Cont: The Trump Presidency Part III

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The Don said:
I think it comes down to how the company is owned, who the shareholders are and the degree of oversight they actually bother to exercise over the executives.

For most publicly quoted companies, the shareholders will be eager to get their share of the spoils which in turn will filter into the pockets of high net worth individuals and to people of more modest means who have mutual funds and the like.

The executives will likely reward themselves for giving a better shareholder return by giving themselves a nice raise - and as they're also probably shareholders, they'll get a second bonus in terms of their increased dividends.

The repeated failure of "trickle down" in the US will mean it almost certainly won't end up in the pockets of working folk and once again will result in a massive transfer of wealth from the working and middle classes to the very wealthiest in society.
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Maybe the next step is for these individuals to start giving themselves hereditary titles and we can circle back to a reenvisioned English/American aristocracy. We already have dynastic wealth, power and privilege. They are only missing the titles. Of course, we can't copy the English titles, what uniquely American ones can we use.
 
seayakin said:
Maybe the next step is for these individuals to start giving themselves hereditary titles and we can circle back to a reenvisioned English/American aristocracy. We already have dynastic wealth, power and privilege. They are only missing the titles. Of course, we can't copy the English titles, what uniquely American ones can we use.
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tbh, the idiosyncrasies of US pronunciation means that the same titles could be used and no-one would be any the wiser :D
 
Fast Eddie B said:
That’s the Scrooge McDuck cartoon image, replete with him skiing down a mountain of gold.

Back to the real world, how do you think it works?
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In the UK, this has been the case Note the increase between 1980 and 1998, and between 1998 and 2013.

http://highpaycentre.org/blog/ftse-...-average-143-times-as-much-as-their-employees

FTSE 100 bosses paid 130 times their average employee

Britain’s top executives are now paid around 130 times their average employee, according to analysis released today by the High Pay Centre think-tank.

The figures illustrate the dramatic rise in executive pay in relation to most UK workers over the past three decades. In 1998, the average FTSE 100 CEO was paid 47 times their average employee. Analysis of six major UK companies in 1980 found that CEOs were paid between 13 and 44 times their average employee.
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These figures refer to CEO pay in relation to the average employee at the company in question, as opposed to the UK as a whole. The average pay realised by a FTSE 100 Chief Executive in 2013 is roughly 174 times that of the average UK worker.
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Pretty close to the stereotype.
 
Fast Eddie B said:
That’s the Scrooge McDuck cartoon image, replete with him skiing down a mountain of gold.

Back to the real world, how do you think it works?
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More like the Donald Trump cartoon image... meanwhile, The Don answered exactly as I would have. Do you have any reason to think that decreased corporate taxes would lead to wage increases for workers, or hiring more people?
 
Something that would actually stimulate the economy and benefit the greatest number of people would be, instead of giving corporations an across-the-board tax cut, give them tax credits or deductions for any yearly increase in their payroll, whether through raises or new jobs. Give them a choice: Give more of your profits to employees or give it to the government. And since the employees would be paying payroll tax, we could afford substantial cuts to corporate tax revenue without killing the budget.

Giving working Americans a bigger share of the wealth that they create would be the fastest path to a booming economy, but that isn't really what the GOP owners want.
 
Fast Eddie B said:
That’s the Scrooge McDuck cartoon image, replete with him skiing down a mountain of gold.

Back to the real world, how do you think it works?
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Exactly the same but now the gold is all tucked away in the Caymans. They can use their gold plated super yachts to visit them once the hurricane damage is repaired.
 
WilliamSeger said:
Giving working Americans a bigger share of the wealth that they create would be the fastest path to a booming economy, but that isn't really what the GOP owners want.
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No they want bigger yachts and more investment property in Mayfair. It is so hard to keep up with the Russian and Chinese these days, the average billionaire feels like a pauper.
 
jond said:
Do you have any reason to think that decreased corporate taxes would lead to wage increases for workers, or hiring more people?
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There is some evidence that employment and corporate taxes are related to each other.

From: http://scholarship.richmond.edu/cgi/viewcontent.cgi?article=1056&context=spcs-faculty-publications
Regression results confirmthe observation that lower corporate taxes have a significant and positive effect on employmentgrowth.

As for how it would happen, there are a few ways I can see:

- The tax cut itself will cause a temporary (very short term) bump in employment as companies adjust to the new tax rates (this is hinted at in the paper above)

- Some companies may decide to move production to places with lower tax rates. (They may do so in order to pay for better gold-plating on the CEO's toilet, but still, the effect is that jobs are still moving from high to low tax areas.) In that situation it becomes a 'race to the bottom' as companies try to outdo each other with lower taxes.

