US tax cuts and the consequences

[razz]

The motive driving the tax cuts which increased the debt load was to bring home investment and create jobs. Is that happening? I have read where of the 8,000,000 jobs lost, only 2 million were off-shored, the major loss was triggered by automation. Some food for thought...

https://www.cbc.ca/news/business/sha...ocks-1.4902823
In fact, the name of the bill said it all. When the tax-cutting legislation was presented to Congress at the end of last year it was introduced as the Tax Cuts and Jobs Act.

Yet, despite the plunging U.S. unemployment rate, jobs continue to go abroad while investors get rich on speculation...

Calculations by the London Financial Times show that so far this year, five of the biggest U.S. technology companies, including Apple and Google parent Alphabet, spent a combined total of $115 billion buying back their own shares.
That's about double the amount those companies spent on share buybacks in the previous year, before Trump's tax cuts kicked in. And it represents only a fraction of the estimated $1 trillion US paid back to shareholders of tech and non-tech companies...

Rochon says short-termism compounds the problem. Rather than waiting for a long-term investment to pay off at five to seven per cent a year, shareholders and managers — who are paid bonuses tied to their stock price — want to see shares rise now. Share buybacks solve that dilemma...

"These companies are going to have a problem," he says. "We're going to see old technology, the need for reinvestment, and we're going to look back and say, 'We should have invested 20 years ago instead of buying back.'"...

And any of the buyback money that disappears as share prices fall might just as well have been left in the public purse to invest in things like infrastructure and health care and education for the poorest — things that really could make America great again...

https://www.bbc.com/news/world-us-canada-42170100
Up to 800 million global workers will lose their jobs by 2030 and be replaced by robotic automation, a new report from a consultancy has found.
The study of 46 countries and 800 occupations by the McKinsey Global Institute found that up to one-fifth of the global work force will be affected.
It said one-third of the workforce in richer nations like Germany and the US may need to retrain for other jobs.

[iris lilies]

“...MAY need to retrain for other jobs?” Ok. I think it is bloody necessary.

But to your larger point—I have learned in my advanced age that several economists looking at the same set of facts will draw different conclusions. And then, the gubmnt can gen up or down measures in various ways.

I have two measures in evaluating the economy here, 1) how are my personal assets doing 2) are we still hip deep in deficit spending?

So according to my measures, one good thing and one bad thing is happening. The bad thing is very very screwed up Bad.

But—how are things up North? Canada has its deficits as well.

Can you point to any obvious bias in the article you linked?

[Teacher Terry]

Tax cuts to the rich make the deficit so much worse. Then of course let’s cut Medicare, SS, etc. Totally FUBAR.

[Alan]

Can you point to any obvious bias in the article you linked?

I can: "And any of the buyback money that disappears as share prices fall might just as well have been left in the public purse to invest in things like infrastructure and health care and education for the poorest — things that really could make America great again..."
This seems to imply that money owned and managed by the private sector provides less public value than that same money if it were in public (government) control. It's a statist opinion.

[dado potato]

Statist: advocating the state having centralized control over social and economic affairs.


The term has been used since the 1850s, perhaps most prominently by Ayn Rand. A statist is a man who believes that some men have the right to force, coerce, enslave, rob, and murder others... The basic principle and the ultimate results of all statist doctrines are the same: dictatorship and destruction. --Capitalism: The Unknown Ideal


Living in Wisconsin, I am agnostic about the public purse being invested in infrastructure. In theory the state hires private contractors to build and repair highways, and the completed projects improve the quality of life for everybody who depends on those highways for transportation. But in practice infrastructure spending sets up winners and losers. For example in our state earlier this year, $90 million in funding for planned highway projects around the state was shifted to build roads for the Foxconn Technology Group's new flat-screen manufacturing plant in Racine County. As President Donald Trump, outgoing Governor Scott Walker, and outgoing Speaker Paul Ryan have promised, The Foxconn plant will employ "up to 13,000 workers".


Winner: Terry Gou's Taiwan-based Foxconn, whether the flat-screens will be made by humans or robots (likely both), gets $90 million worth of good roads.
Wisconsin also promised Tony Gou an incentive payment of $470 million in the next budget. In WI budget bills are prepared by the Governor (formerly Scott Walker, now Tony Evers). There is some concern expressed by Republican legislators in Madison, that Tony Evers better not "mess up" the Foxconn deal.
On the hiring front "up to 13,000 workers" will have jobs in the village of Mount Pleasant. In September the firm is said they planned to recruit veterans in 13 states, and by doing so, qualify for up to $29 million per year in tax credits. The Returning Heroes Tax Credit allows up to $5,600 per veteran hired. The Wounded Warrior Tax Credit allows up to $9,600 per veteran with a disability hired.
Although the company has created tough working conditions in some of the plants in Asia, one hopes that their American workers would feel like winners.

Losers: US News and World Report ranked WI road and highway quality 49th of 50 states. The state has potholes and congestion for drivers to cope with.
I don't envy Tony Evers budgeting problem. It's an unknown how the governor will incentivize Foxconn $470 million, without cuts to education or elsewhere.

[Alan]

Wisconsin also promised Tony Gou an incentive payment of $470 million in the next budget. In WI budget bills are prepared by the Governor (formerly Scott Walker, now Tony Evers). There is some concern expressed by Republican legislators in Madison, that Tony Evers better not "mess up" the Foxconn deal.

I suspect the incentive is not a payment per se but rather a temporary reduction in taxes such as property and sales which costs the taxpayers nothing up front but promises gains in later years. Perhaps you could correct me if I'm wrong.

[Teacher Terry]

When I was young Wisconsin had great roads. Of course that was before the republicans were in charge.

[Alan]

When I was young Wisconsin had great roads. Of course that was before the republicans were in charge.

In the history of Wisconsin there have been 31 Republican Governors, 12 Democrats and 3 others. By your reckoning, it's a wonder anything works in that state.

[dado potato]

The cash subsidy for Foxconn arises from the agreement for a refundable tax credit. As I understand, there is effectively a zero state income tax on manufacturing in WI. Foxconn will receive 17 cents of every dollar in payroll checks (for employees earning at least $30,000 per year) for 15 years. As a refundable tax credit, if Foxconn does not owe a Wisconsin income tax, they will receive cash out of the state treasury in the amount of their tax credit. It is a two-year budget the Governor needs to prepare and submit to the Legislature for approval (or not...). Working from an assumption that the refundable tax credit will be $235 million per year, the cash subsidy to Foxconn will be $470 million in Evers' first budget.


Wisconsin will recoup some of the subsidy from Foxconn workers who are Wisconsin residents. I assume those workers would be paying 6% WI income tax on the same payroll checks for which Foxconn will be receiving 17% from the state Treasury... which brings the net subsidy down to 11%. Mind you, employees commuting from Illinois would be paying their state income taxes in IL, and I don't imagine WI would recoup anything from them.


It is true that there are also various tax holidays. For example, Racine County has promised $764 million in tax incentive, which I believe could be described as a temporary reduction in property taxes.

The original deal between Walker and Gou, written on a napkin, was $3 billion in subsidies from WI over 15 years, and $10 billion investment by Foxconn, and up to 13,000 jobs. Gou subsequently changed the concept of what his Wisconsin plant would be making, and he changed his estimate of the capital investment to a sum closer to $2.5 billion. Foxconn says that initially there could be up to 3,000 jobs around the state (including "innovation centers" in Madison and a few other college towns)… but after the completion of a "phased approach" eventually there will be 13,000 high-value jobs and $10 billion of investment.

[bae]

I think the original author doesn't quite understand what stock is.