Michael Bloomberg criticizes that the Trump administration's tax reform is a trillion dollar blunder.

Fiona Sydney

2017-12-09 08:37:00 Sat ET

Michael Bloomberg, former NYC mayor and media entrepreneur, criticizes that the Trump administration's tax reform is a trillion dollar blunder because it adds another $1.5 trillion federal budget deficit to government debt over the next few years. The corporate tax cuts may restrict the U.S. government's ability to invest in education and infrastructure, may render health insurance more expensive, and may have no impact on real wage growth. Harvard public finance professor Martin Feldstein, however, says this tax overhaul is worth its costs because U.S. corporations will use their tax cuts to boost real wages and capex investments, and these firms will repatriate $2.5 trillion offshore cash to invest in job creation, manufacturing automation, and R&D innovation. In line with some economists' op-ed articles and blog posts on the probable effect of the Trump corporate tax cuts on real wage growth, a firm invests up to the point that the after-tax return on its labor and capital investments equates the return that investors require to allow the firm to expand its factor inputs. As the firm receives income tax breaks, it finances the purchase of new machines, plants, and computers. These capital expenditures make the typical worker more productive. Then the firm wants to hire more workers to run the new machines and computers etc. As a result, the typical firm raises real wages until the economy restores its steady state. Hence, tax cuts can effectively boost real wage growth ceteris paribus.

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More

Many eminent investors suggest that the time may be ripe for a major stock market correction.

Becky Berkman

2017-08-13 09:36:00 Sunday ET

Many eminent investors suggest that the time may be ripe for a major stock market correction.

Several investors and billionaires such as George Soros, Warren Buffett, Carl Icahn, and Howard Marks suggest that the time may be ripe for a major financia

+See More

U.S. trade envoy Robert Lighthizer proposes America to require regular touchpoints to ensure Sino-U.S. trade deal enforcement.

Daisy Harvey

2019-03-17 14:35:00 Sunday ET

U.S. trade envoy Robert Lighthizer proposes America to require regular touchpoints to ensure Sino-U.S. trade deal enforcement.

U.S. trade rep Robert Lighthizer proposes America to require regular touchpoints to ensure Sino-U.S. trade deal enforcement. America has to maintain the thr

+See More

IMF chief economist Gita Gopinath predicts no global recession with key downside risks at this delicate moment.

Charlene Vos

2019-04-29 08:35:00 Monday ET

IMF chief economist Gita Gopinath predicts no global recession with key downside risks at this delicate moment.

IMF chief economist Gita Gopinath predicts no global recession with key downside risks at this delicate moment. First, trade tensions remain one of the key

+See More

Financial institutions benefit from higher equity risk premiums and interest rate spreads.

Charlene Vos

2017-04-01 06:40:00 Saturday ET

Financial institutions benefit from higher equity risk premiums and interest rate spreads.

With the current interest rate hike, large banks and insurance companies are likely to benefit from higher equity risk premiums and interest rate spreads.

+See More

U.S. Treasury's proposal for financial deregulation aims to remove key aspects of the Dodd-Frank Act.

Rose Prince

2017-08-25 13:36:00 Friday ET

U.S. Treasury's proposal for financial deregulation aims to remove key aspects of the Dodd-Frank Act.

The U.S. Treasury's June 2017 grand proposal for financial deregulation aims to remove several aspects of the Dodd-Frank Act 2010 such as annual macro s

+See More

The Economist digs deep into the political economy of U.S. government shutdown over 3 days in January 2018.

Apple Boston

2018-01-13 08:39:00 Saturday ET

The Economist digs deep into the political economy of U.S. government shutdown over 3 days in January 2018.

The Economist digs deep into the political economy of U.S. government shutdown over 3 days in January 2018. In more than 4 years since 2014, U.S. government

+See More