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15 hours ago, KM... said:

But wait, under Trump the US median wage rose $6000.

Under Obama/Biden they rose less than $100.

 

As I was in a wee rush I used a site which I tend to keep clear of as it's accuracy is somewhat questionable on many subjects. As this one involves trump the chances its accurate a pretty slim thinking about it now. Due to that I did credit Obama/Biden with 2 more years in the White House then they actually had. Due to that the 100 is incorrect, it's more like 2K round figures over their 8 year term

Which coincidently is the 2nd largest rise in recent decades. The only team to do better and it was considerably better* was the Trump/whomever it is pairing.

* - The Trump/whoever pairing raised the median wage $4000 in 2018 alone so twice what Obama/Biden did in 8 years.

Many pundits credit that to Trump dropping US Corp taxes from being very high by global standards to only being a bit up there by global standards. In doing that companies paid their staff more. It's called trickle down, you know the thing most in this thread spend a lot of effort trying to pretend doesn't exist 😛

As a FYI, US Corp taxes are still nicely above the global average but below NZ's. Both country's suffer 'entitlement' issues hence have higher taxes compared to the countries with good productivity, unlike the US and NZ.

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What a bunch of hypercritical history rewriting intolerant woke twats. Actually worse than that when AJ demonstrates such deep ignorance of his own countries history.

Yet again I called it correctly, a senile old corrupt racist won. Not to sure I like the idea of the US being headed by a proven war monger though, that's a bit scary especially when watching him

The media is horrendously left, even more in the US than in NZ*, and the total lack of balance it produces is behind most of the whole shitfight. * - according 2 studies by 2 Unis, one being Otag

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29 minutes ago, KM... said:

Unless you can give me a good reason not too I am going to run with the US Dept of Statistics numbers over those put out by some random...who may or may not but more than likely does have an agenda.

Cool, so NOT wages, household income.

Uncool, still no link to the actual data you are referencing.  So I've again included references and to make you happy they are from US census.

Numbers are great, but it helps to know exactly what they are so you can understand what they might mean. 

Important side note - household income is not personal wages income.   Median household income can actually DROP in times of prosperity and rising incomes as households reduce in size eg adult children move out because they can afford to, so the household income drops.  The current median household income in USA is around $68k, the median earnings is around $58k

Second important side note - there is a significant delay between an economy-wide change and its flow-on to employment and wages.  Even moreso into household income.  You can see this in the time series data for wages and employment and household income.  In a recession, employment goes down quickly, wages stagnate and then drop, household income can increase or decrease (last) as people make long-term living situation decisions eg:

an employed person loses their job of has reduced hours (immediate impact) and their income reduces (some delay in impact).  Ultimately, they decide to move in with other family/friends and household income of the consolidated households increases.

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1 hour ago, KM... said:

Many pundits credit that to Trump dropping US Corp taxes from being very high by global standards to only being a bit up there by global standards. In doing that companies paid their staff more. It's called trickle down, you know the thing most in this thread spend a lot of effort trying to pretend doesn't exist 😛

Many others point out that a significant chunk of the wage growth was due to states increasing hte minimum wage.

https://www.usatoday.com/story/money/2020/02/07/minimum-wage-2020-trumps-blue-collar-boom-due-higher-pay-floors/4682939002/

Overall, TRump has not done anything during his term that can be directly linked to the economic gains of 2016-2019.  In reality, he was the recipient of the timing effect.  His failure to act on Covid has definitely and identifiably contributed ot the dramatic and sudden economic decline in 2020.

https://www.bbc.com/news/world-45827430

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Just jumping in to add clarification as many of these comments intersect with my "day job".

The U.S. corporate tax rate is a combination of the state tax rate and the federal tax rate.  State taxes are deductible against federal taxes so you don't just add the two together, but take off the federal tax benefit of the state tax deduction.

As a result, the highest combined corporate tax rate applies to a company in Iowa.  If it were taxed only in Iowa, its corporate tax rate is 30.5%, which is higher than both Australia and New Zealand.  Conversley, four states have no corporate income tax, so the federal rate  of 21% applies - obviously below N.Z.

In reality most companies of any any size do business in multiple states and so share their tax bill around those states.  A corporation taxed across many states often comes out at about +/- 26%. which is still below New Zealand.

Many states have marginal rates, but these phase out quickly and are intended to benefit small businesses.  I apologize; my numbers ignore marginal rates because they are a rounding difference in my field, but that would be a worthwhile comparison for  N.Z. companies - most of which are relatively small.  The tax rates would be a little lower.

It is important to understand that when the federal rate dropped from 35% to 21% on January 1, 2018, there were many other adjustments to corporate tax law here.  A major change was to the way the U.S. taxes multi-national operations.  It provided a "carrot and stick" approach which penalized certain activities and benefited others.  I have observed that many multi-nationals have seen about 2% added to their tax bill by the "stick".  In time I expect this to move down as they modify behavior towards the carrot.

A final comment on the origin of the corporate tax changes made under the Trump regime.  As an individual responsible for my (then) employer's voice at the table of a significant lobbying organization, I had an inside view.  It is important to understand that the drive for tax reform was bipartisan.  Well before Trump announced his candidacy, the kernel of what became the 2017 tax reform was taking shape behind closed doors via representatives from both parties, and interested groups (such as the one I sat on).  There were partisan disagreements around detail, not the least of which was the 21% tax rate, but the basic architecture was not really an issue - though many toward the more left-leaning side of the Dems would say otherwise.    

