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Moody's Assessment of the Tax Overhaul

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  • Originally posted by carpedm9587 View Post
    Show off
    When you got it...

    I'm always still in trouble again

    "You're by far the worst poster on TWeb" and "TWeb's biggest liar" --starlight (the guy who says Stalin was a right-winger)
    "Overall I would rate the withdrawal from Afghanistan as by far the best thing Biden's done" --Starlight
    "Of course, human life begins at fertilization that’s not the argument." --Tassman

    Comment


    • Originally posted by carpedm9587 View Post
      Moody is apparently confirming to its customers that the Tax overhaul will have minimal impact on the economy because (as was predicted) the vast majority of businesses are prioritizing stock buy-backs, mergers and acquisitions, and paying down debt. (https://www.marketwatch.com/story/ta...ays-2018-01-25).

      This was predicted. Prior to the tax overhaul for businesses, U.S. businesses were sitting on almost record holdings. That they would take the surplus cash and use it for things they were not doing with their existing holdings seemed unlikely, and Moody has confirmed this is their projection and what they are seeing in the market.

      What we are seeing in the news is the usual case of select instances of businesses that ARE giving part of their gains to employees, but those gains are primarily being given in the form of one-time bonuses. That avoids the need to change payroll, and means that companies can elect NOT to give that bonus in future years and retain the surplus earnings.

      As expected, raising salaries and adding jobs is not something a business seeks to do. Managers will tell you it is always the course of last resorts and is done only when a business has no additional room to squeeze efficiency enhancements, or is expecting increased demand beyond what they can meet with efficiency enhancements. When a business gets more money, they do not immediately think, "let's make more jobs."
      The tax cut could be thought of as either a reduction in marginal cost, or an increase in marginal revenue. Either way, the relative change between marginal revenue and marginal cost makes it profitable to expand production (or to contract less). Regardless of how much cash was already being held. Surely such expansion (or avoidance of contraction) would include hiring more labor than otherwise.

      I suppose one might argue that most businessmen are failing to think in terms of marginal revenue/cost. But it seems that would result in those businessmen losing market share to the few businessmen who do.

      Comment


      • Originally posted by carpedm9587 View Post
        Short term, yes. But given the impact they are projected to have on the deficit, at the expense of my children and their children. And more to me than the lower and middle classes. I can do without the benefit. Others need it more. And I don't think it is just to saddle our children and their children with the debt for our spending.
        Yes, I think spending should be significantly reduced. Or at least stop increasing spending.

        Comment


        • Originally posted by Joel View Post
          Yes, I think spending should be significantly reduced. Or at least stop increasing spending.
          And the new spending bill doesn't do that either. Between the tax cuts and spending increases, it looks like we are looking at near $1T/year deficits in the not too distant future.

          So much for the "fiscal responsibility" theme...
          The ultimate weakness of violence is that it is a descending spiral begetting the very thing it seeks to destroy...returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that. Martin Luther King

          I would unite with anybody to do right and with nobody to do wrong. Frederick Douglas

          Comment


          • Originally posted by rogue06 View Post
            This is like the survey conducted by Reuters where they cannot find many people who have been positively effected by the recent tax cut. Of course this is no surprise since it doesn't go in effect until next month.
            And now a bit over half way through "next month" the New York Times is reporting that tax cut, which once was overwhelmingly unpopular thanks to incessant negative coverage by the MSM, is now supported by a narrow majority of Americans (up from 37% in December to 51% today). I'll bet that number will continue to grow as more companies continue to give raises, bonuses and increase in benefits because of the tax cuts and as Americans continue filing their income taxes.

            I'm always still in trouble again

            "You're by far the worst poster on TWeb" and "TWeb's biggest liar" --starlight (the guy who says Stalin was a right-winger)
            "Overall I would rate the withdrawal from Afghanistan as by far the best thing Biden's done" --Starlight
            "Of course, human life begins at fertilization that’s not the argument." --Tassman

            Comment

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