Trump's Proposed Corporate Tax Cut: In Perspective

How Illinois can prepare for the Trump tax reforms

How Illinois can prepare for the Trump tax reforms

"Supporters of the blueprint understand the importance of reforming our tax code in a way that incentivizes investment in the United States and the production of American goods, in American towns, by American workers", John Gentzel, a spokesman for a consortium of businesses lobbying for the provision, tells CNN. Currently, corporate taxpayers are taxed on their worldwide income.

That will ensure that less of the cost of government falls on the poor. By demonstrating the importance of tax reform to business and the USA economy, these survey results confirm that tax reform is a critical priority if we are to grow the economy and create jobs and opportunity. A lower corporate tax rate may reduce the METR, but it would still be greater than zero. This is a $126 billion tax cut. Living outside of your means will only lead to trouble down the road.

This result is not unique to the Tax Foundation's model.

Still, the USA should be focusing on ways to boost business investment, which has fallen as a share of output in recent years. But businesses don't like to make investment decisions based on tax cuts that won't last. The percentage of the increase, the association noted, is more than half a percentage point below the 2 percent property tax cap. But U.S. Treasury Secretary Steven Mnuchin says tax reforms combined with sensible trade policies would, over time "help the economy grow at a sustained rate of three to four percent", a claim many economists say is unrealistic. True, Keynesian-style tax cuts like President Barack Obama's 2009 stimulus package also generate red ink, but they're created to phase out when the economy no longer needs the jolt. Actually the facts show the 35 percent is not correct, 27 percent is correct.

The tax system also has led companies to keep offshore earnings sitting overseas - invested in foreign subsidiaries - to avoid paying US taxes on them.

And often, a corporation can avoid taxes altogether by waiting for the enact a repatriation holiday. Any unincorporated business could exploit this practice.

Slashing the corporate tax rate would obviously benefit corporations as they would take in much more profits. Pew Research found last month a decidedly populist sentiment when it comes to taxes: "Among the public overall, 62% say they are bothered "a lot" by the feeling that some corporations don't pay their fair share of taxes, and 60% say the same about some wealthy people not paying their fair share".

Meanwhile, because of tax avoidance, the true rate isn't closely tied to the headline rate. Trump has been talking about a 20 percent corporate tax reduction for some time.

Microsoft launches Surface laptop, streamlined Windows 10
The Surface Laptop also has an unusual keyboard, featuring the same Alcantara coating as the Surface hybrid's Type Cover. But he stressed that Microsoft's new laptop is thinner than these Apple devices and has a longer battery life .

All that avoidance costs real resources - hours of labor by tax accountants and financial professionals, buildings for them to work in, and computers to keep everything in order.

On the merits, there is reason to doubt how much bang for the buck one can get from corporate tax reform.

"You get a Tim Hortons buying a Burger King, which you'd say wouldn't make sense, but they're trying to suck profits out of the USA and have them taxed in lower jurisdictions", Flynn said.

He said the ability to take a deduction for property taxes "makes ideal sense because otherwise you are paying taxes twice".

Those fixed costs make it hard from small startups to compete on a level playing field with big, established companies, worsening the problem of monopoly power in the economy. Their first problem will be trying to explain what's wrong with ending a tax break for the relatively well-off to increase a tax-code benefit for lower-income folks - without seeming to special-plead on behalf of their own well-heeled constituents.

Trump's first attempt at passing his American Health Care Act failed to garner enough support because a group called the Freedom Caucus felt it was way too kind to people in need of affordable health care since it only pushed 24 million people off their insurance.

Most advanced countries have already done this. The rail stuff is a bit murkier, price-wise, but shortly before the Obama administration ended, the Transportation Department produced a $128 billion, multiyear plan to upgrade the Northeast Corridor.

Noah Smith, a Bloomberg View columnist, was an assistant professor of finance at Stony Brook University.

Recommended News

  • Nicola Sturgeon casts vote in Scottish council elections

    Nicola Sturgeon casts vote in Scottish council elections

    The Scottish National Party becomes the biggest party on the council, though without the overall majority it had hoped to achieve. The Scottish Greens returned seven councillors, up from four, while the sole Liberal Democrat lost her seat.
    Pakistan, Iran agree to boost border security after incident

    Pakistan, Iran agree to boost border security after incident

    Zarif and Nisar Ali Khan also called for further interaction between border and security officials of the two countries. They also agreed in principle to revive a hotline between their border forces to coordinate activities, it said.
    James helps Cavs hold off Pacers, earn sweep into 2nd round

    James helps Cavs hold off Pacers, earn sweep into 2nd round

    The Cavs took a 3-0 lead in the best-of-seven series and can close out the series in Game 4 Sunday at 1 Indianapolis . He then pointed to a very specific example, reciting a random play from the game as if he had just watched it again.
  • Alabama gives Saban 3-year extension, $4M signing bonus

    Alabama gives Saban 3-year extension, $4M signing bonus

    University President Stuart Bell said Alabama's success in football under Saban has helped the school overall. Saban had been making a reported $6.9 per season, a figure most of America already found obscene.
    HBO lands new Princess Diana documentary

    HBO lands new Princess Diana documentary

    Prince Harry recently opened up about losing his mother when he was just 12 years old in an emotional interview. ITV has said the film will be broadcast later in the year.

    Led by Hayward, Utah Jazz moving on to new playoff turf

    Paul also went scoreless in the fourth quarter after missing all four of his shots, including three attempts from the perimeter. I could start reciting the list of Griffin injuries in recent years, but let's just stipulate he's injury prone and move on.
  • Ferguson protester photographed with tear gas canister, bag of chips found dead

    Ferguson protester photographed with tear gas canister, bag of chips found dead

    In 2014, an unarmed African-American teenager by the name of Michael Brown had been shot dead by police officer, Darren Wilson. Louis police said Crawford had been complaining of distress to two women seated in the auto , where he suddenly shot himself.
    Nissan Fights Distracted Driving With Faraday Cage Armrest

    Nissan Fights Distracted Driving With Faraday Cage Armrest

    For years, automakers have integrated technologies that make it easier to use a phone without actually wielding the device. Nissan has come up with a center compartment that can help prevent distracted driving called the Nissan Signal Shield .
    Why Uber Is Driving Twilio Much Lower

    Why Uber Is Driving Twilio Much Lower

    Tracking most recent quarter period, Price to book (P/B) ration is at 1.70 and Price to cash per share ration is at 35.39. On average, equities research analysts predict that Twilio will post ($0.16) earnings per share for the current year.
  • Sensex reclaims 30000-level, rises 99 pts in early trade

    Among the sectoral indices, Bankex rose 2.32 percent, Consumer Durable 1.41 percent, Finance 1.38 percent and FMCG 1.08 percent. The BSE IT index slips 0.4 per cent; HCL Technologies, Tech Mahindra, TCS and Infosys among laggards.
    Students injured in Bemidji school bus crash

    Students injured in Bemidji school bus crash

    He said one child had facial lacerations, another sustained a broken arm, and one child may have some internal injuries. Both of the drivers involved in a school bus crash that sent multiple students to the hospital have been identified.
    Police injured in clashes with Paris May Day protesters

    Police injured in clashes with Paris May Day protesters

    Macron joined the man's son and anti-National Front protesters at an annual commemoration near the Louvre Museum in Paris . Protesters push a burning trolley towards police during violent scenes in central Paris at May Day march.

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.