Poll Of Economists - Trump Tax Plan Won't Work

[Loren Pechtel]

I guess it depends on how you define "work."

Will the GOP tax plan "work" to spur growth in the economy? Probably not, because the economy has already recovered. We're at or near full employment, the housing market has recovered, corporate profits are doing fine, and the stock market is at record highs. Cost of living is low, inflation is low, basically the economy is firing on all cylinders.

The GOP plan is based on a false premise - that the economy is weak. We can argue all day long whether tax cuts can spur a weak economy or lead us out of a recession, but the fact is that the economy isn't weak at all, and the recession is (relatively) a distant memory. We need tax cuts like a person who has recovered from an infection years ago needs another round of antibiotics.

I disagree. There's no question the GOP tax plan will spur economic growth.

The problem is the size of the result--the GOP is assuming a much bigger effect than really will happen.

 

[whollygoats]

Economic spectrum disorders (EcSpecDis) are characterized by social-interaction difficulties, communication challenges and a tendency to engage in repetitive behaviors. However, symptoms and their severity vary widely across these three core areas. Taken together, they may result in relatively mild challenges for someone on the high functioning end of the spectrum of economic theory. For others, symptoms may be more severe, as when repetitive behaviors and lack of spoken language interfere with everyday economic life and political functioning.

Heh...Changing a few words in the 'autism' definition seems to work quite well.

 

[whollygoats]

I disagree. There's no question the GOP tax plan will spur economic growth.

The problem is the size of the result--the GOP is assuming a much bigger effect than really will happen.

Yeah? How do you figure?

I think there is a YUGE question as to whether the GOP plan will spur economic growth. I think it may well hinder economic stability and undermine the republic.

The problem is not the bigger size of the net result, but whether there is any increase in growth at all.

If there is growth, then there are the questions of what kind of growth and what kinds of opportunity costs were undertaken to obtain that growth. Also, how is it that what growth occurs is as result of these policies? What is the lag time and analytical processes necessary to ascertain any of this? Other decisions do not obviate growth...it is not some zero sum game.

 

[Jason Harvestdancer]

Will the GOP tax plan "work" to spur growth in the economy? Probably not, because the economy has already recovered

And once again I'm at odds with both sides, since I do not think the GOP tax plan will spur growth, and I do not think the economy has already recovered.

The GOP plan is based on a false premise - that the economy is weak.

It is possible to see a real problem and come up with the wrong solution.

 

[jonatha]

Here's an example of what's likely to happen....

My wife is the majority shareholder in an S corporation in which she actively participates. At one point we refinanced our house and used the money to pay down a business loan (home mortgage rate was quite a bit lower than the business rate).

Now that it looks as though we won't be able to deduct the mortgage interest (we won't have enough in other permitted deductions to bring the total above the expanded standard deduction), we'll probably reverse the polarity and take out a business loan to pay off the mortgage (business interest is probably going to remain deductible).

Might perhaps add some work for the loan officer down at the bank, but I doubt it will result in higher employment or higher wages for anyone.

Multiply by 10 million or so for the overall economic effect.

 

[Elixir]

I guess it depends on how you define "work."

I disagree. There's no question the GOP tax plan will spur economic growth.

Ford is right, and I disagree with Loren. There is absolutely no reason to think that trickle-down nonsense has become a better idea than it was last time the 'thugs tried it.
But whether this tax-shifting proposal would "work" is completely dependent upon how you define "work".
I am certain that it would accomplish the goals of its proponents, i.e. placate the right wing donor class with some nice 10-11 digit numbers of windfall dollars for each of them...

 

[ZiprHead]

Now that it looks as though we won't be able to deduct the mortgage interest (we won't have enough in other permitted deductions to bring the total above the expanded standard deduction), we'll probably reverse the polarity and take out a business loan to pay off the mortgage (business interest is probably going to remain deductible).

How does one use a business loan to pay off a home mortgage?

