The Tax Cuts and Jobs Act (2017) has moved thru Congress strictly along partisan lines.
Based on scant reporting, I’m a NAY. [Dec 20, 2017]
The short term “gain” is more money in taxpayers' pockets. However, that advance is paid via additional federal debt.
IMHO, prosperity cannot rise from increased debt.
The immediate impact is $ 146,000,000,000 LESS federal receipts. With a bigger annual deficit… the out-of-control federal spending is NOT addressed, and the federal debt is further aggravated.
Will this tax cut invigorate US businesses? How will US businesses spend this $ 146,000,000,000 “gain”? Will there be more jobs, more capital equipment purchases, more executive bonuses, or more cash reserves? And, $ 695,000,000,000 additional corporate profits will be necessary to reach pre-TCJA CIT (see chart below).
IMHO, because of continuing uncertainty… money will be held and execs will become richer. This means middle and lower wage workers will NOT profit; the opposite effect expressed in GOP rhetoric.
Reducing the Estate Tax1 (a.k.a. Death Tax) will reduce double-taxing - as income (when earned) and at death. Some additional surviving beneficiaries will NOT have a tax burden amidst their loss.
Doubling the Standard Deduction1 will reduce taxes for most taxpayers. It may also simplify tax preparation; more middle income citizens will cease itemizing deductions.
1 Keep in mind, less tax receipts will increase an annual deficit and aggravate an already massive federal debt.
Deduction of state and local taxes will continue to subsidized state budgets. The money extorted by states does NOT go to the federal gov’t. These lost federal receipts directly enrich high-tax states; the higher the state tax, the greater the benefit to the state… a de facto federal subsidy.
Increased Child Credits reduce federal receipts and favor parents (a winner) with young children. All other taxpayers do NOT receive a benefit (the losers). Is this a tax policy nudge to have children?
Gov’t should NEVER pick winners and losers.
Item Corp Profits
CIT to Federal Gov't
Notes Calculation A $ 1,042.857 35% $ 365.000 CIT - Pre-TCJA A$$ times A% B 21% 219.000 CIT - Post-TCJA A$$ times B% C 146.000 LOST CIT, an addition to the federal deficit A$ minus B$ D 695.238 Additional profits to recoup LOST CIT C$ divided by B% E 66.7% Additional profits – percent of annual profits D$$ divided by A$$
Amounts is $ Billion TCJA is the Tax Cut and Jobs Act CIT = Corporate Income Tax
Web Author - Mike Kolls