Trump looks to MOAR tax cuts

Via Reuters:

The White House and Republicans on the House of Representatives tax-writing committee vowed on Wednesday to take “swift action” next year on a 10 percent tax cut for middle-class Americans.

In a joint statement, the White House and the House Ways and Means Committee’s Republican members said they would push the tax-cut legislation at the start of the new Congress, which will be seated in January.

Can’t see why Democrats would object to that. It must remembered that Trump’s low income tax cuts begin the roll-off in H2 2019, which part of the fiscal cliff, so Id be looking for extentions on that front too.

Comments

  1. Might have to rename it to the (maniacal) Laufter curve.

    It is somewhat interesting that he’s (apparently) attempting a complete shift of the tax base from wages to imports.

    Wonder how that’ll pan out.

  2. Aren’t we told half the population doesn’t pay tax ?

    How’s a tax cut going to help them ?

    • You think labour makes up 100% of the cost of repairing a road? I tried to look it up – labour makes up 30% of the cost of building a road in AUS.

      Also, 90% of the jobs in your make work program will be given to foreign “students” anyway. Just like the foreigners who installed the pink batts and the foreigners who are working in the government-funded NBN. Foreigners probably work at government-owned train stations here.

  3. The biggest tax he should cut is payroll tax. Putting a tax on labour…. discourages the use of labour! Not to mention encourages cash-in-hand payments.

    Money should cleanly flow from companies to employees without issue. If all salaries need to be paid electronically to allow income tax auditing, so be it.

    Doing all this would really supercharge the job market, and the only excuse not to have a job would be that the person is too lazy or welfare is too high.

    Then, encourage (or at least don’t discourage) the use of electric scooters to help workers get around extremely cheaply, and support cheap prefab houses/apartments to lower the cost of rent. Reform the food system a bit to encourage fitness so people can fit on those scooters and in those houses. Take the illegal immigrant and refugee intake down to zero to support the low-end of the labour market. Cut all unemployment welfare and use this to increasingly lower income taxes.

    You have the makings of a utopian capitalist society where everyone must work to earn a decent living, and their potential earnings are limited only by their capability.

    • The biggest tax he should cut is payroll tax. Putting a tax on labour…. discourages the use of labour! Not to mention encourages cash-in-hand payments.

      Money should cleanly flow from companies to employees without issue. If all salaries need to be paid electronically to allow income tax auditing, so be it.

      Doing all this would really supercharge the job market, and the only excuse not to have a job would be that the person is too lazy or welfare is too high.

      Employers would hire more workers out of the goodness of their hearts ?

      • All transactional taxes (including payroll tax) incur deadweight loss representing those transactions which would have proceeded in the absence of the tax but do not proceed with it, unless there is zero elasticty in supply and demand.

        One proposal is to make payroll tax a GST credit. Payroll tax is the effectively the GST on the labour inputs.

        Better still (IMO) would be to move entirely to non-transactional taxes on:

        a) rent; or

        (b) the capitalised value of expected future rent (i.e. wealth).

        In principle this offers the extraordinary double benefit of:

        a) increasing efficiency by eliminating deadweight losses; and

        b) reducing inequality.

        Unfortunately it would mean more tax paid by the largest recipients of rent (i.e. the wealthy) who in most jurisdictions are also the most politically powerful. This may explain why Switzerland in the only country to collect significant (about 1% of GDP) amount of tax from annual wealth tax.

        Also there is the problem of communal rent seeking discussed here:

        https://www.macrobusiness.com.au/2018/09/garnaut-time-tax-bomb-rent-seeking-roach-plague/#comment-3179833

      • Morris…

        Problem numero uno with dead weight loss theory [tm] e.g. supply and demand curve based on so called rational agent models with a dash of atomatistic individualism.

        Numero dos is its a corner stone of the anti tax posse that has a hard time applying in when it conflicts with their broader ideological perspective e,g, per se a wealth tax.

        That’s without getting in to all the wonky stuff to do with labour markets and the decades of tripping over loanable funds theory contra to the works of Kaldor, Turner, and Keynes decades before, but you’ll get that when people write fiction.

        You should be well aware of this stuff when presenting your camps preferences [tm] IMO.

      • Here let me make that really simple –

        “A deadweight loss, also known as excess burden or allocative inefficiency, is a loss of economic efficiency that can occur when equilibrium for a good or a service is not achieved.”

        Firstly excess burden is not quantified e.g. what is excess or what does burden mean, as well inefficiency.

        Moving along the dreaded “equilibrium” is uttered e.g. a fantasy world with two binary traders that always find the right price, that is except in reality where you can trade more than three ways.

        But we all know this was the rational for deregulation and freebies to the corporatist wealth set.

  4. Makes sense. The current round of tax cuts are being payed for by the tariffs on chinese goods which is zeroed out on the chinese side by the Yuan. With new tariffs coming in force at the end of 2018 these will cover new tax cuts and the yuan will move to accommodate them.

    Business’s that complain about a so called trade war hurting the bottom line are blowing out their butts it’s all zero’d out,(hence the increase in trade between china and the US) it’s the Rodger David syndrome, blame everything except management.