Oh Dear! Did the Trump Tax Cuts Really "Pay For Themselves"?

[SpeedRacerXXX]

Originally Posted by lustylad

Actually speedy, it was James Carville who coined the phrase "it's the economy, stupid" after managing Bill Clinton's successful 1992 Presidential campaign. What people tend to forget is that Clinton won with only 43% of the popular vote.

You suggest the Republicans were trounced in 2018, 2020 and 2022. I think the results were mixed, although they clearly fell short of GOP expectations in all three years. Candidate quality is a big problem for both parties. Herschel Walker was a flawed candidate for US Senate in Georgia, as was John Fetterman in Pennsylvania. IMO BOTH should have been rejected by voters last year. Republicans did take back the House, and you forgot to mention Brian Kemp was re-elected as Governor in Georgia.

Given all the extraneous noise affecting recent elections - the Kavanaugh hearings in 2018, the pandemic in 2020, abortion hysteria in 2022 - we can't expect pocketbook issues to be the ONLY driver of election results. And while you can't expect the average voter to link their economic good fortune to a specific tax bill (such as the TCJA), you can assume they will tend to favor the incumbent if the economy is on a solid upswing.

But for the pandemic, I believe Trump would have been re-elected in 2020. We wouldn't have experienced the unprecedented gyrations in GDP growth or the dramatic spike in unemployment that occurred in mid-2020. And we wouldn't have used the national health emergency as an excuse to relax all the election rules to allow so many feebly monitored mail-in ballots either.

I agree with many of your statements. 2020 election without the pandemic would have been interesting. The incredible voter turnout in 2020 was not due to the pandemic. It was due to Trump. Love him or hate him he brought out the vote. I doubt the pandemic had any impact on suburban voters turning on him in 2020. It was obvious from 2018 results that the suburban voters had abandoned Trump candidates.

[Tiny]

Originally Posted by lustylad

As I've said many times before (usually in reference to Paul Krugman) - I prefer my economists to be empirical rather than polemical. That means keep your fucking politics and partisan biases out of it. Does the empirical evidence suggest it was good policy or bad policy?

Hilarious!

Originally Posted by lustylad

This is an old thread. It has 252 replies and nearly 47k views. I bumped it to note the new NBER study which strengthens the case I made when I started the thread 19 months ago. Why don't you go back and read this thread from start to finish, then look at the 85-page NBER study (link is in post #246 above), and let us know your thoughts?

OK, admittedly after seeing all the math I took a pass on reading the entire paper. But here are a few observations from a quick look, followed by a little editorializing.

Here's a link to the paper:

https://conference.nber.org/conf_papers/f191672.pdf

Thirty-nine Nobel Prize winners in economics, 14 members of the Presidents' Council of Eonomic Advisors, and three of the four authors of the paper in question are or were members of the nonpartisan National Bureau of Economic Research (NBER). The authors of the paper work at Harvard, Princeton, the University of Chicago and the Treasury Department.

Figure 9 on page 45 is enlightening. The blue line shows the estimated increase in labor taxes as a % of the pre-TCJA corporate tax revenue. By the third year (2020), labor taxes are up by 10% of corporate tax revenue, and by year 10, they're up by 15% of corporate revenue. The increase in labor taxes results from an increase in (a) wages and (b) employment, as a result of the TCJA. The corporate tax changes in the TCJA had a positive effect on employment and wages.

You sum the solid red and blue lines on the graph to come up with the net change in corporate tax revenues. In the initial years, the drop in corporate tax revenues is greater than the increase in labor taxes, so the net effect is lower total tax revenues. After year 4 though, total tax revenues are actually higher than they would have been without the TCJA. Go out to year 20, and the Treasury is collecting 18% more tax revenue, expressed as a % of pre-TCJA corporate tax revenue, than it would have otherwise! There were no losers here, only winners. The companies, the workers and the Treasury all benefit.

Supply side economics prevail again!

This is a good example of how a Republican led change in policy resulted in benefits to the economy years after it was first implemented. The measures passed during the Biden administration, in particular the American Rescue Plan, were more like sugar highs. They boost the economy while the money's being spent, but then the longer term repercussions, like the increase in the national debt, don't justify the short term high. Admittedly there are long term gains to be had from, for example, the bipartisan infrastructure bill. But given all the pork and inefficiency associated with the Federal bill, I believe local and state fixes for most infrastructure shortcomings are a better way of dealing with inadequate and outdated infrastructure.

[Texas Contrarian]

This paper (from 2019) describes the long-term business dynamism expected to result from the 2017 tax legislation.

The authors discuss the indirect and knock-on effects of the policy, which they show produces enduring beneficial effects.

