Political Roundtable Part XVI

[nate33]

Same experiment was done in Kansas with horrible results. You honestly think it's going to work on a macro level?

I do.

Interesting. What's your opinion on the massive tax cuts failing in Kansas? Why do you believe it can work on a macro level even though it fails on a micro level?

I don't think the state analogy holds for a federal corporate tax cut.

One of the main issues with the corporate tax rate is that it is the highest corporate tax rate in the developed world. Not only does this discourage business investment here, but it also increases tax avoidance. Companies that have been stashing money overseas will bring it back here.

Here's an article discussing the effects of corporate tax changes in Canada and the U.K in 2007. In the U.K. there were issues with depreciation rules in their corporate tax cuts that ultimately resulted in it being effectively a tax increase. Canada, on the other hand, had much more robust corporate tax cuts. Wages in Canada since then have grown substantially more than other OECD countries.

[Ruzious]

I do.

Interesting. What's your opinion on the massive tax cuts failing in Kansas? Why do you believe it can work on a macro level even though it fails on a micro level?

I don't think the state analogy holds for a federal corporate tax cut.

One of the main issues with the corporate tax rate is that it is the highest corporate tax rate in the developed world. Not only does this discourage business investment here, but it also increases tax avoidance. Companies that have been stashing money overseas will bring it back here.

Here's an article discussing the effects of corporate tax changes in Canada and the U.K in 2007. In the U.K. there were issues with depreciation rules in their corporate tax cuts that ultimately resulted in it being effectively a tax increase. Canada, on the other hand, had much more robust corporate tax cuts. Wages in Canada since then have grown substantially more than other OECD countries.

Corporations typically don't really pay the highest rate in the US - partly because US depreciation rules are so generous.

[popper]

Same experiment was done in Kansas with horrible results. You honestly think it's going to work on a macro level?

I do.

Interesting. What's your opinion on the massive tax cuts failing in Kansas? Why do you believe it can work on a macro level even though it fails on a micro level?

I'm no expert obviously but the following explanation makes sense to me.

....The Kansas Republicans were correct, therefore, in assuming that lower tax rates cause greater economic growth. However, like most economists, they assumed that economic growth would show up in the form of increased wages, business revenues, and GDP. They further believed that these additional incomes would result in increased tax revenues that would offset the reduced revenues caused by lowered tax rates.

The problem with this thinking is that economists characteristically attempt to measure economic growth in monetary terms, which comingles two different concepts. Economic growth actually consists of and is defined by an increase in physical goods and services, not an increase in quantities of money. The quantity of money is controlled only by the central bank, and is thus independent of economic growth. The additional supply of goods and services created by economic growth lowers consumer prices relative to wages, which increases real incomes, but not money incomes. The practice of measuring real, physical production in monetary terms led Kansas economic planners into the error of thinking that increased economic growth would result in higher money incomes and thus higher tax revenue from incomes. They were looking in the wrong place for the benefits from lower taxes.
Kansas economic planners also expected decreased unemployment, but that did not materialize, for a different reason. Unemployment, in the long run, is not caused by lack of economic growth or of work available for unemployed workers to perform; it is instead caused by artificially high wage rates at the low end of the wage spectrum (i.e., minimum wage, union legislation, etc.).

Separate from the above is a bigger picture that critics on all sides ignore. First, it is not the tax rates in a single state that affect economic growth in that state, but the tax rates nationally (as well as international capital flows). Kansas taxpayers received a small 24% reduction on the state income tax they paid, but state income tax is a small portion of all taxes paid. Federal income taxes are more than six times greater, not to mention payroll taxes and other taxes and fees that equally serve to consume the savings that would otherwise be used for capital investment. And, it is not only taxes but also regulations, credit market distortions, and other restrictions on and manipulations of production that impede growth.

