The problem is that this isn’t what the tax plan actually does. Whether this is a bug or a feature, there are numerous loopholes that will make it every bit as easy to outsource jobs.
Hang on. The question is not if it’s easy, but if it’s DESIRABLE. (Usually defined as “financially desirable”.
There are always going to be reasons to produce overseas. You want to be close to your customers, for mercy’s sake. But what the old tax bill was doing was making it PREFERABLE to produce and invest overseas. The PREFERENCE, due to both the aterritorial system and the tax rates, is now eliminated.
If I did not make that clear previously, I apologize. But the point here is that you don’t want to incent your corporations to invest and produce overseas, not that you want force them to do it domestically.
Moreover, for things like manufacturing, outsourcing is not why those jobs are no longer there: it’s technology. U.S. manufacturing output has continued to increase even as the number of jobs in manufacturing has gone down. Manufacturing output has doubled since the 1980s, despite the loss of over 5 million manufacturing jobs. Nothing in the Republican tax plan addresses this.
Well, of course it doesn’t address it. We’re free marketers, after all. Again, the goal was the elimination of perverse incentives, and not to replace them with other ones.
I keep hearing this, but have yet to see any evidence that this is actually the case.
What evidence do you need? The all-in tax rate for a US business prior to the new bill was 39% (federal plus state). Now, that’s dropped to 26%-ish.
More broadly, there is also no evidence that the Republican tax plan will actually grow the economy. Every independent analysis has said that it won’t, and virtually every economist polled agreed.
Macroeconomic Analysis of the Tax Cuts and Jobs Act as Passed by the House of Representatives
We find the legislation would boost US economic output by 0.6 percent of gross domestic product (GDP) in 2018, 0.3 percent of GDP in 2027, and 0.2 percent of GDP in 2037. The resulting increase in taxable incomes would reduce the revenue loss created by the legislation by $169 billion from 2018 to 2027 and by $136 billion from 2028 to 2037.
GOP tax plan can help boost economy already growing above trend: Goldman chief economist
The passage of the Republican tax reform bill would be an "additional positive boost" to the U.S. economy, which is…
Economists agree: Tax reform will bring substantial economic growth
Tax reform is nearing a vote in the Senate, and the House already passed its version. As the Senate moves closer to a…
Your statement only works if you ignore all the benefit programs that aren’t funded by payroll taxes (e.g. SNAP, TANF, and Title XVI of the Social Security Act).
Ryan, I believe, spoke of the entitlements only, not other benefit programs.
But let’s not quibble. The usual US response to budgetary challenges is to borrow the money. I’m 63, and in my entire lifetime, the ONLY substantial cut that’s ever been made to government budgets (and it’s questionable how substantial it actually was) was the Obama-period sequester, which went away after the neocons couldn’t stop moaning about it.
Nothing’s going to get cut. Nothing’s at risk of getting cut. What’s at risk is that the deficit rises and the world gets tired of buying our bonds at dead-cheap interest rates, which ultimately forces taxes to rise.
Not directly, but that was my point: the tax bill will blow up the deficit, which will then be used as an excuse to cut these programs under the guise of “reigning in the deficit.”
And to be perfectly honest, I’m having trouble with these adjectives. After the Iraq nightmare ended and before the meltdown, Bush had settled in at a base line defict of 150M/yr. After the meltdown ended and Obama settled in, his baseline deficit was 450M/Yr.
So, that’s an increase of 3 Trillion over 10 years, which is double the estimate of the Trump tax plan. But it’s Trump who is blowing up the deficit?