It is not my job to express opinion here, but it is fair to say that while many on both sides agreed in principle on the issues and approach that ultimately became law (or at least accepted them), the Demorcrat side felt that the rates chosen went too far.  So I do not expect major change to the architecture, but we may see the 21% federal rate walked back a little if the Dems end up with sufficient support in the Senate (which is very uncertain right now).  The federal deficit v GDP ratio has sunk to Great Depression levels since the tax cuts, but it is nothing like as bad as WW2, and only about equal to what was seen on the early 1980s.  It has not yet sunk to Great Recession levels  of 2009.  I can pull up sources if needed but the government sites are there to be searched.

If you are still awake, you've done well.  I'm off to check out the Vendee Globe update.  That is one cool race.

 

 

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1 hour ago, MuzzaB said:

A final comment on the origin of the corporate tax

As you well know the corporatists, of both parties as you correctly point out, 

have "hollowed out" US tax enforcement . . 

The wealthy dodge hundreds of billions in taxes per year - even at currently reduced rates. 

You are Exhibit One as to why our tax structure is skewed to the One Percent; there is big money 

in tax avoidance, dodging, and evasion. 

When I write "our", I mean the US - but NZ has had a big bout of concentrating capital as well. 

Yes, the Vendee is a cool race. 

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Here is a good book that describes the link between tax policy, lax enforcement and exploding inequality in the US; and what to do about it. 

(In deference to KM I'll point out that those policies were bi-partisan, although led by the GOP.) 

I have no idea whether or not something similar happened in Aotearoa. 

https://www.goodreads.com/book/photo/45894166-the-triumph-of-injustice

 

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On 25/11/2020 at 10:18 PM, Black Panther said:

Hey Muzza.  How much tax income was lost as a result? Or is that the deficit increase?

First - the raw data.  The IRS databook for 2017 (so before the law changes) states that net federal corporate income tax collections were $293.6 billion.  For 2019 it was $225.8 billion.

https://www.irs.gov/statistics/soi-tax-stats-irs-data-book-index-of-tables

The 2018 year was a transition year between the pre and post law change effects.

So that is a drop of $67.8 or 23%.  The federal tax drop from 35% to 21% is a 40% drop - in other words federal corporate tax collections dropped by less than the drop in the baseline tax rate.  There are many reasons for this (which I alluded to in my earlier post) - probably not of interest to this group but I will answer questions if asked.

To put the corporate taxes into perspective, net federal tax collections from all sources were $2.980 trillion in 2017 and $3.112 trillion in 2019 - so up by about 4.4%.  This was driven primarily by federal personal income tax which was up despite the drop in personal income tax rates.  So we paid tax at a lower rate - but paid more of it.

Second - we can draw many types of conflicting conclusions from these data, often depending on our perspective and which additional questions we ask?  What were the numbers adjusted for inflation?  What were they as a ratio of GDP?  What were they per band of household income and so on?

I mentioned the federal deficit as a ratio of GDP.  That has worsened despite net tax collections increasing.  Yes - federal government spending has increased by more than collections in 2018 and 2019.  

https://www.whitehouse.gov/omb/historical-tables/

My field of interest is the behavioral impact of tax policy.  With that in mind I will add two observations: 

1. the further "downstream" we get from something, the harder it is to distinguish the influence of that thing (e.g. - a tax rate drop) on the downstream behavior.    For example, the U.S. Bureau of Economic Analysis (bea.gov) tracks consumer spending and savings ratios.  In Q2 and Q3 of 2020 we have seen the ratio of saving to disposable income jump up.  This is in the middle of a pandemic-induced recession when many people have lost their jobs or seen drops in their earnings.  So why are we in the U.S. saving more?  Is it because we are enjoying tax cuts (thank you politicians)?  Is it because we can't spend on our holidays abroad and domestically (thank you Covid)?  Or is it because we are all sh*t scared of the uncertainty in the world and have shut down our discretionary spending (thank you to our sense of prudence and caution)?  The answer depends on individual circumstances and is probably a mix of all three (and more).  So when someone says we are saving more because of tax cuts - I think that is hard to support using data alone as I believe what we are seeing is a behavioral response to a large combination of factors.  For some people it may be true - for others it is irrelevant.

Here is an analogy.  Your arch rival beats you to the bottom mark after a light-airs run.  You know that you can usually beat him.  You know that he has just had the hull cleaned.  Did that make the difference?  Of did you get your gybe angles wrong?  Did he get a better breeze, or should you have changed to the lightweight sheet on the spinnaker?

Isolating the effect of a tax change in a set of macro-data which a bunch of other variables ain't easy.

2.  The way we perceive taxes depends a lot on how taxes impact our behavior.  In the U.S. our personal federal taxes are subject to a "standard deduction" and certain other tax relief items which reduce the base on which taxes are calculated.  As a result a large percentage of the U.S. population pays no personal federal income tax.  Plus or minus half of us do not earn enough, after the standard deduction and adjustments, to pay federal income tax - but we do pay state income taxes (in most states) and of course we usually pay sales taxes (most states) and various excise taxes.  So for that half of the population, Trump's tax cuts had zero behavioral impact.   How much impact did it have on their voting decision?  I don't know.

The bottom line - given just two facts:  net federal corporate tax collection went down over 2 years, and total federal tax collection went up - two persons at each end of the political spectrum could each argue that these facts are the evidence that their view is the right one.

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