Second, the capital that supports production and economic growth in Kansas comes from savers across the country, not just from Kansas. In order to produce an observable result in Kansas, national — not only state — tax reductions would be required. Similarly, the increased savings that wealthy Kansas taxpayers received from tax cuts would not be used only by businesses in Kansas, but by businesses all over the nation. Just as capital from other states flows into Kansas, Kansas capital flows out of Kansas across the nation.

In sum, though every bit of extra capital helps the economy somewhere, it should not be expected that such a small tax cut would benefit Kansans, specifically, to a noticeable degree. Lowering state income taxes helps economic growth, but the benefits are spread nationally and not directly traceable through economic statistics such as GDP, nominal wage growth, or unemployment.

https://mises.org/blog/why-kansass-tax-cut-failure-really-success

[nate33]

Interesting. What's your opinion on the massive tax cuts failing in Kansas? Why do you believe it can work on a macro level even though it fails on a micro level?

I don't think the state analogy holds for a federal corporate tax cut.

One of the main issues with the corporate tax rate is that it is the highest corporate tax rate in the developed world. Not only does this discourage business investment here, but it also increases tax avoidance. Companies that have been stashing money overseas will bring it back here.

Here's an article discussing the effects of corporate tax changes in Canada and the U.K in 2007. In the U.K. there were issues with depreciation rules in their corporate tax cuts that ultimately resulted in it being effectively a tax increase. Canada, on the other hand, had much more robust corporate tax cuts. Wages in Canada since then have grown substantially more than other OECD countries.

Corporations typically don't really pay the highest rate in the US - partly because US depreciation rules are so generous.

Every article I've read on the subject says that the U.S has somewhere between the highest and fourth highest effective corporate tax rate of the 20 OECD countries.

[gtn130]

Separate from the above is a bigger picture that critics on all sides ignore. First, it is not the tax rates in a single state that affect economic growth in that state, but the tax rates nationally (as well as international capital flows). Kansas taxpayers received a small 24% reduction on the state income tax they paid, but state income tax is a small portion of all taxes paid. Federal income taxes are more than six times greater, not to mention payroll taxes and other taxes and fees that equally serve to consume the savings that would otherwise be used for capital investment. And, it is not only taxes but also regulations, credit market distortions, and other restrictions on and manipulations of production that impede growth.

Popper, do you think legislators are so dumb that they weren't aware of the above? They knew exactly what they were doing and the results were not particularly surprising to them.

Look at Paul Ryan's rhetoric vs what is actually in the bill. You're the mark, dude.

[Pointgod]

I do.

Interesting. What's your opinion on the massive tax cuts failing in Kansas? Why do you believe it can work on a macro level even though it fails on a micro level?

I don't think the state analogy holds for a federal corporate tax cut.

One of the main issues with the corporate tax rate is that it is the highest corporate tax rate in the developed world. Not only does this discourage business investment here, but it also increases tax avoidance. Companies that have been stashing money overseas will bring it back here.

Here's an article discussing the effects of corporate tax changes in Canada and the U.K in 2007. In the U.K. there were issues with depreciation rules in their corporate tax cuts that ultimately resulted in it being effectively a tax increase. Canada, on the other hand, had a much more robust corporate tax cuts. Wages in Canada since then have grown substantially more than other OECD countries.

You're just regurgitating Republican talking points without much critical thought. What is the effective rate that corporations pay that's the question. Are there have been zero changes to tax loopholes that create an effective tax of 16%. Do you think corporations are going to just pay the 21% corporate tax because of some affinity for Donald Trump? Not to mention the companies with overseas subsidiaries will still pay the lower tax rate and sometimes no tax in countries like Ireland. Little if any of the foreign money will be repatriated because if companies need capital they can just get low interest loans from the bank.

And you have a fundamental misunderstanding of Canada. Canada covers healthcare for everyone, they have a highly educated workforce and are strongly pro immigrant. Also many provinces have minimum wage that are above the $10 level. So to say that a low corporate tax is the reason for wage growth doesn't tell the whole picture.

The Republicans will blow up the deficit and in turn will cut programs which will end up screwing millions of people and it could hurt the economy. In summation Republicans believe deficits that fund healthcare, education and infrastructure bad, deficits to find wars and give tax breaks to their donors good.

