Effects On Corporate Taxation And Behavior
The Institute on Taxation and Economic Policy reported in December 2019 that:
- The Tax Act lowered the statutory corporate tax rate from 35% to 21% in 2018, although corporations continued to reduce their taxes below the statutory rate via loopholes. The Tax Act closed some old loopholes, but created new ones.
- The effective corporate tax rate in 2018 was the lowest rate in 40 years, at 11.3%, versus 21.2% on average for the 2008â2015 period.
- Of 379 profitable Fortune 500 corporations in the ITEP study, 91 paid no corporate income taxes and another 56 paid an average effective tax rate of 2.2%.
- If the 379 businesses had instead paid the 21% tax rate, it would have generated an additional $74 billion in tax revenue.
The Economic Policy Institute reported in December 2019 that:
- Working people saw no discernible wage increase due to the Tax Act. The tight labor market and higher state-level minimum wages can explain the wage growth in 2018.
- The Tax Act has not increased business investment, with the small increase in 2018 a “natural bounceback” from a weak 2015â2016, and a sizable decline in 2019.
- Companies used much of the tax benefit for stock buybacks, to the tune of $580 billion in 2018, an increase of 50% from 2017.
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Donald Trump has often touted economic growth during his presidency as evidence that he was a successful president, but a recent revision to GDP dating back to 1999 has suggested his rosy view of the period is a fantasy.
The revisions were part of the US’s gross domestic product report that was released on Thursday by the US Commerce Department‘s Bureau of Economic Analysis.
The revisions revealed that economic growth under Mr Trump was the worst since President Herbert Hoover, who was in the White House from 1929 to 1933, the period of the Wall Street Crash and the onset of the Depression.
Bloomberg reported the results of the analysis, which began with the Dwight D Eisenhower administration 1953 to 1961 as that was the first time the BEA reported full quarterly data.
GDP growth under Mr Hoover was negative 7.4 per cent. Mr Trump performed better, with the GDP growing 1.6 per cent during his time in office, but that number is extremely low when compared to every other president since Mr Hoover.
Surpluses Are Usually The Consequence Of Suppressed Wages
This tendency to conflate unlike trade effects effectively misses the point. They do not ignore the impact of imports altogether, but their methodology seems to assume automatically that imports increase real household income by more than they reduce household income through direct job losses. Meanwhile, they simultaneously ignore the ways imports can repress wages or raise indirect unemployment, along with the indirect job losses caused by this wage suppression.
In nearly every country running large, persistent surpluses, the household share of GDP is lower than that of peer countries and trade partners. This isnt merely a coincidence. It is low wages relative to productivity that allows countries to run surpluses, and yet the USCBC analysis seems implicitly to deny that countries increase international competitiveness mainly by directly or indirectly reducing the wage share of production, or that when countries implement policies to improve what they deem international competitiveness, this is usually nothing more than a euphemism for policies that directly or indirectly suppress wages.
That is why they find that more trade can only result in higher real household income. They exclude the possibility that, to the extent a surplus country relies on lowering wages to become competitive enough to run its surplus, it must put downward wage pressure on its trade partners.
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Cherishing Life And Religious Liberty
Steadfastly supported the sanctity of every human life and worked tirelessly to prevent government funding of abortion.
- Reinstated and expanded the Mexico City Policy, ensuring that taxpayer money is not used to fund abortion globally.
- Issued a rule preventing Title X taxpayer funding from subsiding the abortion industry.
- Supported legislation to end late-term abortions.
- Cut all funding to the United Nations population fund due to the funds support for coercive abortion and forced sterilization.
- Signed legislation overturning the previous administrations regulation that prohibited states from defunding abortion facilities as part of their family planning programs.
- Fully enforced the requirement that taxpayer dollars do not support abortion coverage in Obamacare exchange plans.
- Stopped the Federal funding of fetal tissue research.
- Worked to protect healthcare entities and individuals conscience rights ensuring that no medical professional is forced to participate in an abortion in violation of their beliefs.
- Issued an executive order reinforcing requirement that all hospitals in the United States provide medical treatment or an emergency transfer for infants who are in need of emergency medical careregardless of prematurity or disability.
- Led a coalition of countries to sign the Geneva Consensus Declaration, declaring that there is no international right to abortion and committing to protecting womens health.
- First president in history to attend the March for Life.
Data V Spin: The Truth About Trump And The Us Economy
Can Trump take credit for the economys pre-COVID strength? And did his policies really lift all Americans?
President Donald Trump presided over the final years of an economic expansion in the United States that lasted an unprecedented 128 months. But the record run which began in June 2009 came to a halt this year when the US and global economies fell off the COVID-19 cliff.
In a matter of weeks, tens of millions of Americans found themselves out of work as businesses in every sector shut their doors.