- Companies with more money may try to expand their business.

From: https://www.forbes.com/sites/ikebra...rate-tax-reform-benefit-workers/#5b8e5ed52b9d (Note: it is an opinion piece so skepticism is warranted... but it is based in part on academic work.)
...a lower capital tax rate makes plant and equipment cheaper, so firms have an incentive to substitute capital for labor.But there is also the scale effect: reducing the cost of capital lowers the effective cost of doing business, so firms increase their scale of operations. As a result, businesses invest in more capital and labor.

Now, I hope people don't think I'm a Trump fan because of this posting. I certainly think he is a failure as both a president and a human being. I'm just saying that there is some evidence corporate tax cuts may be beneficial.


A few caveats:

- I recognize that economists are probably not universal in believing tax cuts increase employment. I'm sure plenty of people can quote economists saying tax cuts have no effect. I don't think there is definitive proof either way
- I also recognize that there may be other issues at play. So while a corporate tax cut may cause some hiring, if it leads to increasing deficits (as people believe Trump's plans will do) it may eventually cause more problems in the future
- It may also be possible that while a corporate tax cut will increase employment, alternatives (such as income tax cuts targeted at lower incomes, or even maintaining current tax levels but spending more on infrastructure) may actually be more beneficial.
 
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The Don said:
I think it comes down to how the company is owned, who the shareholders are and the degree of oversight they actually bother to exercise over the executives.

For most publicly quoted companies, the shareholders will be eager to get their share of the spoils which in turn will filter into the pockets of high net worth individuals and to people of more modest means who have mutual funds and the like.

The executives will likely reward themselves for giving a better shareholder return by giving themselves a nice raise - and as they're also probably shareholders, they'll get a second bonus in terms of their increased dividends.

The repeated failure of "trickle down" in the US will mean it almost certainly won't end up in the pockets of working folk and once again will result in a massive transfer of wealth from the working and middle classes to the very wealthiest in society.
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And your alterantive to capitalism is........

Anyway, a good many shareholders ARE middle class.

I am against the current tax cuts, but you are getting too close to "Capitalism Is evil" country for my taste. We have seen the alternative...Government control of the economy and Govrnment commands used instead of market forces to control an economy, and the results have been disaterous.
 
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WilliamSeger said:
Something that would actually stimulate the economy and benefit the greatest number of people would be, instead of giving corporations an across-the-board tax cut, give them tax credits or deductions for any yearly increase in their payroll, whether through raises or new jobs. Give them a choice: Give more of your profits to employees or give it to the government. And since the employees would be paying payroll tax, we could afford substantial cuts to corporate tax revenue without killing the budget.

Giving working Americans a bigger share of the wealth that they create would be the fastest path to a booming economy, but that isn't really what the GOP owners want.
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I have thought this for years.
 
One of the problems I see with supply side economics and the conservatives is that there is a religious ideology that it will always have a strong impact on the economy. However, with anything, in some situations it can have a strong impact and in others not. For instance, if it is very expensive to get credit and/or the government is taxing all profits it would have a significant impact. However, in our current economy where it is very cheap to borrow money and there is lots of cash available for investment, it will have a minimal impact.

I have been trying to find analysis from economists but having trouble finding any that addresses this specifically.
 
dudalb said:
And your alterantive to capitalism is........
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That is unfair. The Don didn't say anything about replacing capitalism - but there are capitalist systems with lower inequality in parts of Europe, and these often seem to work quite well for the general population.
 
Segnosaur said:
There is some evidence that employment and corporate taxes are related to each other.

From: http://scholarship.richmond.edu/cgi/viewcontent.cgi?article=1056&context=spcs-faculty-publications
Regression results confirmthe observation that lower corporate taxes have a significant and positive effect on employmentgrowth.

As for how it would happen, there are a few ways I can see:

- The tax cut itself will cause a temporary (very short term) bump in employment as companies adjust to the new tax rates (this is hinted at in the paper above)

- Some companies may decide to move production to places with lower tax rates. (They may do so in order to pay for better gold-plating on the CEO's toilet, but still, the effect is that jobs are still moving from high to low tax areas.) In that situation it becomes a 'race to the bottom' as companies try to outdo each other with lower taxes.

- Companies with more money may try to expand their business.

From: https://www.forbes.com/sites/ikebra...rate-tax-reform-benefit-workers/#5b8e5ed52b9d (Note: it is an opinion piece so skepticism is warranted... but it is based in part on academic work.)
...a lower capital tax rate makes plant and equipment cheaper, so firms have an incentive to substitute capital for labor.But there is also the scale effect: reducing the cost of capital lowers the effective cost of doing business, so firms increase their scale of operations. As a result, businesses invest in more capital and labor.

