Good points. It's worth remembering that different tax-cut strategies affect the economy in different ways, even if their overall effects are judged to be equal. Thus, Republican tax cuts inflate property prices in desirable areas (the big cities, Sunbelt retirement communities, ski resorts, etc.), prop up the stock market, and help luxury-good manufacturers. Whereas Democratic government spending, as either tax cuts or UBI, wouldn't do much for any of those areas, because they would largely go to people who don't buy pricey homes, who don't have stocks outside of their 401(k) plans (if even there), and who don't buy many luxury goods. Mid-market furniture manufacturers would probably do well, though.
My theory about CEO worship still holds true. This is a disaster we'll be teaching for decades in b-school. The idolatry of innovators leads to billion-dollar payouts while thousands of employees are scrambling to clean up the mess, knowing they have a 1 in 2 chance of being fired. https://t.co/NUdBQrZbUF— Scott Galloway (@profgalloway) October 22, 2019
I'm talking about the stock markets supposed role in providing capital for businesses. It's very hard for businesses to raise capital unless it's for the latest 'bubble', often property over here. That's why the stock market and people's living standards, (not to mention the subject of this thread - inequality), usually have very little to do with each other.
I think in a lot of respects though, the GOP cuts don’t even benefit industries like high end goods in a meaningful way. They get the tax cuts, but all large firms can realize more or less the same cuts. I’m looking at consumer demand for their goods. If a HNW individual suddenly sees an extra million due to tax cuts, hardly any of that is spent on yachts, watches/jewelry, or fancy clothes. They already have enough of that stuff. So the vast majority of their additional wealth just accrues in an investment account. And unless those companies can take on additional debt for expansion, a higher stock price doesn’t do much to create new products/revenue for them either. That’s why so many of them are sitting on so much cash right now.
There never was a logic for the corporate-tax cut. We all knew that corporations were already sitting on more cash than they wished to spend, and that cutting their tax bill would simply increase their cash hoards, and/or lead to more stock buybacks. That was obvious. There was more logic for cutting personal taxes, but as it turned out the 2017 bill didn't end up doing much of that. Pretty much all the revenue decline to the IRS came from lower corporate receipts, not lower personal receipts. https://fas.org/sgp/crs/misc/R45736.pdf
Definitely. I guess where I was (mainly) trying to go is that even in the luxury brand sector, individual income tax cuts for HNW people don't provide much pop on the product demand. A good example is Brunswick's yacht lines branded SeaRay. A SeaRay L550 or L650 fits luxury perfectly. Those things are 1.5 million to maybe 3.5 million new depending upon model and options. So it's logical to assume that very HNW business owners who can take advantage of some combination of the individual rate adjustments, pass through benefits and lower corporate rates have a lot of money burning a hole in their pockets. The boat market is super cyclical. I think their sport yacht + yacht sales went up about 8% year over year after the cut and they were something like 5-6% during the pre-cut expansion. So the volume increase (on a really small base of sales) is nothing really. They're selling something like 350 40+ footers a year. The smaller ones are "sport yachts". The models I'm talking about are a bigger class within that group, so they may only sell 30-40. The difference between the tax cut or no tax cut is roughly 1 boat per year. And this is one reason why Brunswick is selling off SeaRay and the yacht side of their marine business. There's a small number of buyers. People who want a yacht and can afford one already have one. Boats depreciate, so they're not "investments". It's the same thing with ultra luxury cars. US sales are up about 1-2% annually. Tax breaks that benefit the folks at the very top of the economic ladder don't do much of anything to spur demand. Even in the categories where you'd expect to see it, because they already have about as many toys as they can deal with. The tax savings gets dumped into investments or stays as cash.
I didn't go there because I don't know anybody who was helped by the tax bill! Eliminating/reducing the state tax, mortgage, and real-estate tax deductions gobbled up whatever gains the lower rates were supposed to deliver. But yes. Once people have bigtime excess assets, giving them more cash doesn't lead to much new spending.
I remember reading somewhere, that tax cuts actually led to price inflation for luxury goods and services, so in a way, it didn't help most of the upper class either.
Why do you think pro sports teams’ values are skyrocketing? The Clippers were never worth $2B. But Ballmer had more money than he knew what to do with, they’re in LA, so.... MLS is benefitting from this. Warren’s wealth tax, if successfully implemented, will lead to a bear market in pro sports.