Back on February 4 before lockdown orders swept the nation Trump highlighted his stewardship of the economy during his State of the Union address, telling the American people:
From the instant I took office, I moved rapidly to revive the US economy slashing a record number of job-killing regulations, enacting historic and record-setting tax cuts, and fighting for fair and reciprocal trade agreements We are advancing with unbridled optimism and lifting our citizens of every race, colour, religion, and creed very, very high.
But did Trumps policies really revive the economy for the benefit of all Americans? And does Trump or his Democratic rival, Joe Biden, have the winning policy mix to get the economy back on track as the country remains mired in the coronavirus pandemic?
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Trade Is More Than Ideology
The USCBC study concludes with the following:
Scaling back tariffs would likely benefit the US economy and create jobs. Even a moderate rollback in tariffs could increase economic growth and stimulate employment growth. Under our trade war de-escalation scenario, where both governments gradually scale back average tariff rates to around 12% , the US economy produces an additional $160 billion in real GDP over the next five years and employs an additional 145,000 people by 2025. US household income would be $460 higher per household as result of increased employment and incomes as well as lower prices.
Escalating trade tensions and significant decoupling with China would hurt the US economy further and reduce employment. Our trade war escalation and decoupling scenario sees the US economy produce $1.6 trillion less in real GDP terms over the next five years and results in 732,000 fewer jobs in 2022 and 320,000 fewer jobs in 2025. In addition to a significant near-term shock to economic output, long-term effects would permanently lower GDP, reflecting lower economic productivity. By the end of 2025, US households will have lost an estimated $6,400 in real income.
This is an admirably precise set of conclusions and projections about the supposed impact of their recommendations, but the USCBCs methodology does not support them. Their analysis focuses mostly on minor or irrelevant data and almost wholly ignores the key issues at play.
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Actions To Hinder Implementation Of Aca
President Trump continued Republican attacks on the ACA while in office, according to the New York Times, including steps such as:
- Weakening the individual mandate through his first executive order, which resulted in limiting enforcement of mandate penalties by the IRS. For example, tax returns without indications of health insurance will still be processed, overriding instructions from the Obama administration to the IRS to reject them.
- Reducing funding for advertising for the 2017 and 2018 exchange enrollment periods by up to 90%, with other reductions to support resources used to answer questions and help people sign-up for coverage. This action could reduce ACA enrollment.
- Cutting the enrollment period for 2018 by half, to 45 days. The NYT editorial board referred to this as part of a concerted “sabotage” effort.
- Issuing public statements that the exchanges are unstable or in a death spiral. CBO reported in May 2017 that the exchanges would remain stable under current law , but would be less stable if the AHCA were passed.
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Skeptics Doubt It Will Last
His critics don’t believe it will last. They figure the current boom will begin petering out as soon as mid-2019 and possibly end in recession in 2020.
“This is temporary. In fact it’s raising the odds of recession on the other side,” said Mark Zandi, chief economist at Moody’s Analytics. “The economy is now more cyclical because of the stimulus. You’re doing a lot of near-term growth, but you’re setting up for a tough time on the other side of it. That’s why most economists think we have a recession in 2020, because of these policies.”
There is plenty to worry about: A ballooning debt that will only get worse if Trump’s growth predictions don’t materialize, the increasing likelihood of a trade war that sparks inflation and punishes U.S. companies that depend on exports, and a suddenly slowing real estate market that could be pointing to larger issues at the heart of the economy.
Indeed, while Trump has preached fiscal discipline, he has not practiced it. The U.S. economy is carrying a $45 trillion debt load that continues to grow under Trump. Government debt has swollen by $1.46 trillion in Trump’s 19 months, an increase of 7.3 percent, to $21.4 trillion. The public owes $15.7 trillion of that debt, an increase of 9 percent.
Government debt since 2009
Then there’s the Federal Reserve, which cut rates and flooded the financial system with cash during the Obama years. Now it is reversing course and tightening, or raising rates.
A Look At Trump’s Economic Legacy
Examining the outgoing president’s policies from tax cuts to trade wars.
President Donald Trump campaigned as a billionaire businessman and champion of the working class with the economic prowess and deal-cutting skills that politicians in Washington, D.C., lacked.
He summed up his position neatly during the campaign: “I’ll be the greatest jobs president that God ever created.”
On the campaign trail, Trump claimed to be laser-focused on bringing back manufacturing and mining jobs, renegotiating trade deals that led to work disappearing overseas and curtailing immigration.
His Clintonian tack of “it’s the economy, stupid,” despite the myriad scandals and investigations that dogged him, largely worked as GDP grew at a healthy clip, the stock market soared and unemployment rates hit a half-century low, until the coronavirus pandemic gutted the job market.
Yet as he leaves after his one-term tenure, Trump has become the first president since Herbert Hoover during the Great Depression to depart office with fewer jobs in the country than when he entered.
