Tag: Tax cut

U.S. holiday spending surges to 12-year high, helped by tax cuts
Unemployment

U.S. holiday spending surges to 12-year high, helped by tax cuts

Low unemployment and high consumer confidence helped deliver a gift to retailers this holiday; record high spending.
Here’s a look at the current climate and expectations for the rest of 2017.
U.S. holiday spending jumped 5.5 percent – its biggest gain since 2005 – spurred by stronger employment, rising consumer confidence and expectations of higher wages and bonuses after the recent tax bill, the National Retail Federation said on Friday.
Sales in November and December rose to $691.9 billion, compared with $655.8 billion the previous year, excluding sales at restaurants, automobile dealers and gasoline stations.
The NRF previously forecast sales would rise 3.6 to 4 percent for the period.
Holiday sales can account for up to 40 percent of annual sales for some stores.
NRF Chief Economist Jack Kleinhenz said a number of factors contributed to surging consumer confidence including a pickup in income, a rising stock market, unemployment levels at 17-year lows and the timing of the tax cuts. “When that got passed and companies started to announce bonuses and wage increases, the consumer felt very much more at ease going into the holiday season and spending,” Kleinhenz said in an interview, adding the possible tax cuts had not been accounted for in the NRF’s forecast.
Kleinhenz also said retailers had the right mix of inventory, pricing and staffing to help connect with shoppers.
Struggling with competition from Amazon and off-price stores, traditional retailers have worked hard to address changing consumer habits by lowering prices, sprucing up physical stores and websites and improving delivery options.

Bernie Sanders Clarifies Comments About Middle-Class Tax Cuts In GOP Bill
Social Security Disability

Bernie Sanders Clarifies Comments About Middle-Class Tax Cuts In GOP Bill

“Next year, 91 percent of middle-income Americans will receive a tax cut.
Isn’t that a good thing?” host Jake Tapper asked Sanders.
“Yeah, it is a very good thing,” Sanders responded.
“And that’s why we should’ve made the tax cuts for the middle class permanent.” Some Republicans delighted in the idea that they had caught Sanders owning up to the bill’s perks.
“When Bernie comes back to town, he should pledge to vote with Republicans in ten years to make the tax cuts permanent for the middle class.” But Sanders maintained on Wednesday that the legislation’s modest middle-class benefits do not outweigh its problems.
Sanders also fears that congressional Republicans will cite the $1.4 trillion the law is expected to add to the national debt as an excuse to pursue cuts to Social Security, Medicare, Medicaid and other social programs.
Rather than do away with the tax law entirely, Sanders supports repealing the tax breaks for the wealthy and corporations to make the bill’s middle-class tax breaks permanent and expand upon them.
“Let’s pass tax reform that permanently benefits all middle-income and working-class families without giving tax breaks to the top 1 percent,” he said.
“Instead of providing huge tax breaks to the rich and large corporations that explode the deficit, which this bill does, millionaires, billionaires and large, profitable corporations must begin paying their fair share of taxes.” Sanders has ambitious domestic spending priorities, including a national, single-payer health care system that he and other boosters have dubbed “Medicare for all.” Sanders declared flatly at a Democratic presidential candidate forum in January 2016 that to fund these priorities, “We will raise taxes, yes we will.” He introduced new legislation in September laying out his vision for a universal public insurance plan that goes beyond even the benefits Medicare currently provides to seniors and people with disabilities.
One of the ideas is a 4 percent income-based premium on all households ― in other words, a middle-class tax increase.

New Stimulus Leads Economists to Revise Up Growth, Deficit Projections — Update
Unemployment

New Stimulus Leads Economists to Revise Up Growth, Deficit Projections — Update

Economists on Wall Street are revising up their estimates of U.S. economic growth over the coming two years due to Washington’s embrace of tax cuts and government spending increases.
Meanwhile, Congress is likely to consider a deal in January to boost federal spending caps and spend heavily on disaster relief to address storms earlier this year.
Nomura expects the fiscal stimulus to drag on growth after 2019 because it will help induce higher short-term and long-term interest rates.
Goldman and J.P. Morgan expect deficits to rise from $664 billion in the fiscal year ended September, or around 3.4% of GDP, to $1 trillion, or 5% of GDP, in 2019.
Economists at Goldman and J.P. Morgan expect stronger growth, including from the new stimulus, to lead Federal Reserve officials to raise rates four times next year.
Write to Nick Timiraos at nick.timiraos@wsj.com Economists on Wall Street are revising up their estimates of U.S. economic growth over the coming two years due to Washington’s embrace of tax cuts and government spending increases.
Meanwhile, Congress is likely to consider a deal in January to boost federal spending caps and spend heavily on disaster relief to address storms earlier this year.
Nomura expects the fiscal stimulus to drag on growth after 2019 because it will help induce higher short-term and long-term interest rates.
Goldman and J.P. Morgan expect deficits to rise from $664 billion in the fiscal year ended September, or around 3.4% of GDP, to $1 trillion, or 5% of GDP, in 2019.
Economists at Goldman and J.P. Morgan expect stronger growth, including from the new stimulus, to lead Federal Reserve officials to raise rates four times next year.