[dckingsfan]

Interesting. What's your opinion on the massive tax cuts failing in Kansas? Why do you believe it can work on a macro level even though it fails on a micro level?

I don't think the state analogy holds for a federal corporate tax cut.

One of the main issues with the corporate tax rate is that it is the highest corporate tax rate in the developed world. Not only does this discourage business investment here, but it also increases tax avoidance. Companies that have been stashing money overseas will bring it back here.

Here's an article discussing the effects of corporate tax changes in Canada and the U.K in 2007. In the U.K. there were issues with depreciation rules in their corporate tax cuts that ultimately resulted in it being effectively a tax increase. Canada, on the other hand, had a much more robust corporate tax cuts. Wages in Canada since then have grown substantially more than other OECD countries.

You're just regurgitating Republican talking points without much critical thought. What is the effective rate that corporations pay that's the question. Are there have been zero changes to tax loopholes that create an effective tax of 16%. Do you think corporations are going to just pay the 21% corporate tax because of some affinity for Donald Trump? Not to mention the companies with overseas subsidiaries will still pay the lower tax rate and sometimes no tax in countries like Ireland. Little if any of the foreign money will be repatriated because if companies need capital they can just get low interest loans from the bank.

And you have a fundamental misunderstanding of Canada. Canada covers healthcare for everyone, they have a highly educated workforce and are strongly pro immigrant. Also many provinces have minimum wage that are above the $10 level. So to say that a low corporate tax is the reason for wage growth doesn't tell the whole picture.

The Republicans will blow up the deficit and in turn will cut programs which will end up screwing millions of people and it could hurt the economy. In summation Republicans believe deficits that fund healthcare, education and infrastructure bad, deficits to find wars and give tax breaks to their donors good.

Before you dig in here - remember that on corporate tax rates Obama very much wanted to drop the rate to 25%. Yes, this one drops it to 21% and yes, there are distortions due to the carveouts from both sides.

I would have preferred incremental drops and watching the market reaction over time... but this is politics and not science.

As to wage growth, even our Fed is perplexed. There is more than one camp on why wage growth hasn't taken off as fast as expected (low unemployment rates) and what a corporate tax rate reduction will do.

In short, the Ds didn't address the problem when they were in power - and you know what happens in a vacuum.

Now, if you want to complain about the tax bills - there are some very good parts to complain about. Tax fairness (this bill isn't), additional carveouts which will increase complexity of our tax code, repealing the estate tax and the focus on tax breaks for Real Estate ventures vs. other corporations (which won't lead to growth).

[dckingsfan]

Separate from the above is a bigger picture that critics on all sides ignore. First, it is not the tax rates in a single state that affect economic growth in that state, but the tax rates nationally (as well as international capital flows). Kansas taxpayers received a small 24% reduction on the state income tax they paid, but state income tax is a small portion of all taxes paid. Federal income taxes are more than six times greater, not to mention payroll taxes and other taxes and fees that equally serve to consume the savings that would otherwise be used for capital investment. And, it is not only taxes but also regulations, credit market distortions, and other restrictions on and manipulations of production that impede growth.

Popper, do you think legislators are so dumb that they weren't aware of the above? They knew exactly what they were doing and the results were not particularly surprising to them.

Look at Paul Ryan's rhetoric vs what is actually in the bill. You're the mark, dude.

In the case of the Kansas legislators - I believe that they (for the most part) believed this. What they didn't do is look at the sustainability of their programs against the taxes that needed to be generated.

And those that think federal taxes are much greater than state and local taxes - well, that isn't the case. And this is why we are between a rock and a hard place. Even though we are taxing at 40% of GDP, our spending is past that and climbing a frightening rate.

Do either of you see either party coming up with a solution?

