds more jobs and more people go to work, and once you get to the point where the workforce is close to full employment, the demand for work is higher. People have options and they start changing jobs for places that pay better, and companies are forced to pay better for new hires due to competition.

    Companies paying attention may be proactive and offer raises to keep people happy, but I think more of the income increase happens when people move to new jobs that pay better. So I'm not sure that the real impact on income will start showing up until a few months down the road. From what I've heard, right now we're just starting to pull people back into the workforce who had given up during the Obama administration. So there's no shortage of workers right now in most (not all) fields. The wage pressure hasn't really started to kick in yet.
     
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  9. Phil Elliott

    Phil Elliott 1,000+ Posts

    Even if wages are stagnant, more people are working and drawing paychecks than before.
     
  10. bystander

    bystander 2,500+ Posts

    They could have tied the tax cuts to "desired activity." I remember hiring a kid who qualified us for some tax credit and it worked. We got the money and hired the kid for a needed job. Or they could have forced through tax credits for capital investments or accelerate depreciation etc. I understand the hoarding of money but I thought there was a tax for that too. At least there used to be. It was called an accumulated earnings tax. Here is some language about it:

    http://loopholelewy.com/loopholelew...s/corporation-16-accumulated-earnings-tax.htm

    "If a C corporation retains earnings (doesn't distribute them to shareholders) above a certain amount, an amount which the IRS concludes is beyond the reasonable needs of the business, the corporation may be assessed tax penalty called the accumulated earnings tax ( IRC section 531) equal to 20 percent (15% prior to 2013) of accumulated taxable income.

    Purpose of the Tax
    The purpose of the accumulated earnings tax is to discourage the accumulation of earnings if the reason for such accumulation is to allow shareholders to avoid paying taxes on such earnings by not paying them dividends. Keep in mind, this is not a self-assessed tax, it can be imposed via IRS review of a corporation."

    Bottom-line: money is always better in OUR hands and not in DC where they can blow it on other things or direct it in a political manner.
     
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