After a heated debate, the US tax bill is expected. UU Be a blessing for companies – tech2.org

After a heated debate, the US tax bill is expected. UU Be a blessing for companies



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WASHINGTON – Is it a gift for the rich or a relief for the middle clbad? A blessing for business or an unnecessary stimulus for an economy that is already in full employment?

The radical fiscal reform package adopted by a narrow margin of 51-49 early Saturday morning by the Republican-controlled Senate has sparked a fierce debate among economists.

It also has to be reconciled with a separate version approved by the House of Representatives.

But the main tables of the proposal included a reduction in corporate tax rates from 35 to 20 percent, increasing some deductions for individual taxpayers and eliminating many others. reduce taxes on badociations.

The White House describes the new tax package as the largest tax cut in the history of the United States. UU and aims to boost growth and produce higher wages and corporate profits, while encouraging companies to repatriate their wealth.

One of the main drivers of the proposal, Treasury Secretary Steven Mnuchin, recently promoted a letter from nine economists who claimed that the first comp A general tax review in three decades would raise annual GDP growth by 0.3 percent in 10 years.

But a study by the University of Chicago found that among 38 economists, the overwhelming majority doubts that growth will increase and almost everyone believed that it would inflate the national debt.

The Joint Committee on Taxation, a nonpartisan committee that estimates the cost of fiscal policies, also discovered on Thursday that the bill now pbaded by the Senate would add $ 1 trillion to the deficit.

Many economists argue that this type of stimulus has a limited impact when the economy is growing at its potential rate.

Disagreements have sometimes become personal, with former Labor Secretary Robert Reich, a Democrat, writing in an opinion piece on Wednesday that Mnuchin was either "a fool or a Knave," accusing him of lying about the badumptions benefits of the tax review.

Reich cited the findings of the Tax Policy Center, according to which most of the proposal is more than a decade. The benefits are likely to go to the richest 1 percent of Americans, while the upper middle clbad will likely face a higher tax burden and the poorest will only see small tax cuts.

But according to Douglas Holtz-Eakin, one of the economists who signed the letter cited by Mnuchin, the new modified tax code aims to boost production and supply, rather than demand.

Entrepreneurs are among the first that can win, with corporate tax rates falling up to 15 percentage points, supposedly to a level in line with those of other developed countries.

But US companies have long benefited from tax deductions that reduced their effective tax rate to around 21 percent.

Another great help for the business world: badociations and other so-called transfer companies whose profits are directly enjoyed by their owners, and which represent half of corporate income and 90 percent of small businesses, will experience heavy tax cuts.

Multin National companies will also be encouraged to repatriate their profits at a preferential tax rate.

According to Holtz-Eakin, these changes are all incentives for innovation and investment that will boost productivity in the United States.

However, as white House economic adviser Gary Cohn recently discovered that he was attending a business conference and many companies plan to use excess cash from tax cuts to increase their dividends instead of investing in equipment or hire more workers.

The administration of President Donald Trump argues that wages should rise after having stagnated for decades when accounting for inflation.

Holtz-Eakin said that productivity gains should make hiring workers more profitable and that companies compete for available labor by offering higher wages.

Others call the time for such tax review in question, since the world's largest economy is already close to full employment and the Federal Reserve is about to take note of any signs of inflation by raising the rates of interest.

Lloyd Blankfein, the CEO of Goldman Sachs, expressed similar doubts last month in an interview with Bloomberg.

"I can not say that this is the time when you want the greatest fiscal stimulus in the market, when we are in full employment, when GDP was last recorded at 3 percent," he said.

"I do not know if it is the moment when the greatest stimulus is provided."

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