[gtn130]

Separate from the above is a bigger picture that critics on all sides ignore. First, it is not the tax rates in a single state that affect economic growth in that state, but the tax rates nationally (as well as international capital flows). Kansas taxpayers received a small 24% reduction on the state income tax they paid, but state income tax is a small portion of all taxes paid. Federal income taxes are more than six times greater, not to mention payroll taxes and other taxes and fees that equally serve to consume the savings that would otherwise be used for capital investment. And, it is not only taxes but also regulations, credit market distortions, and other restrictions on and manipulations of production that impede growth.

Popper, do you think legislators are so dumb that they weren't aware of the above? They knew exactly what they were doing and the results were not particularly surprising to them.

Look at Paul Ryan's rhetoric vs what is actually in the bill. You're the mark, dude.

In the case of the Kansas legislators - I believe that they (for the most part) believed this. What they didn't do is look at the sustainability of their programs against the taxes that needed to be generated.

And those that think federal taxes are much greater than state and local taxes - well, that isn't the case. And this is why we are between a rock and a hard place. Even though we are taxing at 40% of GDP, our spending is past that and climbing a frightening rate.

Do either of you see either party coming up with a solution?

Pretty sure my proposed solution of cutting military spending and taxing the 1% more would solve basically everything

[gtn130]

Ok, healthcare and SS need major changes too, but none of this is rocket science.

[popper]

Breaking news. Racist Republicans at Heritage Foundation unanimously elect African American women as new president. Congratulations Kay Coles James.

[gtn130]

Breaking news. Racist Republicans at Heritage Foundation unanimously elect African American women as new president. Congratulations Kay Coles James.

"I have a black friend"

[cammac]

Companies will not repatriate moneys offshore by a simple tax change since a 21% corporate tax is nothing!
When I lived in China my business was located in Hong Kong not China for the simple reason that my clients were in North America, Europe, Middle East and Australia. The Hong Kong tax code said monies made not directly in Hong Kong was taxed at 0%. I was obviously small potato's to corporate giants but this is a report on it.

http://money.cnn.com/2016/12/11/news/economy/corporate-tax-havens/index.html

[Pointgod]

I don't think the state analogy holds for a federal corporate tax cut.

One of the main issues with the corporate tax rate is that it is the highest corporate tax rate in the developed world. Not only does this discourage business investment here, but it also increases tax avoidance. Companies that have been stashing money overseas will bring it back here.

Here's an article discussing the effects of corporate tax changes in Canada and the U.K in 2007. In the U.K. there were issues with depreciation rules in their corporate tax cuts that ultimately resulted in it being effectively a tax increase. Canada, on the other hand, had a much more robust corporate tax cuts. Wages in Canada since then have grown substantially more than other OECD countries.

You're just regurgitating Republican talking points without much critical thought. What is the effective rate that corporations pay that's the question. Are there have been zero changes to tax loopholes that create an effective tax of 16%. Do you think corporations are going to just pay the 21% corporate tax because of some affinity for Donald Trump? Not to mention the companies with overseas subsidiaries will still pay the lower tax rate and sometimes no tax in countries like Ireland. Little if any of the foreign money will be repatriated because if companies need capital they can just get low interest loans from the bank.

And you have a fundamental misunderstanding of Canada. Canada covers healthcare for everyone, they have a highly educated workforce and are strongly pro immigrant. Also many provinces have minimum wage that are above the $10 level. So to say that a low corporate tax is the reason for wage growth doesn't tell the whole picture.

The Republicans will blow up the deficit and in turn will cut programs which will end up screwing millions of people and it could hurt the economy. In summation Republicans believe deficits that fund healthcare, education and infrastructure bad, deficits to find wars and give tax breaks to their donors good.

Before you dig in here - remember that on corporate tax rates Obama very much wanted to drop the rate to 25%. Yes, this one drops it to 21% and yes, there are distortions due to the carveouts from both sides.

I would have preferred incremental drops and watching the market reaction over time... but this is politics and not science.

As to wage growth, even our Fed is perplexed. There is more than one camp on why wage growth hasn't taken off as fast as expected (low unemployment rates) and what a corporate tax rate reduction will do.

