Tax Foundation analysis shows tax cuts will increase capital formation leading to higher wages and employment

Washington Free Beacon:
The Tax Cuts and Jobs Act, recently passed by both the House and the Senate, will increase capital formation, which will lead to higher wages and employment, according to an analysis from the Tax Foundation.

"We estimate that the Act will boost investment, employment, and incomes in the United States," the report says. "It will facilitate the expansion of U.S. capital stock, our productive capacity, and our ability to compete in the world."

The Tax Foundation explains that because the corporate tax rate will be cut to 21 percent, it is projected that long-run GDP will increase by 1.7 percent. This would lead to $1.8 trillion in the quality of equipment, commercial, residential structures, and plants, which would boost employment, wages, and productivity.

The bill's provisions of immediate expensing, reduced income tax rates, and reduced rates on businesses would make GDP closer to 4.7 percent. It is projected that capital stock would be closer to $5 trillion more.

"The higher returns on capital will cause people to save more, to buy more American stocks and bonds, and to pump more money into their small businesses," the report states. "The corporate and individual tax reductions on business income, and the faster depreciation permitted by expensing, will boost businesses' saving directly by raising after-tax cash flow."

The analysis also says the new capital that includes equipment and structures would earn enough to pay for its own replacement and maintenance. Because the bill will lead to higher incomes and investment, it will make it a better environment for hiring and production.
...
There is more.

To the dismay of some Democrats, this appears to be already happening as companies give bonuses to employees and raise wages and stall projects become active again because of the immediate write-offs.

I think the politics of the cut will also turn positive as voters seen a bump in take-home pay as a result of smaller withholdings for the lower tax rates.

Comments

Post a Comment

Popular posts from this blog

Should Republicans go ahead and add Supreme Court Justices to head off Democrats

Washington Post: Some Democrats eye adding more justices to the Supreme Court to change its ideological bent The once-remote idea has gained the attention of liberals angered by the GOP push to remake the federal courts. Probably the easy way to defeat this court-packing scheme is for Trump to propose doing the same thing now.  It would lead to Democrat denunciations and claims that it would be wrong, thereby blowing up any attempt by them in the unfortunate event of Democrats winning a presidential election.
Read more

29 % of companies say they are unlikely to keep insurance after Obamacare

Conn Carroll: A new survey of 368 midsize to large companies found that 29% of them are considering terminating their active employee health care plans when Obamacare is full implemented in 2014. Only 71% of employers surveyed said they did not expect to drop their health coverage, while 20% said they did not know and 9% said they were planning to exit. The latest survey, conducted by Towers Watson, echoes an ealier survey by McKinsey & Co. finding that 30% of private-sector employers were planning to drop their employee health insurance coverage by 2014. When the Congressional Budget Office crunched Obamacare's spending numbers, they estimated that only 7% of employees currently covered by employer-sponsored plans would lose their plans. ... This means the cost of the health care fiasco will be hundreds of billions more than estimated by the CBO and Congressional Democrat. It is also clear that Obama's pledge that you could keep your health care plan if you wanted t...
Read more

Is the F-35 obsolete?

Headline USA: Pentagon Fires Back after Musk Calls Its Most Expensive Project ‘Obsolete’ 'Yeah, as I'm sure you can appreciate, Mr. Musk is, currently, a private citizen, I'm not going to make any comments about what a private citizen may have to say about the F-35....'   ... ... Drones appear to be replacing jets for many operations.  The Russia-Ukraine war is an example of that.  Drones are often hard to detect and can be used for intelligence operations as well as for attacking enemy targets.  It would not surprise me to see drones engaging other drones in combat.  They also cost much less than manned fighters.  
Read more