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

Economic policy incrementalism for better fiscal and monetary policy coordination

Becky Berkman

2023-12-07 07:22:00 Thursday ET

Economic policy incrementalism for better fiscal and monetary policy coordination

Economic policy incrementalism for better fiscal and monetary policy coordination Traditionally, fiscal and monetary policies were made incrementally. In

+See More

Fed Chair Jerome Powell sees a remarkably positive outlook for the U.S. economy in early-October 2018.

Charlene Vos

2018-10-03 11:37:00 Wednesday ET

Fed Chair Jerome Powell sees a remarkably positive outlook for the U.S. economy in early-October 2018.

Fed Chair Jerome Powell sees a remarkably positive outlook for the U.S. economy right after the recent interest rate hike as of September 2018. He humbly su

+See More

Apple releases its September 2018 trifecta of smart phones or iPhone X sequels: iPhone Xs, iPhone Xs Max, and iPhone XR.

Jacob Miramar

2018-09-15 11:35:00 Saturday ET

Apple releases its September 2018 trifecta of smart phones or iPhone X sequels: iPhone Xs, iPhone Xs Max, and iPhone XR.

Apple releases its September 2018 trifecta of smart phones or iPhone X sequels: iPhone Xs, iPhone Xs Max, and iPhone XR. Both iPhone Xs and iPhone Xs Max ha

+See More

President Trump's current trade policies appear like the Reagan administration's protectionist trade policies back in the 1980s.

Apple Boston

2018-07-03 11:42:00 Tuesday ET

President Trump's current trade policies appear like the Reagan administration's protectionist trade policies back in the 1980s.

President Trump's current trade policies appear like the Reagan administration's protectionist trade policies back in the 1980s. In comparison to th

+See More

U.S. federalism and domestic institutional arrangements

Olivia London

2023-12-10 09:23:00 Sunday ET

U.S. federalism and domestic institutional arrangements

U.S. federalism and domestic institutional arrangements A given country is federal when both of its national and sub-national governments exercise separa

+See More

President Trump unveils his ambitious $1.5 trillion public infrastructure plan.

Daisy Harvey

2018-02-11 07:30:00 Sunday ET

President Trump unveils his ambitious $1.5 trillion public infrastructure plan.

President Trump unveils his ambitious $1.5 trillion public infrastructure plan. Trump proposes offering $100 billion in federal incentives to encourage stat

+See More