In short, the Ds didn't address the problem when they were in power - and you know what happens in a vacuum.

Now, if you want to complain about the tax bills - there are some very good parts to complain about. Tax fairness (this bill isn't), additional carveouts which will increase complexity of our tax code, repealing the estate tax and the focus on tax breaks for Real Estate ventures vs. other corporations (which won't lead to growth).

I’ve come out in favour of lowering the corporate tax rate but the conversation is pointless if the loopholes that reduce the effective rate below 21% aren’t closed. No corporation is going to pay 21% when they can pay 16% or even zero! It’s all smoke and mirrors because very few corporations actually pay the 35% tax rate and the Republican talking points.

America’s problems are all self inflicted. You keep voting the same idiots that prove that they have no idea how to run a government and only serve to cut taxes for the rich and social services. They wont stop until they turn the country into a Plutocracy like Russia. If you ever heard the story about the scorpion and the frog, that describes the relationship with Republicans and the American public.

The problem is the Republican Party. They refused to work with the Dems on the tax bill and just wanted to push it through. No committees, no debate. All they did was obstruct Obama when he was in power. Obama had a trillion dollar infrastructure bill, they refused to work with him. They refused to work with him on the ACA, the framework was a Republican plan from the heritage foundation! People need to realize that the Republicans were more concerned with sticking it to the first black President rather than comprimising to help the American people.

[Pointgod]

Breaking news. Racist Republicans at Heritage Foundation unanimously elect African American women as new president. Congratulations Kay Coles James.

Your party voted for Donald Trump and supported Roy Moore. Stop it

[dckingsfan]

Popper, do you think legislators are so dumb that they weren't aware of the above? They knew exactly what they were doing and the results were not particularly surprising to them.

Look at Paul Ryan's rhetoric vs what is actually in the bill. You're the mark, dude.

In the case of the Kansas legislators - I believe that they (for the most part) believed this. What they didn't do is look at the sustainability of their programs against the taxes that needed to be generated.

And those that think federal taxes are much greater than state and local taxes - well, that isn't the case. And this is why we are between a rock and a hard place. Even though we are taxing at 40% of GDP, our spending is past that and climbing a frightening rate.

Do either of you see either party coming up with a solution?

Pretty sure my proposed solution of cutting military spending and taxing the 1% more would solve basically everything

Nope - you could cut defense spending to zero and you still cross the line.

[dckingsfan]

You're just regurgitating Republican talking points without much critical thought. What is the effective rate that corporations pay that's the question. Are there have been zero changes to tax loopholes that create an effective tax of 16%. Do you think corporations are going to just pay the 21% corporate tax because of some affinity for Donald Trump? Not to mention the companies with overseas subsidiaries will still pay the lower tax rate and sometimes no tax in countries like Ireland. Little if any of the foreign money will be repatriated because if companies need capital they can just get low interest loans from the bank.

And you have a fundamental misunderstanding of Canada. Canada covers healthcare for everyone, they have a highly educated workforce and are strongly pro immigrant. Also many provinces have minimum wage that are above the $10 level. So to say that a low corporate tax is the reason for wage growth doesn't tell the whole picture.

The Republicans will blow up the deficit and in turn will cut programs which will end up screwing millions of people and it could hurt the economy. In summation Republicans believe deficits that fund healthcare, education and infrastructure bad, deficits to find wars and give tax breaks to their donors good.

Before you dig in here - remember that on corporate tax rates Obama very much wanted to drop the rate to 25%. Yes, this one drops it to 21% and yes, there are distortions due to the carveouts from both sides.

I would have preferred incremental drops and watching the market reaction over time... but this is politics and not science.

As to wage growth, even our Fed is perplexed. There is more than one camp on why wage growth hasn't taken off as fast as expected (low unemployment rates) and what a corporate tax rate reduction will do.

In short, the Ds didn't address the problem when they were in power - and you know what happens in a vacuum.

