DawgTalkers.net Forums DawgTalk Palus Politicus White House economist: Middle class will benefit from business tax cuts in 3 to 5 years

https://www.yahoo.com/finance/news/white...-205555300.html

A recent study from the White House claims that slashing the corporate tax rate would boost middle class incomes by somewhere at least $4,000 per year. But there’s a catch: it would take a while.

“This is the disappointing answer in terms of timing,” Kevin Hassett, chairman of the White House Council of Economic Advisers, said at the Yahoo Finance All-Markets Summit on October 25. “If you go to the optimistic side of the literature, it could take 3 to 5 years. If you go to the pessimistic side, it would about double that.”


Hasset’s paper makes a fairly intuitive argument: Lowering the corporate tax rate from 35%, the current rate, to 20%, which is President Trump’s target, would lure more businesses to America, generate more economic activity, and increase demand for workers, which would push wages up. But the paper doesn’t say how long it might take for this process to play out, which is what Hassett elaborated on at the Yahoo Finance summit.

“Firms are going to say, ‘Oh geez, we should go to the United States and locate our plants here,’ ” Hassett told Yahoo Finance. “But it takes a while for the machines to get nailed down and plugged in, the jobs to be listed online, people to apply and so on. That process takes a little bit of time.”

Hassett’s paper has drawn criticism from prominent economists such as Larry Summers and Jason Furman, who both worked in the Obama administration. But economists who have worked in Republican administrations support it, including Greg Mankiw and Casey Mulligan. The new caveat about the lag between tax cuts on businesses and benefits enjoyed by middle-class workers may actually improve the credibility of the CEA analysis, since it acknowledges that corporate tax cuts are not a magic formula that would push incomes up overnight.

But it’s politically problematic, because corporations would enjoy lower taxes and higher profits right away, while ordinary workers waited for the benefits to reach them. Hassett’s best-case scenario—a three-year lag—would span at least two election cycles. If corporate tax cuts went into effect in 2018, ordinary folks wouldn’t benefit until at least 2021. Republicans, meanwhile, would have to campaign for the 2018 midterms and the 2020 presidential election by promising that the tax relief already enjoyed by businesses will soon reach regular families.

Individual tax rates
Cutting individual tax rates could offer a different form of relief for middle- and lower-income families, one they feel much sooner. During a different session at the Yahoo Finance summit, Douglas Holtz-Eakin, president of the American Action Forum and former director of the Congressional Budget Office, predicted that the tax reform bill Congress eventually passes will go into effect as of January 1, 2018 (even if it must be retroactive) and push rates down for most taxpayers right away. That means the amount of tax withheld from paychecks would go down and take-home pay would go up—well before voters hit the polls next November.

Still, many economists argue that it’s the business tax code, rather than the individual side, that is in most need of repair. That’s because the US corporate rate of 35% is the highest among advanced economies, yet tax breaks and loopholes push the actual tax paid far lower than 35%. For most companies, the CEA paper is an attempt to link cuts in the corporate rate to the well-being of ordinary Americans. Expect the debate over that to intensify.

3 to 5 years means 4 years to me.
Just in time for the 2020 elections.

Passing Tax cuts and reforms this year or early next year will be just in time for the 2018 midterm elections.

Funny how these things work in Washington.

He said that’s optimistic. He also said it could be double that.

You honestly think the majority of the country supports trickle down economics? This plan is trash.

I think the American People are thrilled at the thought of tax cuts putting more money in their pockets.

I think they are thrilled with the thought of being able to file their taxes on a single sheet of paper, saving them instantly on what they pay Accountants to do those taxes.

I think people are thrilled to think of Trillions of Dollars returning to America from overseas, being spent in America instead of foreign countries.

I think the American People are thrilled with the thought of Small and Big Business having their taxes cut, being more able to compete with the world, as this will lead to jobs, lower unemployment, and pay increases as workers become hard to find.

Yea I heard all that the last time y’all tried to cut taxes.

And my parents heard that nonsense when Reagan cut taxes.

This plan benefits the wealthy and gives scraps to the rest of us.

But if you’re cool with the GOP treating us like peasants then I guess we got nothing else to discuss.

