The following article by David Kay Johnson was posted on the dcreports.org website in April, 2018:
The Republicans Didn’t Reform the Tax System, They Blew It Up
In a Tax Day essay under the byline of Donald Trump, the USA Today newspaper has allowed the 45th president to tell an utterly misleading story about the tax “reform” law he signed into law in December. The calculated deceptions in this piece matter a lot because the front page of that same newspaper declares “Exclusive: GOP banks on tax cuts to keep majority in Congress.”
So, let’s examine what someone wrote for Trump as he campaigns for a second term and a Congress controlled by Republicans who will not hold him accountable for anything.
Keep in mind that Donald Trump claims to be the greatest world expert of all-time on taxes, but under oath has testified that he knows nothing about accounting. Accounting is central to taxes. Indeed, it is so critical that his claim of expertise is the same as if I declared myself the world’s greatest airplane designer, but then asked, “What is a wing?” Continue reading “What Trump Doesn’t Say About His Own Tax Plan”
The following article by Naomi Jagoda and Niv Elis was posted on the Hill website March 30, 2018:
Credit: Alex Edelman/picture-alliance/dpa/AP
More than three months after the passage of the GOP’s tax-cut law, new surveys suggest that many people don’t think they are getting bigger paychecks, which could cut into support for Republicans in this fall’s midterm elections.
A CNBC poll this week stated that just 32 percent of working adults reported having more take-home pay due to the new law, a problem for Republicans hoping to run on the measure and the health of the economy in November.
The GOP has made the tax-cut law the centerpiece of its campaign message, arguing that Republican control of Congress and the White House led to legislation that is putting more money in people’s pockets and stimulating an economy with low unemployment. Continue reading “GOP tax message hits a snag”
The following article by Jeff Stein was posted on the Washington Post website March 28, 2018:
House Speaker Paul D. Ryan (R-Wis.). Credit: Melina Mara/The Washington Post
House Republicans are considering a vote on a “balanced-budget amendment,” a move that would proclaim their desire to eliminate the federal deficit even as they control a Congress that has added more than $1 trillion to it.
Rep. Erik Paulsen sure is busy telling everyone how great he thinks the tax reform act is. Erik, if the plans is so fantastic why don’t you plan an in-person town hall and have a conversation with your constituents so you can hear what we think?
We all understand that the tax reform act will reduce taxes overall, but it appears to be a gift to the wealthiest individuals and corporations, not working families. Home-owning Minnesotans, especially in cities like Eden Prairie, will see limited benefit or even tax increases while narrow interests, like real estate businesses will have windfall. Republicans used to abhor government picking winners and losers. No more. Continue reading “Income Taxes Aren’t Going to Go Down”
Erik Paulsen paints a very rosy picture for “American families and hard working taxpayers across the nation” in his commentary on tax reform, in the March 15 edition of the Eden Prairie News. This is the rest of the story.
It is important to keep in mind that the tax-reform provisions related to corporations are permanent, while those affecting individual taxpayers expire in 2025. As a result many individuals will have higher paychecks in the near term, thanks to the new tax bracket levels and several increased tax credits. However, the tax bracket levels will return to their previous rates after 2025, while many tax credits will expire. Therefore, depending on one’s personal situation, taxes may increase substantially in 2026. Continue reading “Don’t be fooled by short-term gains”
The following article by Alexandra Thornton was posted on the Center for American Progress website March 1, 2018:
Credit: Getty Images
The Tax Cuts and Jobs Act (TCJA) was introduced on November 2, 2017, rushed through Congress on a partisan basis, and signed by President Donald Trump just seven weeks later. No hearings were held on the actual bill and experts who could have helped ensure that provisions were properly drafted had barely any opportunity to digest legislative language or analysis from the Congressional Joint Committee on Taxation, much less to provide comments. Additionally, Democratic legislators were not permitted in the drafting room. The result is a bill riddled with drafting errors, special tax breaks that were not vetted, and new loopholes.1 While some are mere glitches, others appear to be purposeful giveaways that will create complexity and confusion for taxpayers and will have a significant impact on federal revenues.2
Most tax policy experts understand tax reform to involve making the tax system fairer, as well as simpler and more efficient where possible.3 This is achieved in part by eliminating special interest tax breaks and loopholes that allow savvy taxpayers to legally escape tax.4 This approach contributed to the success of the Tax Reform Act of 1986.5 While it will take time before the full ramifications of the TCJA are fully revealed, it is clear at this point that the effort did not result in true tax reform. Rather, while some special interest tax breaks and tax loopholes were eliminated or reduced, a host of others were left in place. And new breaks and loopholes were added that individuals and businesses, with the help of their sophisticated tax advisers, can use to avoid paying taxes in the years ahead.6 This issue brief provides a sample of the many special tax breaks that remain or were added to the tax code, along with some new loopholes that have been identified in the two short months since the bill was passed. Continue reading “Broken Promises: More Special Interest Breaks and Loopholes Under the New Tax Law”
The following article by Ed O’Keefe was posted on the Washington Post website March 1, 2018:
House Minority Leader Nancy Pelosi (D-Calif.) has earned the ire of Republicans for suggesting that major corporations are giving workers “crumbs” while top executives reap bonuses after passage of the GOP’s tax revision plan.
But a new poll from a group supportive of President Trump finds nearly half of Americans agree with Pelosi’s comments despite weeks of relentless criticism from GOP leaders.
