Waiter, Can We Have the Bill Please? Republican Tax Reform in One Chart
On Tuesday, 20 December, the Conference Agreement on House Resolution 1 – Tax Cuts and Jobs Act, otherwise known as the Republican tax bill, was passed by the US Senate just hours after it had been approved by the House of Representatives. In the next few days, the bill will be signed into law by President Donald Trump.
During the last few months, many different versions of the bill have been circulated, so one can be forgiven for not knowing the exact details of the tax overhaul. Even some lawmakers like Republican senator Bob Corker of Tennessee admitted they had not read the bill. The result? Corker was “shocked” to learn a provision that would enrich him and other real estate magnates had been slipped into the final version of the bill.
So for everyone who has not read the bill in full, here is a concise summary of the costs and benefits of the Republican tax legislation in one chart. It compares the benefits of the tax bill, as measured in higher economic growth, as calculated by the Tax Policy Center, with the anticipated costs in higher budget deficits, as projected by the Congressional Budget Office (CBO).
The Republican Tax Bill in One Chart
Source: Congressional Budget Office (CBO), Tax Policy Center, Fidante Capital
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7 thoughts on “Waiter, Can We Have the Bill Please? Republican Tax Reform in One Chart”
Not sure what the conclusion is. Could you explain? Thanks you Bruce
The conclusion seems to be that he wants to make the current administration look bad.
From a European perspective it’s extremely difficult to understand why one would pass a tax bill that increases rather than decreases the disparity between rich and poor. The most enduring effects will be felt on the corporate side, which will disproportionally benefit the rich. Let’s see how many new jobs will be created, and if capital allocation remains all that rational in the coming years; I share the view of Joachim that it will be a costly measure at the wrong time of the cycle.
From a French point of view (at least mine), this bill seems a complete nonsense, in a social term of course, but also in economic terms considering the current level of US debts. It is a very dangerous bet not only for United States, but for the world. I am not convinced that Europe will gain from a weak America. Maybe China will? Could somebody explain at least a single benefit ? Thanks JF
Shows in one chart what we all knew: it’s a terrible idea concocted overnight without any discussion or further thought.
Actually this is per the CBO. Which has never been close to a long term projection. There is really two tax bills. One is the reduction in corporate taxes which was duly needed. US coprporatoons were playing games to keep cash and earnings offshore. IE Apple Computer which has its intellectual capital residing in Ireland. This is now not allowed. Also US companies were moving there domicile to other countries. This will stop that. The idea is that companies were investing more in other countries and this will make it more advantageous to invest here. We will see. There will be more company profits that will actually stay in the US.
The other part of the tax bill is for individuals. This one is crazy. The US has low unemployment and doesn’t need anymore Demand. Should have saved for a future recession. However this was a political vote giveaway. People of all incomes will see there salary income go up.
Finally as a sidenote there are the passthru rules. . This is a tax accountants retirement package. Certain entities get a certain percentage of their income taxed at zero up to a certain amount. The idea here was that half of US employment works for Corporations and the other half work for pass thrus
There is other stuff in the bill. But the idea is that you will get more investment and workers will have more money to spend. The only thing I can guarantee is the the CBO projections are incorrect. This is way to complicated to model. Lots of moving parts and behavioral issues on individuals and companies. Happy New Year to all.
It is my understanding that economists are ambivalent on the size of the deficit, but that we definitely want growth.
Therefore, it is not clear to me how change in growth and the deficit can be netted out.