Anyone with a 401k already knows what the hope for growth and change can do for all of us. They are already cashing in and nothing has even passed yet. They aren't rich, they are workers.

https://www.bloomberg.com/news/articles/...-in-their-401-k

So again, this plan benefits only the few.

This also doesn’t change the fact that the wealthy instantly benefits from the plan while everyone else has to wait around and HOPE they finally see benefits, because it isn’t guaranteed that any of the dreams your leadership is selling will happen.

We’ve seen this story before. Tax cuts come, the wealthy profit while jobs continue to be stagnant, or worse, lost.

From healthcare to taxes, he gop is showing they don’t give a damn about the middle and poor class.

Well, we’ve always known that, but some people still have their heads in the sand thinking trickle down works at a national level.

The critics all want to focus on guarantees.
Life offers few guarantees but many possibilities and probabilities.

So if I strike the the match and apply it to the paper, under the kindling, the probability of a nice warm fire is there but can anyone guarantee that?

We focused on the guarantees because the wealthy are guaranteed to see instant results while the majority has to hope we benefit.

You’re trying to downplay the guarantee because only a few see the benefits quickly.

This plan does not help the middle class. It does not help the poor. And yet you’re all for it?

When the Bill actually exists we will have our answers.

*if*

Is that "if" a possibility, a probability, or a guarantee?

ask your guys trying to pass healthcare.

I think many americans will end up getting screwed by Trumps tax plan if he gets away with with making the middle class, and the poor pay more in taxes.



I think people are to damn lazy to do their own taxes.



I agree



Once again I agree

I really, really dislike the 401k limits in the tax plan. A majority of the population already doesn't invest and those that do will be really hurt by this. $2400 cap? Really? The cap is higher on a Roth IRA, but that's post-tax income so they aren't as worried about that I suppose. This is a horrible part of the plan and one that will make me totally against it if that part makes it into the actual bill.

I need to do more research and see if it affects SEP contributions as well, but I'd still be really against this even if it doesn't.

Speaking to other parts of the article, I don't like the excuses made in it for people not investing. Being confused and not understanding is not a reason to not invest. We really need to start teaching basic finance to kids in high school - my sons school offers a personal finance class as an elective, which he will be taking as it is NOT an elective in my mind, it should be mandatory.

While you are researching you will find that President Trump said no to 401k meddling. No because it hurts the people and is a great savings plan. NO!

Good ole trickle down economics. All wrapped up in fancy paper with glitter.

That is good news.

The House on Thursday narrowly approved a Senate version of the 2018 federal budget, clearing the way for the GOP-controlled Senate to pass a massive set of tax cuts later this year.

By passing the Senate version of the budget, House Republicans kick-started the reconciliation process, a window during which the Senate can pass legislation with only a simple majority, instead of the 60 vote supermajority typically needed to end debate and move a bill to a vote.
https://www.cnbc.com/2017/10/26/house-na...tax-reform.html

LOL 401k income is taxed like any other income when withdrawing the funds. Any adjustment to the tax code changes what retired or semi retired pays when withdrawing funds from their 401k.

From your own article

Signs of the looming fight over popular tax deductions were already visible Thursday, when a number of Republicans opposed the budget bill in the hopes of protecting a popular tax deduction.

I didn't claim otherwise. Pay attention!
The whole draw of the 401k is to put off paying taxes until you are retired and your personal income is lower, thus you pay less taxes. If you pay taxes on that now, while you are earning higher pay, you will pay higher taxes than when you retire.

I didn't say it was finished, I said the house approved it so it now goes back to the Senate. Then when they finish it goes to the President I do believe.

Those popular deductions include writing off State and Local taxes along with other items. 401k's may come up for debate but Trump has already told them NO!

From business insider article of an hour ago....he told them no a couple days ago but now 410k limits are back on the table.
President Donald Trump said on Wednesday that changes to Americans' retirement-savings accounts could still be included in the forthcoming Republican tax-reform plan.

Trump was asked about comments from Rep. Kevin Brady, chair of the House Ways and Means Committee and an author of the forthcoming GOP tax bill, that there could be changes to retirement accounts like 401(k)s in the plan.

Trump said 401(k)s are "very important" to him because they benefit the middle class but suggested tweaks could be included.