The GOP Won Its Tax Cut For The 1 Percent, But The Battle To Stop It Will Help Progressives Win The War
Social Security Disability

The GOP Won Its Tax Cut For The 1 Percent, But The Battle To Stop It Will Help Progressives Win The War

The non-partisan Tax Policy Center has found that when all of the provisions of the Republican tax bill are in full effect by 2027, 82.8 percent of the bill’s benefits will go to the top 1 percent ― and 53 percent of Americans would actually pay more in taxes.
The GOP was successful at teeing up its next campaign – to cut Medicare, Medicaid, Social Security and education in order to offset the rising federal deficits that will result from their tax cuts for the very rich.
They have won that battle.
The Republican Party will pay a huge political price for their tax “victory.” Granted that the rulers of the Party may not care.
The most recent NBC poll found that by a margin of 63 percent to 7 percent, Americans believe the GOP tax plan was designed to help corporations and the wealthy, not the middle class.
The forces opposing the tax bill wanted to brand it as a tax cut for millionaires, billionaires and wealthy corporations paid for by cutting Medicare, Medicaid, Social Security and education – and by raising taxes on the middle class.
A recent CNN poll found that only 33 percent of Americans supported the bill and 55 percent opposed.
The tax battle has already changed the perceptions of the Republican and Democratic brands.
Now, they prefer Democrats by 4 points.
And when asked about the Presidential election in 2020 in an NBC poll, 52 percent said they would definitely or probably vote against Trump while only 36 percent said they would definitely or probably vote for his re-election.

Trump ends first year as America’s least popular president, despite prospect of tax cuts
Unemployment

Trump ends first year as America’s least popular president, despite prospect of tax cuts

A new poll gives Trump a 32% approval rating while 67% disapprove of the job done by the 45th US president.
The results come as Republicans work to get Trump’s tax cuts through Congress before Christmas.
They amount to the biggest overhaul to the US tax system since the 1980s and amount, according to the president, to the biggest tax cut in history. “It’ll be fantastic for the middle-income people and for jobs, most of all,” Trump said.
Trump’s tax reforms will see the US corporate tax rate down to 21% from the current 35%.
The top individual income tax will fall to 37% from 39.6%.
However, Democrats argue the tax plans will favour only the rich and offer little to the president’s blue-collar base.
Since his inauguration in January, Trump attempted to roll back Obamacare, install a travel ban from mainly Muslim countries and extricated the US from the Paris climate agreement, Unesco and Trans Pacific trade agreement.
He has also faced continued pressure over Russian involvement in his election and suffered a set back when deep-Red Alabama voted for Democrat Doug Jones in its Senate election.
Supporters point to a growing economy and low unemployment as signs Trump is making a positive impact as well as his taking the fight to Muslim fundamentalist terror group Isis.

What’s Inside The GOP’s Christmas Box?
Social Security Disability

What’s Inside The GOP’s Christmas Box?

Second, Republican leaders are logrolling to get enough votes to send the bill to Trump.
Next, the promise that tax reform will benefit the middle-class is based largely on the assumption that corporations and wealthy Americans will use their tax savings to expand businesses and create jobs.
Moody’s anticipates that the amount of corporate profits being hoarded overseas will reach $2 trillion by the end of this year.
However, Congress gave a “tax holiday” in 2004 to companies that repatriated their overseas money.
But according to the CBO’s latest data, profitable companies actually pay an average of 18.6 percent (called the “effective” rate), thanks to the array of tax breaks Congress has approved at the behest of lobbyists over the last 30 years.
It found that 258 profitable companies paid a tax rate of 21.2 percent on their U.S. profits.
Other companies paid no taxes at all in one or more of the eight years.
If the additional debt were $1.4 trillion, taxpayers would end up paying nearly $260 billion in interest, according to the Peter G. Peterson Foundation.
House Speaker Paul Ryan has said openly that Republicans will try to cut entitlement programs such as Medicare next year to reduce the debt the tax bill creates.
Despite its pretty wrappings and all the anticipation it has created, the tax bill does not appear to be the gift the middle class was promised.

Fed Predicts Modest Economic Growth From Tax Cut
Unemployment

Fed Predicts Modest Economic Growth From Tax Cut

WASHINGTON — The Federal Reserve, buoyed by a steadily strengthening economy, raised interest rates on Wednesday for a fifth time since the financial crisis and predicted that a proposed tax cut moving through Congress would modestly increase economic growth for the next few years without stoking inflation.
She said they expected the bill to provide “a modest lift.” Ms. Yellen spoke at a news conference after the Fed announced a widely expected decision to increase its benchmark interest rate by a quarter of a percentage point, to a range of 1.25 percent to 1.5 percent.
Wednesday’s increase is the third time this year that the Fed has raised rates, reflecting its confidence that the economy is in good health.
Some Fed officials, including Ms. Yellen, cautioned earlier this year that tax cuts could push the pace of growth to an unsustainable level, resulting in higher inflation, and that the Fed might respond by raising interest rates more quickly, to restrain growth and keep a lid on inflation.
A quarterly update of the Fed’s economic forecast showed that officials still expect to raise rates three times next year — unchanged from the last economic forecast.
Fed officials predicted that the economy would grow at a 2.5 percent pace next year; the previous forecast was 2.1 percent.
President Trump has predicted that the tax plan could deliver 4 percent growth or more.
They do not want the Fed to get in the way by raising rates.
It would be relatively easy for the Fed to respond if inflation does begin to climb.
Mr. Gonzalez noted that housing prices were rising, and he said that higher mortgage rates could worsen affordability problems in some markets.

