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-   -   Skewering of Leftist Economic "Conventional Wisdom" (http://www.politicalchat.org/showthread.php?t=12192)

whell 01-11-2018 09:12 AM

Skewering of Leftist Economic "Conventional Wisdom"
 
"Conventional Wisdom" - tax cuts for business are bad, since the business will not pass along the benefit of those cuts to workers, and there will be no economic benefit for anyone except business owners or share holders.

Reality:

https://www.bloomberg.com/news/artic...f-tax-overhaul

Wal-Mart Stores Inc. is boosting its starting hourly wage to $11 and delivering bonuses to employees, capitalizing on the U.S. tax overhaul to stay competitive in a tightening labor market.

“Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.,” Chief Executive Officer Doug McMillon said in the statement.


Wal-Mart’s decision makes it the latest corporate titan to plow expected tax savings into employee payouts. Boeing Co., AT&T Inc. and Wells Fargo & Co. have all made similar announcements in recent weeks. Wal-Mart said it’s “early in the process of assessing potential additional investments” it could make.

MrPots 01-11-2018 09:23 AM

Quote:

Originally Posted by whell (Post 366055)
"Conventional Wisdom" - tax cuts for business are bad, since the business will not pass along the benefit of those cuts to workers, and there will be no economic benefit for anyone except business owners or share holders.

Reality:

https://www.bloomberg.com/news/artic...f-tax-overhaul

Wal-Mart Stores Inc. is boosting its starting hourly wage to $11 and delivering bonuses to employees, capitalizing on the U.S. tax overhaul to stay competitive in a tightening labor market.

“Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.,” Chief Executive Officer Doug McMillon said in the statement.


Wal-Mart’s decision makes it the latest corporate titan to plow expected tax savings into employee payouts. Boeing Co., AT&T Inc. and Wells Fargo & Co. have all made similar announcements in recent weeks. Wal-Mart said it’s “early in the process of assessing potential additional investments” it could make.

So you found the exception that proves the rule.

JJIII 01-11-2018 09:37 AM

Looks like at least four exceptions.

Dondilion 01-11-2018 09:38 AM

I believe we have to look at the total picture. The negatives and positives and see where we end up to determine "bad".

The basic argument of the left is that the less well off will end up paying ( reduction in safety net) for the hole which it feels the cut will create.

Anyway it is early in the season.

finnbow 01-11-2018 09:45 AM

Again, Whell uses a single anecdote to try to prove a larger point, just as he did with the Carrier deal in Indiana (where Trump "saved" hundreds of jobs, only to have Carrier move all the jobs to Mexico anyway). The only thing this anecdote proves is the existence of an anecdote.

Here's the truth of the matter. The consensus of non-partisan economists and researchers is that ~20% of such tax increases actually help employees. The rest goes to shareholders.
https://www.cbpp.org/research/federa...administration

Target raised their minimum wage last year to $11 far before the GOP's tax plan was finalized. It could be argued that labor market forces compelled Walmart to act and they chose to throw (the ever-needy) Trump a bone by attributing it to the tax bill.

Dondilion 01-11-2018 09:51 AM

Quote:

Originally Posted by finnbow (Post 366059)
Again, Whell uses a single anecdote to try to prove a larger point, just as he did with the Carrier deal in Indiana (where Trump "saved" hundreds of jobs, only to have Carrier move all the jobs to Mexico anyway). The only thing this anecdote proves is the existence of an anecdote.

Here's the truth of the matter. The consensus of non-partisan economists and researchers is that ~20% of such tax increases actually help employees. The rest goes to shareholders.
https://www.cbpp.org/research/federa...administration

It trickles down.

finnbow 01-11-2018 09:54 AM

Quote:

Originally Posted by Dondilion (Post 366061)
It trickles down.

Or so the discredited theory goes.

whell 01-11-2018 01:19 PM

Quote:

Originally Posted by finnbow (Post 366059)
Here's the truth of the matter. The consensus of non-partisan economists and researchers is that ~20% of such tax increases actually help employees. The rest goes to shareholders.
https://www.cbpp.org/research/federa...administration

Target raised their minimum wage last year to $11 far before the GOP's tax plan was finalized. It could be argued that labor market forces compelled Walmart to act and they chose to throw (the ever-needy) Trump a bone by attributing it to the tax bill.