 

[Loren Pechtel]

I guess it depends on how you define "work."

I disagree. There's no question the GOP tax plan will spur economic growth.

Ford is right, and I disagree with Loren. There is absolutely no reason to think that trickle-down nonsense has become a better idea than it was last time the 'thugs tried it.
But whether this tax-shifting proposal would "work" is completely dependent upon how you define "work".
I am certain that it would accomplish the goals of its proponents, i.e. placate the right wing donor class with some nice 10-11 digit numbers of windfall dollars for each of them...

You'll have more capital chasing returns, that drives down the cost of capital and causes more investment. Economics 101.

The problem is the GOP thinks the effect is a mountain when in today's economy it's a molehill.

 

[whollygoats]

Well, Loren, I think your Economics 101 has its own set of problems.

I tend to lean with these two economists, Michael Hudson and Steve Keen. So far, they've pretty good track records.

These are economists I think you should heed.

I consider my outlook to be 'post-Keynesian'. I tend to think that Keynesian economics was mugged and raped and left for dead. Proof was Nixon being attributed with Milton Friedman's assurance that, "we are all Keynesians now". For me, that was a sure sign of its probable permanent incarceration, having been educated in the shadow of Uncle Milty and his Chicago thugs.

 

[jonatha]

Now that it looks as though we won't be able to deduct the mortgage interest (we won't have enough in other permitted deductions to bring the total above the expanded standard deduction), we'll probably reverse the polarity and take out a business loan to pay off the mortgage (business interest is probably going to remain deductible).

How does one use a business loan to pay off a home mortgage?

Business borrows money.

Business uses money to pay dividend.

Shareholders use received dividend to pay off mortgage.

 

[ZiprHead]

Now that it looks as though we won't be able to deduct the mortgage interest (we won't have enough in other permitted deductions to bring the total above the expanded standard deduction), we'll probably reverse the polarity and take out a business loan to pay off the mortgage (business interest is probably going to remain deductible).

How does one use a business loan to pay off a home mortgage?

Business borrows money.

Business uses money to pay dividend.

Shareholders use received dividend to pay off mortgage.

Ah, okay. Got it.

 

[whollygoats]

I rather think that if I knew that a firm I'd invested in was borrowing money to pay dividends, I'd unload the shares tout suite, suspecting that they were involved in poor business practices or engaged in illicit tax avoidance.

A shareholder has sufficient power to float a loan for a publicly held corporation to pay dividends so that they can pay the mortgage on their private home? Seems tenuous.

 

[jonatha]

I rather think that if I knew that a firm I'd invested in was borrowing money to pay dividends, I'd unload the shares tout suite, suspecting that they were involved in poor business practices or engaged in illicit tax avoidance.

A shareholder has sufficient power to float a loan for a publicly held corporation to pay dividends so that they can pay the mortgage on their private home? Seems tenuous.

It's not a publicly held corporation.

ETA Although publicly held corporations routinely take on debt in order to maintain a dividend

 

[Ford]

Serious question:

Is there an economic problem in the last 3 or 4 decades that the GOP hasn't proposed to fix with a tax cut?


Recession? Tax cut.

Recovery not going well? Tax cut.

Economy humming along fine? Tax cut.


And of course the tax cuts always help the top tier. So if the economy is crashing, we're supposed to cut taxes for the rich. If the economy is going great, we're supposed to cut taxes for the rich. If everything is kinda mediocre, we're supposed to cut taxes for the rich.

Is there any economic situation where the GOP's answer isn't "hey let's cut taxes on the rich?"

 

[Harry Bosch]

I rather think that if I knew that a firm I'd invested in was borrowing money to pay dividends, I'd unload the shares tout suite, suspecting that they were involved in poor business practices or engaged in illicit tax avoidance.

A shareholder has sufficient power to float a loan for a publicly held corporation to pay dividends so that they can pay the mortgage on their private home? Seems tenuous.

