So what? The same thing happened with the stimulus back in 2009-10. Like I said, people believed the stories they’d already heard. If you’re saying it’s gonna work out different this time, kindly explain your reasoning.
I’m not “saying it’s gonna work out different this time”, I’m merely refuting the claim that “few people who can’t afford good tax lawyers will see the fruits of this bill before tax time in early 2019”. Many people will see the fruits of this bill sometime in the next couple of months.
Once the lower tax withholding starts to show up in people’s paychecks, a lot may then depend on future job prospects. Seeing a larger net pay line is going to have some short-term positive effect, certainly. If the tax cuts do in fact spur meaningful increased consumption, and some kind of wage inflation without correspondingly high general/CPI inflation, then perhaps the perception of the tax bill will improve. On the other hand, once the novelty of the larger paycheck has worn off, if people are still working the same crappy jobs for the same mediocre gross pay, any stimulative effect may well be short-lived as people save and pay down debt instead of consume.
I will have less taken out of my check, and I can take advantage of the pass through business income.
(post shortened)
The cost of doing business in the U.S. has been reduced with the lowering of the corporate tax rate. Working people will see more money in their paychecks, or less money being taken away for taxes, your choice. Will voters see that as a good thing before the next election(s)? Probably?
The tax break may be the determining factor as to whether or not an employer choses to hire two more employees. Will the employer be able to sell more product? Will cheaper U.S. supplies be available in the near future, further reducing the cost of doing business? Will more customers have the extra cash to be able to purchase the employer’s products, which would increase the need for even more employees?
Politically-speaking, Democrats hope that the tax breaks will hurt the economy. The Republicans are hoping that the tax breaks will boost the economy. Time will tell, of course, but the stock market investors seem to betting on a boost.
That may be true, but if that’s the reason Arizona Mike is hiring new workers it has nothing to do with the tax break his business is receiving, and everything to do with the tax breaks to consumers. And that’s not the claim he made in his post.
I think everyone would like to see the economy continue to do well. A better question is whether this cut will boost the economy enough to make up for the loss in government revenue.
Especially if they find that the $50/pay period extra that they get back due to the tax break is eclipsed by an $80/pay period increase in their health insurance premiums.
Wrong, for most people. You have to understand the difference between a tax credit and a tax deduction. A $1,000 tax credit = $4,000 in deductions if you’re in a 25% tax bracket. Most people will be in a lower bracket.
That is to say: A tax credit comes directly off the amount of taxes you owe. A tax deduction comes off the amount of taxable income you have.
Obama cut the employee contribution to social security from 6.2% down to 4.2%, meaning for every $10,000 in gross income you earned you saw an extra $200 a year in tax savings.
He did that as part of the stimulus. The vast majority of American’s didn’t notice and didn’t care. I don’t see why this tax bill will be different.
The GOP seems to be better at marketing than the Democrats.
It will help the Republicans if jobs return to America. Unless canny Democrats finesse it in their favour, of course.
They are, because that’s all they have. They don’t have any ideas or programs or even an ethos, really. Just marketing and jockeying for power, even tho once they have power they don’t have anything to do with it or know how to use it in the first place.
For many of them, their whole existence can be summed up in two words: “no; me!”
I don’t understand.
On edit: 25% of $4000.00 ?
Correct. But note that I used 25% for ease of calculation. There isn’t a 25% tax bracket at the federal level, and it’s also possible for your $4,000 to straddle two different tax brackets and make the calculation more complex.
But the important thing is that if you owe $5,000 in taxes and you get a $1,000 tax credit, that lowers your taxes due to $4,000. If you get a $1,000 tax deduction, that lowers the amount of taxable income you have, which means you only get a fraction of that $1,000 off your actual tax bill.
Different economic conditions. During the Great Recession, what we saw is people trying to save and pay down debt, so there was little stimulative effect on consumption. The general narrative was that people, fearing they’d be unemployed in the near future, tightened their belts for the bad times ahead. Whether that narrative has a basis in reality is of course open for debate, although I think it has some merit.
If people do the same thing with their tax cuts here, the whole tax plan will fall flat on its face rather quickly as a stimulus (again, once the whole “I got more money this month!” factor wears off). If people spend, then it may do some good. Not “pay-for-itself” good (c’mon Mnuchin, seriously?), but at least some people will be happy. And consumer confidence has been rising generally, for whatever that may be worth.
One thing that will be hard to explain to the sheep is that the tax cuts for them are only temporary, while those for the 1% (and maybe 10%) are permanent. That’s why the Reps think it will be popular in the short run.
Yes, it’s especially difficult to explain when the GOP is saying they want to renew those cuts before they expire. Your explaining might go a bit better if you don’t start by calling the targets of your explanation “sheep”. YMMV.
Immediate gratification.
@Hari Seldon and @carnivorousplant,
As an aside: do you think it’s a fair assessment that the GOP has a better grasp of human nature / behavior than the Democrats?
Oh, so they want to renew the small tax cuts for the middle class when they expire in 10 years! How generous!
But they made the massive tax cuts for the rich permanent. Now, why didn’t they do it the other way around?
Of course, the budget impact of the tax cuts only works if they middle class tax cuts DON’T become permanent, right? Because otherwise that would bust the budget, right? So they have to sunset in 10 years, right?