Give me an F-ing break. The CBPP is a bunch of non-partisan leftists. The only reason they're non-partisan is that their membership is likely equally distributed between those who vote Democrat, Green Party, Communist Party USA or Social Democrats. Linking to that bunch and calling them "non-partisan" is laughable. I'll see your CBPP blather and raise you something similar from the Tax Foundation.

According to the Tax Foundation’s Taxes and Growth Model, the Tax Cuts and Jobs Act would increase the long-run size of the U.S. economy by 1.7 percent (Table 3). The larger economy would result in 1.5 percent higher wages and a 4.8 percent larger capital stock. The plan would also result in 339,000 additional full-time equivalent jobs.

The larger economy and higher wages are due chiefly to the significantly lower cost of capital under the proposal, which reduces the corporate income tax rate and accelerates expensing of capital investment for short-lived assets.


Of course the bulk of the benefits of a reduction in corporate tax rates will be retained by the business and its shareholders. Hell, shareholders of a nice chunk of US corporations have benefited mightily just from the anticipation of this tax cut.

The question is where that money goes. It doesn't just sit inside the business and do nothing. Businesses reinvest and grow the business which creates jobs, increases demand for labor (thus increasing the upward pressure on wages) broadens the tax base.

What really floors my about the CBPP article you cited, and demonstrates the intellectual deficit behind it, is this:

Further, corporate rate cuts could ultimately hurt the majority of Americans, depending on how they are paid for. If, as in the Administration’s tax proposals, corporate rate cuts are not offset by spending cuts or increases in other taxes, any assumed increase in domestic investment — and therefore benefit for workers in the form of higher productivity and wages — won’t be sustained. The higher deficits would reduce national saving, meaning less capital would be available for investment in the economy and interest rates could rise. Higher interest rates, in turn, would reduce and ultimately reverse the increase in investment necessary for workers to gain (in the form of higher productivity and wages) from a corporate rate cut.

So we have the usual "the economy is static" argument. Tax cuts equal less revenue for government, and that's bad. Increased economic growth and broadening that tax base are not taken into account when determining the impact of a corp tax rate cut. No, the money is just going to sit in corporate coffers and not be returned to the economy. Somehow, this is all going to result in no one saving any money so interest rates will rise and we'll all get screwed.

What a load of crap this is. For example, the pressure to increase interest rates are stimulated by a variety of factors. One of those factors is economic growth. Interest rates are already nosing upward a bit because of this. So, I guess we shouldn't have economic growth because that's bad for interest rates?

Spare me.

finnbow 01-11-2018 01:32 PM

Quote:

Originally Posted by whell (Post 366069)
Give me an F-ing break. The CBPP is a bunch of non-partisan leftists. The only reason they're non-partisan is that their membership is likely equally distributed between those who vote Democrat, Green Party, Communist Party USA or Social Democrats. Linking to that bunch and calling them "non-partisan" is laughable. I'll see your CBPP blather and raise you something similar from the Tax Foundation...

Meanwhile, as an adjunct to your anecdote about Walmart's wonderfulness and generosity courtesy of your Dear Leader, Walmart also just announced that they are "closing 63 Sam's Club stores across the US, the company told Business Insider. Several stores were abruptly closed Thursday. In some cases, employees were not informed of the closures prior to showing up to work on Thursday. Instead, they learned that their store would be closing when they found the store's doors locked and a notice announcing the closure, according to reports."

http://www.businessinsider.com/walma...-stores-2018-1

Should your Dear Leader also claim responsibility for these thousands of lay-offs?

By the way, the Tax Foundation is no more non-partisan than the CBPP (they're conservative) and the analysis you point do has been criticized as incomplete and thereby fraudulent.
https://krugman.blogs.nytimes.com/20...laining-to-do/

The bottom line - Using only anecdotal evidence to prove a point proves only the existence of an anecdote (and nothing else). You should have learned that after your embarrassing Carrier Corp. post.

finnbow 01-11-2018 01:51 PM

Meanwhile, on the subject of the tax bill:

Millions of Americans will need to use a new Internal Revenue Service tool to ensure their new paychecks are accurate, Trump administration officials said Thursday as they issued guidelines for implementing the recently passed tax law...

In rushing the process, the Treasury Department is asking companies to rely on outdated forms to help determine how much to withhold...

(M)any Americans, including those who tend to itemize their tax returns, would need to use the online tool to ensure they aren’t dramatically overpaying or underpaying their taxes.

If they find their paychecks are inaccurate, it will be incumbent on the employees to tell their employers to make corrections.


https://www.washingtonpost.com/busin...4ef_story.html


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