The Trump Tax Keeps Getting Worse
April 19, 2018
Wall Street continues to be the big winner of the Trump tax, which still has not trickled down to workers. Meanwhile, new projections show that the Trump tax will actually slow our economic growth, increase our trade deficit, and could make future recessions worse.
The International Monetary Fund projected that Republicans’ $1.8 trillion Trump tax will actually cause economic growth to slow within five years.
Washington Post: “The broader economic impact likewise will be short-lived. That’s in part because the tax overhaul packs its biggest punch into the next few years, before a number of its corporate incentives expire. ‘The US tax reform will reduce growth momentum starting in 2020, and then more strongly when full investment expensing begins to be phased out in 2023,’ the IMF report says.”
Corporations are using tax savings to massively benefit shareholders and executives while barely increasing wage growth.
CNBC: “Employers appear to be using proceeds from corporate tax cuts to continue the practice of rewarding shareholders and executives over workers.”
CNBC: “The early tally continues a trend that has seen companies commit $4.9 trillion over the past five years to buybacks and deals — ‘financial engineering,’ as TrimTabs puts it — and $2.3 trillion to wage increases. If the first-quarter numbers were extrapolated over a five-year period, they would show $6.1 trillion in buybacks and deals to $2.6 trillion in wages, or only slightly above the previous five-year pace for worker raises.”
The Trump tax could make future recessions worse while also blowing up the deficit.
Business Insider: “‘While this policy supports growth in the near term, it may worsen the next downturn while limiting the fiscal reaction to it. Even if those concerns are unfounded, we think much of fiscal stimulus’ ‘good news’ is already in the price of key markets.’ To that end, it’s not really ‘morning in America,’ as Ronald Reagan’s 1984 reelection ad campaign declared. Rather, it’s ‘happy hour in America,’ Morgan Stanley said.”
Wall Street took in record profits thanks to the Trump tax.
Wall Street Journal: “The Biggest U.S. Banks Made $2.5 Billion From Tax Law—In One Quarter”
Fortune: “The Big Banks Are Reporting Record Profits Thanks In Part To President Trump’s Tax Cuts”
CNN Money: “Big banks are raking in monster profits—and they can thank President Trump for their success. Trump’s corporate tax cuts helped fuel Wall Street’s blockbuster first-quarter results. Ditto for the recent market mayhem, which Trump played a starring role in at times. Morgan Stanley and Bank of America (BAC) both revealed record quarterly earnings this week.”
The Trump tax will further widen the trade deficit Trump promised to eliminate.
Wall Street Journal: “Among President Donald Trump’s most deeply held economic convictions is that trade deficits are bad, yet his signature economic policy—a major tax cut—likely will deepen the trade deficits he abhors for years to come.”