The following article by Matt Phillips was posted on the New York Ties website February 26, 2018:
President Trump promised that his tax cut would encourage companies to invest in factories, workers and wages, setting off a spending spree that would reinvigorate the American economy. Companies have announced plans for some of those investments. But so far, companies are using much of the money for something with a more narrow benefit: buying their own shares. Those so-called buybacks are good for shareholders, including the senior executives who tend to be big owners of their companies’ stock. A company purchasing its own shares is a time-tested way to bolster its stock price. But the purchases can come at the expense of investments in things like hiring, research and development and building new plants — the sort of investments that directly help the overall economy. The buybacks are also most likely to worsen economic inequality because the benefits of stocks purchases flow disproportionately to the richest Americans. The tax overhaul is the cornerstone of Mr. Trump’s economic plan. It has been a big win for companies, offering lower corporate rates and a permanent break on overseas profits. Warren E. Buffett said in his annual letter to investors on Saturday that his company, Berkshire Hathaway, enjoyed a $29 billion gain thanks to the new tax law. Continue reading the main story RELATED COVERAGE Opinion Editorial Well-Heeled Investors Reap the Republican Tax Cut Bonanza FEB. 25, 2018 Apple, Capitalizing on New Tax Law, Plans to Bring Billions in Cash Back to U.S. JAN. 17, 2018 Bonuses Aside, Tax Law’s Trickle-Down Impact Not Yet Clear JAN. 22, 2018 Tax Overhaul Gains Public Support, Buoying Republicans Feb. 19, 2018
President Trump promised that his tax cut would encourage companies to invest in factories, workers and wages, setting off a spending spree that would reinvigorate the American economy.
Companies have announced plans for some of those investments. But so far, companies are using much of the money for something with a more narrow benefit: buying their own shares.
Those so-called buybacks are good for shareholders, including the senior executives who tend to be big owners of their companies’ stock. A company purchasing its own shares is a time-tested way to bolster its stock price.
But the purchases can come at the expense of investments in things like hiring, research and development and building new plants — the sort of investments that directly help the overall economy. The buybacks are also most likely to worsen economic inequality because the benefits of stocks purchases flow disproportionately to the richest Americans.
The tax overhaul is the cornerstone of Mr. Trump’s economic plan. It has been a big win for companies, offering lower corporate rates and a permanent break on overseas profits. Warren E. Buffett said in his annual letter to investors on Saturday that his company, Berkshire Hathaway, enjoyed a $29 billion gain thanks to the new tax law.
What companies do with the trillions of dollars they’re bringing back to the United States, and the money they will save each year on their tax bills, will in large part determine whether the plan is a success or a failure.
As the tax cuts kick in, companies have laid out a variety of uses for the money. Some are paying out one-time bonuses to employees. Others are raising salaries. Others plan to open new factories.
In the fourth quarter, American companies’ investments in things like factories and business equipment grew by 6.8 percent. That was the fastest growth rate since 2014, but far from the giant surge in capital spending that was promised ahead of the tax overhaul.
But the buying back of shares is also at record levels.
Almost 100 American corporations have trumpeted such plans in the past month. American companies have announced more than $178 billion in planned buybacks — the largest amount unveiled in a single quarter, according to Birinyi Associates, a market research firm.
Such purchases reduce a company’s total number of outstanding shares, giving each remaining share a slightly bigger piece of the profit pie.
Cisco said this month that in response to the tax package, it would bring back to the United States $67 billion of overseas cash, using $25 billionto finance additional share repurchases. Alphabet, the parent company of Google, authorized up to $8.6 billion in stock purchases. PepsiCo announced a fresh $15 billion in planned buybacks. Chip gear maker Applied Materials disclosed plans for a $6 billion program to buy shares. Late last month, home improvement retailer Lowe’s unveiled plans for $5 billion in purchases.
On Monday, Mr. Buffett said on CNBC that Berkshire might be open to buy some of its shares. The remarks helped send Berkshire’s stock — and the broader market — higher.
More buybacks are almost certainly on the way. UBS analysts covering Apple said the iPhone maker might authorize another $30 billion in share purchases when it reports its next quarterly earnings in April. That would be on top of the $30 billion it already spends each year to buy back its shares.
“I’m expecting buybacks to get to a record for 2018,” said Howard Silverblatt, a senior index analyst with S.&P. Dow Jones Indices. “And if I’m disappointed, there’s a lot of people with me.”
The flurry of planned buybacks has been good for the stock market. Early this month, stocks were down more than 10 percent from their January peak. The prospect of companies flooding markets with “buy” orders helped the market recoup some of its losses.
The broader impact on the economy is less clear. Economists believe a rising stock market benefits the economy, helping support consumer and business confidence. But the vast majority of the billions of dollars in planned share purchases will benefit the richest 10 percent of American households, who own 84 percent of all stocks. The top 1 percent of households own about 40 percent of all stocks.
Ultimately, the effect of the rising stock market depends on how those wealthy investors use their windfall. It helps the economy more, for example, if they put the money toward productive new companies than if they invest in government bonds.
In a Tax Day essay under the byline of Donald Trump, the USA Today newspaper has allowed the 45th president to tell an utterly misleading story about the tax “reform” law he signed into law in December. The calculated deceptions in this piece matter a lot because the front page of that same newspaper declares “Exclusive: GOP banks on tax cuts to keep majority in Congress.”
House Minority Leader Nancy Pelosi (D-Calif.) has earned the ire of Republicans for suggesting that major corporations are giving workers “crumbs” while top executives reap bonuses after passage of the GOP’s tax revision plan.