It's not a publicly held corporation.

ETA Although publicly held corporations routinely take on debt in order to maintain a dividend

Banks don't like to finance distributions. In fact, excess distributions are one of the largest reasons for bank denials of credit. To distribute more than a company generates in net income is a big warning sign for banks.

 

[Worldtraveller]

I disagree. There's no question the GOP tax plan will spur economic growth.

Ford is right, and I disagree with Loren. There is absolutely no reason to think that trickle-down nonsense has become a better idea than it was last time the 'thugs tried it.
But whether this tax-shifting proposal would "work" is completely dependent upon how you define "work".
I am certain that it would accomplish the goals of its proponents, i.e. placate the right wing donor class with some nice 10-11 digit numbers of windfall dollars for each of them...

You'll have more capital chasing returns, that drives down the cost of capital and causes more investment. Economics 101.

The problem is the GOP thinks the effect is a mountain when in today's economy it's a molehill.

The problem with this thinking is that even if it's true, it only benefits the investing class and the investment part of the economy, which is moderate in terms of dollars, but tiny in the number of people it actually benefits.

 

[Harry Bosch]

Ford is right, and I disagree with Loren. There is absolutely no reason to think that trickle-down nonsense has become a better idea than it was last time the 'thugs tried it.
But whether this tax-shifting proposal would "work" is completely dependent upon how you define "work".
I am certain that it would accomplish the goals of its proponents, i.e. placate the right wing donor class with some nice 10-11 digit numbers of windfall dollars for each of them...

You'll have more capital chasing returns, that drives down the cost of capital and causes more investment. Economics 101.

The problem is the GOP thinks the effect is a mountain when in today's economy it's a molehill.

The problem with this thinking is that even if it's true, it only benefits the investing class and the investment part of the economy, which is moderate in terms of dollars, but tiny in the number of people it actually benefits.

? The cost of capital affects every company in the country. Even a company with no debt is affected as there is a cost to equity.

 

[Worldtraveller]

You'll have more capital chasing returns, that drives down the cost of capital and causes more investment. Economics 101.

The problem is the GOP thinks the effect is a mountain when in today's economy it's a molehill.

The problem with this thinking is that even if it's true, it only benefits the investing class and the investment part of the economy, which is moderate in terms of dollars, but tiny in the number of people it actually benefits.

? The cost of capital affects every company in the country. Even a company with no debt is affected as there is a cost to equity.

How much does it help the cashier working at Kmart?

Hell, they even interviewed a couple of CEOs who basically told them trickle down was BS (they weren't going to hire more people because their companies were making more profit), and those are the ones who support the idea of the trickle down myth.

 

[Harry Bosch]

The problem with this thinking is that even if it's true, it only benefits the investing class and the investment part of the economy, which is moderate in terms of dollars, but tiny in the number of people it actually benefits.

? The cost of capital affects every company in the country. Even a company with no debt is affected as there is a cost to equity.

How much does it help the cashier working at Kmart?

Hell, they even interviewed a couple of CEOs who basically told them trickle down was BS (they weren't going to hire more people because their companies were making more profit), and those are the ones who support the idea of the trickle down myth.

A lot, if you compared that cashier to the cashier who used to work at Sears! There are a lot of former Sears workers who wished their company had made better decisions. Trickle down does work. There is a benefit when an owner has more money in his pocket. A stronger company tends to hire more, buy more capital equipment, pay better benefits, and etc. However, the real argument is that it is very inefficient and expensive. The rich are doing fine. It's the middle and lower classes that need to be boosted up. Secondly, any tax cut will increase the deficit. Deficits are paid back by lower taxes in the future, reduced government spending, or inflation. Either way, all three of these hurt the working class far more than the upper class.

 

[Shake]

NPR yesterday was reporting that provisions of this plan would increase premiums under the ACA. So, it sounds like just a way to try to make it fail and kick more people off of their coverage.