Yahoo - water is wet news "Evidence shows corporate tax cuts don't work" (we know this)

[NRaleighLiberal]

https://finance.yahoo.com/news/evidence-shows-corporate-tax-cuts-dont-work-132230398.html

by Myles Udland
Markets Reporter
Yahoo Finance December 4, 2017


Early Saturday, Senate Republicans passed their version of a bill to cut taxes which paves the way for President Donald Trump to sign one of his primary campaign promises into law in the coming weeks Senate and House Republicans will now come together to reconcile the differences between their bills to find a unified path for lower corporate taxes to bring to Trump’s desk.

And while supporters of the bill may list a litany of reasons for why this move was needed, or why this move will be good for the economy, the Trump administration has long maintained that economic growth would be the main result of cutting taxes. And this economic growth the thinking went, would be the direct result of corporations increasing investment due to lower tax burdens. Kevin Hassett, the chair of Trump’s council of economic advisors, has said that American families would see $4,000 in additional wages over the next decade as a result of increased investment from corporations benefitting from lower taxes.

But Joe LaVorgna, chief economist for the Americas at Nataxis, outlined in a note circulated Friday that the last several decades of evidence lends little to the idea that lower taxes boost investment in a meaningful way.

LaVorgna writes that gross business investment as a share of GDP since 1960, averaging 13% over time with a standard deviation of 1.3%, meaning that there have been few major changes in the investment tendencies of American businesses.

snip - more to read, graphs, at the link

[haele]

1. Growth that will only result in families seeing an additional $4000 over a decade is no growth.

As my BIL the bank manager admitted " (sic) if you gave my bank a tax break, we're not going to hire more people if we don't need to hire more people. And we'll only pay our workers more to attract more better trained workers and if our competitors paid their own workers more and could hire our good people away from us."

$4K a year over a decade, heck, even $4K every year or so may just help a family keep pace with inflation and emergency bills, not "get ahead" or prosper.
Wages have been stagnant up across the board and into the professional levels (doctors, lawyers, engineers) over the past two decades, while the cost of living (not the cost of toys and technology) has been going up.
Even software engineers - kids nowadays don't realize that back in 1992 - 1995, I knew software engineers and application developers who were starting at $125K a year after getting a Bachelor's degree - not even a Master's degree. It wasn't unusual to know a family making close to $200K between both spouses. Now, the same type of jobs are starting at around $90K, and require far more training and experience than their fathers and mothers had to show to get a foot in the door. Doctors - same thing. And what's worse, the cost of that education is staggeringly more expensive - I recently got my bachelor's at a reputable state university with in-state tuition costs partially paid for with FASFA student loans, and those three years still ended up costing me $46K out of pocket - or rather, $75K total with interest.

I found paperwork from when I was estimating how much that same degree at a similar local university back in 1991, and it would have cost me around $15K total for three years - including books. With much better rates for student loans, so it would have been equivalent of purchasing a new luxury vehicle. Very doable at the time; at the time I was making $15 an hour and had very reasonable rent. (Only reason I didn't get the degree is that I didn't really need it at the time, and I was always on travel for work.)

To put it bluntly, since about 2002, there was a bit of a decline, and wages across the board just have not kept up with such basics as the cost of housing or rent, for one thing - and it doesn't matter where you live, Red State or Blue State.

Legally, businesses have a greater fiduciary duty to their shareholders than they have a duty to their workers or their customers. They need to contain costs if that's what their shareholders want.
So...Tax breaks are going to get parked somewhere or handed out to shareholders, instead of going to improve processes, invest in a product or rolled into a better paid workforce.

Haele