US Fed to hike interest rates this week as Donald Trump tax cut looms
Unemployment

US Fed to hike interest rates this week as Donald Trump tax cut looms

It would be the third rate hike this year, and is overwhelmingly expected by economists and traders, and hinted at by policymakers, even though official data show inflation remains well below the Federal Reserve’s two percent target.
With the world’s largest economy growing and near full employment—confirmed by a strong November jobs report on Friday—the central bank has long been expecting to see signs of inflation in the pipeline.
The Fed’s forecast in September indicated three rate hikes were likely next year, but any increase in anxiety over fiscal policy and its impact on inflation could be reflected in the revised projections from policymakers that will be released at this week’s meeting.
Since the rate-setting Federal Open Market Committee last met six weeks ago, economic data have seen ripples of distortion from the multiple hurricanes of late summer, including rebounds in home construction and industrial output, for example.
And a key measure of consumer inflation posted its first gain in nine months in October—though this was partly driven by the cost of hotels and lodging, which rose as people left home to flee Hurricanes Harvey and Irma.
The Fed’s latest nationwide survey of the economy also contained reports of rising prices and worker pay — just the thing the central bank watches closely.
But the underlying trends have not changed much: an economy humming along at near three percent quarterly growth, robust-but-slowing job creation and record low unemployment, accompanied by weak inflation and sluggish wage gains.
The absence of inflation has baffled Fed officials and led to a split among those who want to go slow, and those who want to hike more quickly before price increases hit the economy.
But Chicago Federal Reserve Bank president Charles Evans, currently a voting member of the FOMC, questioned the need to raise rates again so soon, and said the central bank could simply sit on its hands “until the middle of next year.” How a massive tax cut that slashes corporate tax rates to 20% from 35% might change the outlook for the economy and inflation remains unclear as estimates vary widely.
“We know the economic effects are smaller… which doesn’t make or break your monetary policy,” she told AFP.

Powell faces early test on policy as tax cuts near approval
Unemployment

Powell faces early test on policy as tax cuts near approval

Powell in statements throughout the year, culminating with his recent Senate confirmation hearing, has been clear he sees little risk of inflation that would prompt the Fed to raise rates faster than expected, and takes weak wage growth as a sign that sidelined workers remain to be drawn into jobs.
Employment in November grew faster than expected, but wage growth remained muted.
Some policymakers feel the central bank has already undercut its credibility by raising interest rates while inflation remains so weak.
“If the Fed gets its paradigm wrong and sees inflation that ultimately doesn’t materialize, and they take rates too far, then markets would feel aggrieved,” said Carl Tannenbaum, chief economist at Northern Trust in Chicago, and a former senior risk official at the Fed Board.
He expects the Fed under Powell to only raise rates twice next year.
They are expected to raise interest rates for the third time this year.
The economy is arguably as much as a half a percentage point below full employment, a condition in which prices and wages should be rising.
As the tax plan advanced in Congress, forecasting shops at Goldman Sachs, JP Morgan and others penciled in a faster pace of Fed rate increases – essentially expecting the Fed would need to lean against the inflationary outcome.
His outlook is consistent with positions Trump and current chair Janet Yellen have taken, and the depth of his commitment to that view will be a critical part of the Fed’s debate about whether and how to react to the tax plan.
But when asked about Fed staff research that challenged a key Republican premise that corporate tax cuts generate jobs, Powell kept his distance.

The Tax Scam: Naming The Culprits
Social Security Disability

The Tax Scam: Naming The Culprits

Some of the conspirators merit special attention: Gary Cohn.
Cohn racked up quite a record of interesting statements: “The wealthy are not getting a tax cut” (Sept. 28).
Unlike others on this list, Rubio offered a dose of honesty about the tax cut.
The House bill would eliminate the alternative minimum tax – under which Trump paid $31 million in 2005.
Dear Senator Flake, we admire some of your recent criticisms of Donald Trump, but – and this is probably the first and last time we suggest looking to Donald Trump for advice – he wrote this book called The Art of the Deal that maybe you should check out.
The self-styled tax policy wonk continues to insist that the tax cuts will pay for themselves.
He insists that they will promote economic growth to such an extent that the government’s overall tax revenue will remain consistent.
Treasury Secretary Steven Mnuchin helped lead the chorus around the lie that the tax cut would pay for itself.
Mnuchin’s Treasury Department had earlier removed from its website a 2012 study that refuted Mnuchin’s claim that corporations would pass on most of the savings from tax cuts to their workers.
There have been few votes more disgraceful than the recent House and Senate passage of massive tax cuts for corporations and the superrich.