Now, if you want to complain about the tax bills - there are some very good parts to complain about. Tax fairness (this bill isn't), additional carveouts which will increase complexity of our tax code, repealing the estate tax and the focus on tax breaks for Real Estate ventures vs. other corporations (which won't lead to growth).

I’ve come out in favour of lowering the corporate tax rate but the conversation is pointless if the loopholes that reduce the effective rate below 21% aren’t closed. No corporation is going to pay 21% when they can pay 16% or even zero! It’s all smoke and mirrors because very few corporations actually pay the 35% tax rate and the Republican talking points.

America’s problems are all self inflicted. You keep voting the same idiots that prove that they have no idea how to run a government and only serve to cut taxes for the rich and social services. They wont stop until they turn the country into a Plutocracy like Russia. If you ever heard the story about the scorpion and the frog, that describes the relationship with Republicans and the American public.

The problem is the Republican Party. They refused to work with the Dems on the tax bill and just wanted to push it through. No committees, no debate. All they did was obstruct Obama when he was in power. Obama had a trillion dollar infrastructure bill, they refused to work with him. They refused to work with him on the ACA, the framework was a Republican plan from the heritage foundation! People need to realize that the Republicans were more concerned with sticking it to the first black President rather than comprimising to help the American people.

Slamming Ds for not fixing the tax code when they were in power is pointless. They had other things to deal with...

Snark works both ways. I don't even want to defend the politics of the Rs - but it hasn't been a one way street on taxes in any way shape or form.

Our tax fairness issues have been bipartisan. Our spending problems have been bipartisan.

[cammac]

I don't think the state analogy holds for a federal corporate tax cut.

One of the main issues with the corporate tax rate is that it is the highest corporate tax rate in the developed world. Not only does this discourage business investment here, but it also increases tax avoidance. Companies that have been stashing money overseas will bring it back here.

Here's an article discussing the effects of corporate tax changes in Canada and the U.K in 2007. In the U.K. there were issues with depreciation rules in their corporate tax cuts that ultimately resulted in it being effectively a tax increase. Canada, on the other hand, had much more robust corporate tax cuts. Wages in Canada since then have grown substantially more than other OECD countries.

Corporations typically don't really pay the highest rate in the US - partly because US depreciation rules are so generous.

Every article I've read on the subject says that the U.S has somewhere between the highest and fourth highest effective corporate tax rate of the 20 OECD countries.

Posted tax rates and real tax rates are completely different!
https://www.forbes.com/sites/christopherhelman/2017/04/18/what-americas-biggest-companies-pay-in-taxes/#116970c2f515
I agree tax rates worldwide need to be changed but if a sector should benefit the most is small business the generator of jobs and where the profits are most likely generated back into the economy. In Canada I benefit since I own 2 small businesses that generate less than $500,000 profit a year and in 2 years I will be paying 8.5% federal and 3.5% provincial income tax. Its nice that Boeing and other companies are getting publicity about giving a few 100 million away god only knows they should.
https://www.washingtonpost.com/blogs/govbeat/wp/2015/03/17/the-united-states-of-subsidies-the-biggest-corporate-winners-in-each-state/?utm_term=.e05b6af0e304
Wells Fargo giving a minimum wage of $15 Banks have decimated its workforce through automation and were bailed out in the economic crisis by the general populous. Yes they paid it back but they were complicit in causing the greatest economic down turn since the great depression.

[TGW]

Breaking news. Racist Republicans at Heritage Foundation unanimously elect African American women as new president. Congratulations Kay Coles James.

The Heritage Foundation has a history of publishing racist articles. One token negro doesn't change that. Racist organizations in this country have used this trick since the late 1800's.

[popper]

Breaking news. Racist Republicans at Heritage Foundation unanimously elect African American women as new president. Congratulations Kay Coles James.

The Heritage Foundation has a history of publishing racist articles. One token negro doesn't change that. Racist organizations in this country have used this trick since the late 1800's.

She has an impressive resume and life story. I think she got the job based purely on merit.