Seems like mostly right on the lack of Investment side, but the stock buyback may be a bit exaggerated (at least in the first year). https://www.politifact.com/truth-o-...x-bill-lead-virtually-no-new-business-invest/ Then again, perhaps all the buybacks was due to the change in how we tax foreign income. https://www.marketwatch.com/story/y...cut-but-they-havent-put-it-to-work-2018-06-29
Every once in awhile they let little old unwashed me breathe the same the same air from the room. It turns out we got a modest break. That was all down to low state tax, mortgage and real estate tax deductions here though. Had we stayed up there and bought what we were targeting in Oak Park, no way in hell. My property taxes up there would have been almost equal to my mortgage here. Even if the political will was there, it will never be successfully implemented. Guys who can spend 2Bn on the Clippers have ways of moving money that can't be feasibly monitored in any meaningful way. It may not end up getting parked in pro sports teams, but that money will get parked in something.
When Bill Gates gives his money away to try to vaccinate all the poor people in Africa (etc etc) it does make me feel better about how much money I've given to Microsoft over the years. But for every "good" billionaire there is an evil one, like the Koch brothers or Sheldon Adelson. Or Donald Trump.
The Koch brothers certainly give to more than just activities you disagree with. Like Soros, their personification doesn't fit the reality. But haters gonna hate. And to be clear, I don't think Trump has ever given a nickle to a charity without expecting something back from it. That's not philanthropy.
Irony died quietly in its sleep last night. There will be a viewing on Thursday and a small funeral service on Friday.Paul Ryan launches nonprofit organization focused on 'fighting poverty' and economic policy https://t.co/6ZfMih3956— The Hoarse Whisperer (@TheRealHoarse) October 28, 2019
I find the 2017 tax bill to be fascinating. The GOP sold a tax cut that was phantom for many if not most of the people who expected to get a tax cut, that is white-collar suburbanites. Their official tax rate went down, but the elimination of several deductions ate up the potential savings. This elicited relatively little discussion. I would have expected an uproar -- it was a bait-and-switch campaign, and on a topic that people normally care greatly about. The reason for the relative quiet, I think, was that the Republican suburbanites weren't going to complain too loudly about their own party's bill, and Democrats don't typically complain about not receiving tax cuts. So in that sense, the Republican tactic was clever. However, given that the GOP lost the greatest amount of ground in the 2018 elections in the very Congressional districts that were most baited and switched, this bill may be a case of the GOP being too clever for its own good. The voters may have noticed, quietly.
I'm sure that played into the minds of a few people, but I'm not sure this was a major factor. Looking at the approval polling Reuters put together by demographic, the thing that stands out is how remarkably constant things are even within demographic group from about 90 days into DT's term through today. The "swingable" suburban demographic that might be influenced by the tax cut (white, not very conservative or very liberal, at least 100K household earners) have disapproved as strongly in May 2017 as they did when their 2019 tax bill came due. People who are most likely to change their mind tends to be people who are : a) white, b) not particularly socially conservative/liberal and c) of average to above average financial status/education. Most of the suburbs.
Good work. I wasn't sure if the tax reaction was a cause or coincidence. It seems more like the latter. Which does fit my thesis that the swing votes for Trump are based more on cultural reactions than on policy issues. My lifetime Republican neighbors, who had McCain '08 signs and then Romney '12 signs, as long with signs each two years for the local GOP Congressional candidate, abstained from the 2016 election. It wasn't because they thought that Trump wouldn't nominate conservative judges or sign tax cuts, both of which they wanted. It was because he was trash, and they weren't about to vote for trash.
Yeah I think some sat out like your neighbors. Some like my parents made the switch well before election day 2016. In their case from 2004-08. And some went along for the ride understanding he was a dick, only to realize and accept within 90 days of inauguration day that the office wasn't going to change him. He was going to change the office. That last group was important. I think some of the latter sat out midterms or were even moved toward the Dem column. And some of the Dems who saw HRC as less than inspiring actually showed up. What this means in 2020 when younger voter turnout tends to be higher than during midterms will be interesting. Could this mean that +10R house districts are in play? What about +7R Senate seats?
I think the GOP just does straight up electoral self harm these days - in order to satisfy ideology. The media still parrots the meme that they are electoral geniuses but there is little to collaborate that view lately
If GOP voters were cerebral about their options, and they actually assessed their elected representatives based on their deliverance, the GOP should have fizzled as a party right around Bush I. However, the party understood that there were enough voters if they could appeal to racism (in dog whistles) and that they'd have to prevent the democrat votes from counting. There's some genius to it. Putting it in in numbers, I think that they have only won the popular vote in one out of the last 7 Presidential elections (2nd Bush II), and two (or maybe all 3) of their 3 victories have been surrounded by scandal and suspicious episodes. IOW, they are not only favored by our electoral system, but they have found effective ways to cheat and make their votes be counted, while suppressing those of the Democrats.