Now, I hope people don't think I'm a Trump fan because of this posting. I certainly think he is a failure as both a president and a human being. I'm just saying that there is some evidence corporate tax cuts may be beneficial.


A few caveats:

- I recognize that economists are probably not universal in believing tax cuts increase employment. I'm sure plenty of people can quote economists saying tax cuts have no effect. I don't think there is definitive proof either way
- I also recognize that there may be other issues at play. So while a corporate tax cut may cause some hiring, if it leads to increasing deficits (as people believe Trump's plans will do) it may eventually cause more problems in the future
- It may also be possible that while a corporate tax cut will increase employment, alternatives (such as income tax cuts targeted at lower incomes, or even maintaining current tax levels but spending more on infrastructure) may actually be more beneficial.
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Interesting, thanks. Kansas recently tells us a very different story. But, then again, it's Kansas. ;)
 
Segnosaur said:
There is some evidence that employment and corporate taxes are related to each other.

From: http://scholarship.richmond.edu/cgi/viewcontent.cgi?article=1056&context=spcs-faculty-publications
Regression results confirmthe observation that lower corporate taxes have a significant and positive effect on employmentgrowth.

As for how it would happen, there are a few ways I can see:

- The tax cut itself will cause a temporary (very short term) bump in employment as companies adjust to the new tax rates (this is hinted at in the paper above)

- Some companies may decide to move production to places with lower tax rates. (They may do so in order to pay for better gold-plating on the CEO's toilet, but still, the effect is that jobs are still moving from high to low tax areas.) In that situation it becomes a 'race to the bottom' as companies try to outdo each other with lower taxes.

- Companies with more money may try to expand their business.
From: https://www.forbes.com/sites/ikebra...rate-tax-reform-benefit-workers/#5b8e5ed52b9d (Note: it is an opinion piece so skepticism is warranted... but it is based in part on academic work.)
...a lower capital tax rate makes plant and equipment cheaper, so firms have an incentive to substitute capital for labor.But there is also the scale effect: reducing the cost of capital lowers the effective cost of doing business, so firms increase their scale of operations. As a result, businesses invest in more capital and labor.

Now, I hope people don't think I'm a Trump fan because of this posting. I certainly think he is a failure as both a president and a human being. I'm just saying that there is some evidence corporate tax cuts may be beneficial.


A few caveats:

- I recognize that economists are probably not universal in believing tax cuts increase employment. I'm sure plenty of people can quote economists saying tax cuts have no effect. I don't think there is definitive proof either way
- I also recognize that there may be other issues at play. So while a corporate tax cut may cause some hiring, if it leads to increasing deficits (as people believe Trump's plans will do) it may eventually cause more problems in the future
- It may also be possible that while a corporate tax cut will increase employment, alternatives (such as income tax cuts targeted at lower incomes, or even maintaining current tax levels but spending more on infrastructure) may actually be more beneficial.
Click to expand...

Companies with more money have an easier time expanding, of course, but companies also expand by going into debt or selling equity whenever they think the expansion will be profitable. That's the part that seems to be left out of the analysis: Companies only expand or get created because someone perceives an expanding market. Somehow the supply side seems to take care of itself if they can make a convincing case to the people who control the capital.
 
Fast Eddie B said:
I agree the Trump is largely ignorant about how the economy works.

I’m curious, where do you envision that money saved by companies on taxes will actually go?
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A lot of these big corporations are cash rich and not doing anything with it.

A third of cash is held by 5 U.S. companies
And nearly three-quarters of cash held by non-financial U.S. companies is stashed overseas, outside the long arm of Uncle Sam. ...

Investors are eyeing companies' growing cash piles as potential sources of dividend increases to maintain fat returns even if stock prices continue to go nowhere. Dividends rose 4% last year to a record high of $404 billion, while companies cut back on capital spending by 3% to $885 billion. Capital spending is the cash companies put into new plants and equipment with the hopes of driving higher profits in the future.
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How America’s Richest Companies Invest Their Cash

I don't see anything when I search that says the money stimulates the economy or ends up in worker's pockets.

Whereas despite the loss of some jobs, raising the minimum wage results in net job growth overall.

Raising the Minimum Wage Boosts Growth and Does Not Cause Unemployment

Or, we could spend those tax dollars on rebuilding the infrastructure, something Trump promised he cared about but which seems to take a back seat to tax cuts for the rich. That would directly inject money into worker's pockets. And workers spend that money, resending it into the economy.
 
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