Economists say Trumps economic legacy will be defined by his failure in leadership during the COVID-19 pandemic that exacerbated the financial downturn, domestic policies that overwhelmingly benefited the wealthy, and international trade policies that hurt U.S. industry while simultaneously alienating allies.
Here is a look at the outgoing president’s legacy on the U.S. economy.
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Economic Hardship Is Elevated Across The Country
Amid this wobbly recovery, millions of Americans are still struggling to meet their basic needs. The CARES Acts core supports notably the weekly $600 unemployment insurance supplement and the one-time Economic Impact Payments cushioned consumer spending and enabled jobless workers to stow away a small amount of savings. But after Republicans allowed the UI supplement to expire in July, and continue to block new relief, these reserves are largely depleted. Consequently:
Impact On The Economy Deficit And Debt
The non-partisan Joint Committee on Taxation of the U.S. Congress published its macroeconomic analysis of the Senate version of the Act, on November 30, 2017:
- Gross domestic product would be 0.7% higher on average each year during the 2018â2027 period relative to the CBO baseline forecast, a cumulative total of $1,895 billion, due to an increase in labor supply and business investment. This is the level of GDP, not annual growth rate, so the economic impact is relatively minor.
- Employment would be about 0.6% higher each year during the 2018â2027 period than otherwise. The lower marginal tax rate on labor would provide “strong incentives for an increase in labor supply.”
- Personal consumption, the largest component of GDP, would increase by 0.6%.
The CBO estimated in April 2018 that implementing the Act would add an estimated $2.289 trillion to the national debt over ten years, or about $1.891 trillion after taking into account macroeconomic feedback effects, in addition to the $9.8 trillion increase forecast under the current policy baseline and existing $20 trillion national debt.
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Help From The Federal Reserve
Facts first:It’s true that Fed policies helped the economy recover from the Great Recession under Obama, and while its key interest rate is higher now than it ever was under the previous president– it was cut last year for the first time since 2008.kept the federal funds ratethree separate times
Donald Trump Said During The First Us Presidential Debate With Joe Biden That His Administration Built The Greatest Economy In History A Statement He Has Often Made To Support His Case For A Second Term In The White House
The presidents record on the economy has been diminished by the devastating fallout of the coronavirus pandemic. Polls, however, tend to remain positive for him when voters are asked who they trust more to create jobs and economic growth.
This sentiment stems from Trumps career as a businessman, an early tax cut he signed as president and a strong stock market, which — on paper at least — boosts retirement savings. Regardless, Trumps messaging on the economy is prone to exaggeration and hyperbole.
AFP Fact Check examines the numbers.
Did Trump create the greatest economy?
Gross domestic product and job numbers are the main measures of US economic health. Trump has touted both, as well as chart-topping stock prices, as proof of his success. But his claims are misleading.
In Trumps favor, US unemployment hit a 50-year low of 3.5 percent in December 2019. In January this year, however, before states imposed lockdowns to try and contain the coronavirus, the Labor Department issued an update that was less positive revised numbers showed job growth slowed significantly in the first three years of Trumps presidency.
Some 6.5 million jobs were added between 2017 and 2019 — 2.109m, 2.314m and 2.096m. This compared to more than eight million jobs — 3.004m, 2.72m and 2.345m — in the three prior years, under Barack Obama.
The pandemic has upended the job market.
Gross Domestic Product
The stock market
In Trumps single term as president the Dow Jones grew 56 percent.
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Even Before The Pandemic Trump Failed To Unleash An Economic Miracle
President Trumps failure to save the economy from the coronavirus is consistent with his record of failure before the pandemic. Upon inheriting a growing economy with low and falling unemployment from the Obama Administration, President Trumps first order of business was to squander $2 trillion on a taxgiveaway that showered unnecessary benefits on corporations and the wealthy with little to show for it. Like his tax scam, progress on the Presidents other major promises to eliminate the trade deficit that China would pay for the costs of his tariffs that manufacturing would boom everyone would have health insurance not only failed to materialize, but in many cases moved in the wrong direction. The share of Americans uninsured has grown every yearhe has been in office, for instance, reversing six consecutive years of insurance gains prior to his presidency. Rather than put his economic inheritance to good use, President Trump failed to meaningfully change the economys trajectory or achieve his major economic goals before running the economy further into the ground with his mismanagement of COVID-19.
What Has Trump Done For The Economy
Trump has repeated many times that he has supervised “the greatest economy” ever, according to The Los Angeles Times.
However, the Times reports that the economy has performed roughly on the same level it performed for Barack Obama during the last three years of his tenure.
The economy added 6.6 million jobs in Trumps first three years, compared to 8.1million in the last three years under Obama, according to the newspaper.
The country’s unemployment rate under Trump fell to an impressive 3.5 percent before the devastating coronavirus pandemic struck.
That’s the lowest mark in 50 years.
In April 2020 it was close to 15 percent but has steadily fallen, and in September stood at 7.9 percent.
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