"Well maybe it is, maybe we'll use it as negotiating, but trust me, that's one of the great things," Trump said. "There are certain elements of deals that you don't want to negotiate with — and Kevin knows this, and I think Kevin Brady is fantastic — but he knows how important 401(k)s are."

Yeah... because "trickle-down on the little guy" worked so well the last time. Why do you think the income disparity is so yuge now?
So now we get to do it all over again to 2 new generations of victims?

This latest steaming, reeking barrel of crap has now earned you the name: "40anne Conjob" because you will carry Hairpiece 45's water across the freakking Sahara no matter what he's dissolved in it.

Peddle this mess somewhere else. Folks with more than 8 brain cells will never buy it. And folks with fewer than 8 brain cells can't afford it.

i want to know what you think about the actual tax policy.

you and Eve were super amped up about this. but you haven't commented on the fact that you and other wealthy guys benefit INSTANTLY from this while the rest of us commoners MIGHT see something in 3-5 years.

My question is...

If the Tax Bill finally makes it to the Presidents desk for signing and does include some tweaks or changes to 401k's,
Does he throw the entire Bill in the trash?

I think he fights and negotiates now but if it ends up that way he will take what he can get and sign.

well he was prepared to sign whatever the gop put on his desk when it comes to healthcare, regardless if it did what he promised the american people or not.

so i don't expect him to veto it if it does indeed reach his desk.

Your BP pills are in the middle drawer of the desk.

I've already said what I have to say about it. I pay 50%+ in taxes. I SHOULD benefit instantly, because frankly, I'm being raped by the IRS.

so your federal rate is 50%+?

and everybody else should just be glad that they don't see anything but you are?

Self employed people pay 39% plus an additional 15% for fica/medicare/ss

I really don't have an opinion on it until I see the 3 income brackets that would affect W-2 employees - I don't see how there can even be a debate on this until those are available. I'm OK with not allowing local and state taxes to be part of the deduction IF the brackets are where I think they should be (I put what I felt was fair in a previous thread) and the standard deductions are doubled. If they keep the cap at 2900 for 401(k) I'd be totally opposed to it even though it would not affect my retirement planning all that much.

I just changed my LLC to an S-Corp from a sole proprietorship this year so I will be taking a "salary" and the rest of my income will be taxed as business income. I changed it well before any of the Trump tax plan was revealed and now I'm going to have to get with my accountant again and see if it was a mistake should this pass. There is going to be a lot of playing with numbers with this plan I think. For example, if I pay myself 100k I can put 25% into my SEP or 25000. However, I'll be taxed at possibly 35% on that 100k - the question becomes do I pay myself like 50k, contribute less at pre-tax, put the rest in post-tax and actually save money? I'll be double taxed when I withdraw at retirement too and I make too much to qualify for a Roth, though with being an S-Corp now I may qualify once again based on what I pay myself. Those are numbers that my accountant will run for me, but it will be interesting, to say the least.

That 39% goes to 20% instantly.

Suck it up buttercup. All of you socialist were wanting Bernie and his desire to raised taxes by 7%+, and now youre crying because you dont get a tax cut?

I will care about your opinion on taxes when you get an actual job and contribute to society. Instead of sitting around with your hands out and not contributing to anything other than the ground wet with liberal tears.

fair enough on you from an individual standpoint.

i guess im wondering your thoughts on what the guy directly from the WH said on this.

regardless on if you swapped to early or not, you guys get to benefit instantly while others have to wait around and HOPE it trickles down.

you do realize you are the few, correct?

why are you saying "you socialist" when i was the first one to oppose bernie's tax plan on here?

i had an actual job, and now i pay property taxes on my 3 investment properties plus my own home.

your post made no sense whatsoever.

I end up around 50% after my deductions and SEP contributions as well. I agree with Eve - I am getting raped by the IRS, it's horrible, it makes me sick just thinking about it.

Property taxes are not income taxes. Income taxes come from having an actual job.

So no, your opinion doesnt mean much to me on this topic.

I rather hear from working people.

I do give you credit, out of the libs on this boards, you were practically the only one who said the tax hike was too much. So yes, I wont lump you into that group.

Try to calm your stomach, Trump got this.

And once we can do our taxes on a single sheet of paper, the big bad IRS will get cut by at least half.