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Bad news about the new USA Tax Code

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Bad news about the new USA Tax Code

Postby the_ignored » Sat Nov 18, 2017 10:13 pm

Grim news for the common person.

Lately, however, there’s been a switch, as Piketty and Saez, along with Berkeley’s Gabriel Zucman, recently concluded. “The upsurge of top incomes was first a labor income phenomenon but has mostly been a capital income phenomenon since 2000,” they noted in a paper updating the data through 2014. Since then, income growth within the top 1 percent has accrued to people who make their money from owning money, stock, and other financial instruments, rather than to people who make their money via skills and labor.

We’ve seen a large increase in corporate profits since 2000, increasing faster during the Great Recession, yet this hasn’t trickled down to regular people. Wages are nearly flat since 2000, and the recovery from the recession featured the weakest business investment of the postwar period. This is a genuine shift in the organization of the economy, one economists are still struggling to understand.

The Republican tax plan supercharges these changes. To a striking degree, the changes are about benefiting not just the well-off but those who are well-off because they own capital, as the Institute on Taxation and Economic Policy notes in its analysis of the Senate bill.

That’s because the plans are tilted toward corporate income tax reductions, which will largely benefit concentrated owners of stock; passive owners of pass-through businesses who don’t actively work for the firm; and people who inherit their money. (Notably, because around a third of stocks are foreign-held, a significant amount of the benefit won’t even go to US citizens. The Institute on Taxation and Economic Policy estimates that “foreign investors would receive [benefits roughly equal to the] benefits that would go to the bottom three-fifths of Americans.”)
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Re: Bad news about the new USA Tax Code

Postby zilch » Sun Nov 19, 2017 9:52 pm

Again, no surprises here. Sigh.
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