after hot debate us tax bill a boon to businesses
Last Updated : GMT 09:07:40
Egypt Today, egypt today
Egypt Today, egypt today
Last Updated : GMT 09:07:40
Egypt Today, egypt today

After hot debate, US tax bill a boon to businesses

Egypt Today, egypt today

Egypt Today, egypt today After hot debate, US tax bill a boon to businesses

U.S. Sen. Orrin Hatch (R-UT) (C) is surrounded by members of the media
Washington - AFP

Is it a giveaway to the rich or a relief for the middle class? A boon for business or unnecessary stimulus for an economy already at full employment? 

The sweeping tax reform package adopted by a slim margin of 51-49 early Saturday by the Republican-controlled Senate has sparked fierce debate among economists.

It also has yet to be reconciled with a separate version passed by the House of Representatives.

But the proposal's main planks included a reduction in corporate tax rates from 35 to 20 percent, increasing some deductions for individual taxpayers while eliminating many others and reducing taxation on partnerships. 

The White House portrays the new tax package as the largest tax cut in US history and says it is aimed at spurring growth and producing higher wages and corporate profits while encouraging tax-shy companies to repatriate their wealth.

One of the proposal's main boosters, Treasury Secretary Steven Mnuchin, recently touted a letter from nine economists who asserted that the first comprehensive tax overhaul in three decades would lift annual GDP growth by 0.3 percent over 10 years.

But a University of Chicago study found that among 38 economists, the overwhelming majority doubt growth will increase and nearly all believed it would balloon the national debt.

The Joint Committee on Taxation, a nonpartisan committee which estimates the cost of tax policies, also found Thursday the bill now passed by the Senate would add $1 trillion to the deficit.

Many economists argue that this kind of stimulus has limited impact when the economy is growing at its full potential pace.

Disagreements have at times turned personal, with former Labor Secretary Robert Reich, a Democrat, writing in an opinion piece on Wednesday that Mnuchin was either a "fool or a knave," accusing him of lying about the supposed benefits of the tax overhaul.

 

- Is now the right time? -

 

Reich cited the findings of the Tax Policy Center, according to which over a decade most of the proposal's benefits are likely to go to the wealthiest one percent of Americans while the upper middle class would likely face a higher tax burden and the poorest would see only small tax cuts.

But according to Douglas Holtz-Eakin, one of the economists who signed the letter cited by Mnuchin, said the modified new tax code aims to boost production and supply, rather than demand.

Entrepreneurs are among the first who stand to gain, with corporate tax rates falling as much as 15 percentage points, supposedly down to a level in line with those in other developed countries. 

But US companies have long benefitted from tax deductions that brought their effective tax rate down to around 21 percent.

Another boon for the business world: partnerships and other so-called "pass-through" companies whose profits are enjoyed directly by their owners -- and which account for half of corporate revenue and 90 percent of small businesses -- will see steep tax cuts.

Multinational companies also will be encouraged to repatriate their profits at a preferential tax rate.

According to Holtz-Eakin, these changes are all incentives for innovation and investment that will drive productivity in the United States.

However, as White House economic adviser Gary Cohn found while attending a business conference recently, many companies plan to use excess cash from the tax cuts to increase their dividend rather than invest in equipment or hire more workers.

President Donald Trump's administration argues that wages should rise after having stagnated for decades when accounting for inflation.

Holtz-Eakin said productivity gains should make hiring workers more profitable and cause companies to compete for available labor by offering higher salaries.

Others call the timing of such a tax overhaul into question, given that the world's largest economy is already close to full employment and the Federal Reserve is poised to pounce on any sign of inflation by raising interest rates.

Lloyd Blankfein, the CEO of Goldman Sachs, expressed similar doubts last month in an interview with Bloomberg.

"I can't say this is the moment where you want the most fiscal stimulus in the market, when we’re mostly at full employment, when GDP last registered at 3 percent," he said

egypttoday
egypttoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

after hot debate us tax bill a boon to businesses after hot debate us tax bill a boon to businesses



GMT 15:49 2011 Friday ,10 June

Oil firm wins injunction against Greenpeace

GMT 10:27 2015 Monday ,06 July

Mini to launch ‘Clubman’ in 2016

GMT 17:21 2011 Wednesday ,23 February

Lampard Desperate To Win The Champions League

GMT 10:13 2018 Tuesday ,09 January

Barcelona to unveil 160m Coutinho

GMT 23:03 2017 Monday ,16 January

Bank of Korea: Money Production Cost Rise in 2016

GMT 20:33 2011 Friday ,06 May

Asad\'s army arrests all men over 15 in Daraa

GMT 11:55 2011 Tuesday ,29 November

Ultrabooks could save the PC

GMT 13:02 2012 Saturday ,01 September

Zombies and Morons compete

GMT 07:31 2017 Tuesday ,20 June

Sisi keen on attaining unity

GMT 11:50 2015 Saturday ,26 September

The Library of Fragrance announces January launches

GMT 06:28 2014 Saturday ,18 October

Asian Junior Volleyball tourney kicks off in Bahrain

GMT 13:31 2016 Saturday ,13 February

Greek farmers clash with police

GMT 07:40 2012 Friday ,06 July

Deeds, not words, matter the most

GMT 14:16 2016 Wednesday ,23 November

Gigi sorry for ‘racist’ Melania Trump impression

GMT 22:52 2011 Tuesday ,26 April

Nigeria prepares for parliamentary elections

GMT 20:35 2016 Tuesday ,04 October

Paris climate deal: EU backs landmark agreement

GMT 10:50 2016 Thursday ,01 September

India's Reliance announces launch

GMT 09:34 2016 Friday ,30 September

Rosetta spacecraft set for final comet crash landing

GMT 06:27 2017 Wednesday ,28 June

Rakeen Georgia ex-CEO faces trial in Georgia
 
 Egypt Today Facebook,egypt today facebook  Egypt Today Twitter,egypt today twitter Egypt Today Rss,egypt today rss  Egypt Today Youtube,egypt today youtube  Egypt Today Youtube,egypt today youtube

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

egypttoday egypttoday egypttoday egypttoday
egypttoday egypttoday egypttoday
egypttoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
egypttoday, Egypttoday, Egypttoday