In any case, it's an interesting read.

https://www.sciencedirect.com/scienc...04393219300753

[Tiny]

Originally Posted by lustylad

That's based on a questionable assumption that the IRS would collect a lot more in taxes if it keeps all of the $80 billion Biden wants to throw at it under his wasteful, spendthrift, highly inflationary, and ridiculously misnamed "Inflation Reduction Act". (This for an agency with a current annual budget of $13 billion.)

So, Biden and the Democrats passed legislation to provide $80 billion in new funding to the IRS over 10 years. That's $8 billion per year. And $45.6 billion of that was to be spent on enforcement, targeting first and foremost high wealth taxpayers. To be transparent, Republicans managed to claw back $20 billion of the $80 billion.

How's that working out? Well, over about the last year the IRS has collected $520 million from 900 millionaires! How's that for a great return!

I wonder how much of that $520 million would have been collected anyway without the new funding?

https://news.bloombergtax.com/daily-...lthy-taxpayers

[The_Waco_Kid]

Originally Posted by Tiny

So, Biden and the Democrats passed legislation to provide $80 billion in new funding to the IRS over 10 years. That's $8 billion per year. And $45.6 billion of that was to be spent on enforcement, targeting first and foremost high wealth taxpayers. To be transparent, Republicans managed to claw back $20 billion of the $80 billion.

How's that working out? Well, over about the last year the IRS has collected $520 million from 900 millionaires! How's that for a great return!

I wonder how much of that $520 million would have been collected anyway without the new funding?

https://news.bloombergtax.com/daily-...lthy-taxpayers

all of it. what a perfect example of Gov waste. let's spend 10 dollars to get 1 dollar "extra" in taxes

brilliant


bahahhahhaaaaa

[Gotyour6]

Originally Posted by Tsmokies

Because they are finally paying some token taxes because they don't want to fuck with Biden and his exploding economy after trumpy fucked it all up.

Dah...cheap gas because of record unemployment. No one could buy shit except the billionaires. Bigger boats. Bigger planes. Buying more corrupt gop. Spend baby spent b4 trumpy gets fired by record numbers lol n omg fkn Moran


Mission accomplished!!!

How did he fuck it up?

[Ripmany]

Macro economics 101, you can not cut taxes on a population unless you cut spending since we aint got the gold. Basically trump so call tax cut were replaced with tariff, inflation, postage subsidy to China, money pull for what few bonds won't bought federal reserves print money. And fines on everyone waise and a hole lot killing
Happened under trump..

[The_Waco_Kid]

Originally Posted by Gotyour6

How did he fuck it up?

tsmokies gets his worldview of Trump from Rachel Maddow and CNN. that tells you everything you need to know.


the fact is, despite the "nattering neybobs of negativity" by the left, the US copr tax rate was the highest in the world at the time and put US multinationals at a disadvantage compared to non-US based companies.



this made US companies more competitive and .. wait for it ... more profitable. which in turn increased the tax revenue from corp America.


who knew?


bahahahaaa

[Tiny]

Hi SpeedRacer, In order to stay on topic, and to honor LustyLad, who I understand may soon be rejoining us, I'm moving your post to a different thread.

Originally Posted by SpeedRacerXXX

Why would corporate revenue go down under Trump's 2017 tax plan? Who said they would go down?

What was said was tax revenue from corporations would decrease significantly but the hope was that corporations would reinvest their additional profits into building more infrastructure to produce more product which would require more workers. Did not happen to the extent that Trump expected.

"The corporate tax cuts included in the 2017 Tax Cuts and Jobs Act helped boost business investment while delivering a small increase in worker pay, according to a new analysis published by the Bureau of Economic Research. The tax cuts did not, however, come anywhere close to paying for themselves, as their Republican proponents in Congress and the Trump administration insisted they would, and instead are costing the federal government more than $100 billion per year in lost revenues."

https://finance.yahoo.com/news/trump...mic%20Research.

That's not what I got out of the NBER (Bureau of Economic Research) paper. Please see Figure 9 on page 45 (page 46 of the .pdf) in the link below.

Yes, corporate tax revenues fall off greatly at first, and don't regain what they would have been without the tax cuts until 10 years out. But over the long term, increased investment resulting from the tax cuts creates more jobs. And the payroll contributions (Social Security and Medicare) more than make up for the lower corporate tax revenues. In year 20, the government is collecting 18% more in revenues, as a share of pre-TCJA corporate revenue, than it would have otherwise! It's a win-win! In the long run, the government gets more money, the corporations make more money, and there are more jobs.

https://conference.nber.org/conf_papers/f191672.pdf

Please see posts #246 and #257 in this thread for more detail. LL's #246 was a good read, for me at least.