I can agree with some of your points. You have given wise counsel to your daughter about her career. Hopefully, she will not have to give up the career that she wants for job security.
One hopes. I had wanted her to come to U of T, but they want $175 US just to apply nowadays. Not that that’s a lot of money, but the vet school and animal science is at Guelph, and we went to visit Guelph, and if you’ve ever been to Guelph……..well, let’s just say that nobody is captivated by the scenic beauty of the Guelph campus. They don’t have a Hart House or Trinity College. :-(
Are you saying that all those, such as Rand Paul, who rely on the success of Reagan tax cuts in stimulating the economy to promote the present tax cuts are wrong?
Well, it’s semantics. “Reagan cut taxes and tax revenues went up” is easy to quote, although “Reagan cut tax rates and tax revenues went up” is more accurate. And it skips a step. The money people didn’t get a windfall because of lower taxes; they got a windfall because they no longer had to pay an attorney to get into a tax shelter.
Rand may or may not actually know any of this. It’s my experience with congresscritters that very few of them really know the numbers (people like Ryan and Kasich are exceptions, rather than the rule).
Does that mean that Reagan found he could not cut taxes and had to make up for his publicly touted tax cuts by other reform such as taking away tax exemptions which resulted in effectively no tax cuts?
No. The Reagan package was always intended to be I think the better measure of the present effect of corporate tax is the amount corporations pay relative to the GDP as shown by Carasso (admittedly a Dem therefore a lefty). See a righty’s, Tim Worstall, comment to the contrary.revenue neutral, and always had as one of its objectives to get rid of the tax shelters. Every economist, whether they were right-wing or left, agreed that the tax shelter system led to a very inefficient tax code that stunted GDP growth. It was a Friedman priority, IIRC.
My article deals only with corporate tax cuts and not with individual rates — an apples and oranges issue.
I agree that the two are separate. However, I believe you did say that “Reagan cut taxes”, but Reagan did not touch the corporate tax code, just the individual.
I think the better measure of the present effect of corporate tax is the amount corporations pay relative to the GDP as shown by Carasso (admittedly a Dem therefore a lefty). See a righty’s, Tim Worstall, comment to the contrary.
Well, I don’t think either of them are right. :-). If corporate tax revenues to the US Treasury are a function of what’s recognized on the US tax return, and our largest corporations are getting more and more of their revenues internationally and leaving that money overseas because US tax rates are too high, then quite logically the contribution of corporate taxes to overall revenues will decrease over time, even though the corporations might, on paper, be experiencing record profits.
But, anyway, we’re now in speculation mode. Worstall’s chart extended to 2015 looks like this:
Obviously tax receipts drop during recessions. After 2010, they rose again to late 1990’s levels by 2014…….then started to drop off again (interestingly, this chart seems to show that dropping corporate tax receipts/GDP is a leading indicator for a recession. Wonder if that’s tradable? :-)
At any rate, it will be very interesting to see this chart in three years. I would EXPECT receipts to stay in the 1985–2015 range……but we’ll see.
If Trump’s tax cuts, unlike Reagan’s, are real, and there is, as intended, an increase in corporate profits, then how will they be used by corporations?
Well, I am not expecting a large increase in profits. Time will tell. I am a lot more interested to see if there’s an uptick in hiring in the small to medium sized domestic corporation sector, which because of the tight job market would lead to increases in wage.
The key point of my article was the opportunity by corporate executives to secretly manipulate the market before causing their corporation to buy back their own shares. Do you think this is a significant problem?
Yes. There are two policies that cause distortion because they encourage short term thinking as opposed to longer range planning. One of them is the ability of the corporations to mint money; this can only be addressed through shareholder bills of rights, which hardly exist at all at present. The second is the requirement to report quarterly, which…..really makes no sense whatsoever.
If there actually are tax cuts, will the savings go into business expansion and hence create more jobs, or will they be creamed off through buybacks or put towards automation?
Guess we’ll find out. :-) But again, I am more interested in what happens in the the small and medium business domestic sector. These corps do not pay their executives absurd compensation,and generally do not engage in buybacks, although automation is a possibility.