Can tax cuts really have jobs returning with middle class pay?

Discussion in 'Politics, Religion, Social Issues' started by thermodynamic, Jul 16, 2016.

  1. thermodynamic Suspended

    thermodynamic

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    #1
    What happens if Trump gets his plans regarding tax reform passed and companies don't return the way he says they will?

    Some items I agree with, but moving money from an Irish bank to an American bank - how does that work for all of America, which is what's rather implied in the text? It probably helps the American bank holding the money but one bank is not a whole country:

    And does "put it to work in America" mean spending it on jobs and updated tools to remain competitive in the fields they are in? Maybe tax incentives to encourage that like what Eisenhower had?
     
  2. mrkramer macrumors 603

    mrkramer

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    It won't make a difference, if adding jobs in the US would make companies more money they would have done it already. At the most tax breaks might make it worth it to pay minimum wage for some jobs that have gone overseas, but that won't help the middle class.
     
  3. blackfox macrumors 65816

    blackfox

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    #3
    The reality is that a generation (or maybe more) are out of luck in a transition to a Globalized, information-based Economy (at least in the US). In an age of Globalization, Unions become a dinosaur, and so do guaranteed good wages for relatively-unskilled workers. I took a compromise a long time ago. I manage a bar/venue - I will never be a millionaire, but feast-or-famine, people always want to drink. In my mind, that's as close to job security as you can get in 2016
     
  4. DearthnVader macrumors regular

    DearthnVader

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    It is better to lose some of your money, than it is to lose all of your money.
     
  5. 1458279 Suspended

    1458279

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    It's tough to call this one. Middle class jobs are going to be harder and harder to create. The entire concept of exchanging human labor as a means of support is going to be challenged by automation. The cost of education, the constant demand for education make it even worse.

    Gone are the days of having a life long middle class job with a HS education. Even a 4 year degree is going to require life-long learning.

    Just as much as business left America for cheaper labor, they'll leave humans for robots. Those the try to stay with human labor will be undercut and washed out of the market like Blockbuster was when NetFlix beat them.

    Selling human labor will be like selling VHS tape in a digital world.

    There will be a window of time to change this, but most people consume away everything they get. We need to move from an earned income model to an unearned income model. People need to learn to control their personal economy.

    Trump can open the window for this, but getting the people to do it is another thing.

    Hillary will use regulation, higher min wage will bring the robots even faster. Higher min wage violates the basics of making long term gains. This is because the people gain no skills. Hillary wan't people to get ahead by giving them something they haven't earned and can't take with them.

    There's no job skills gained with a forced min wage raise. Once the people learn they don't have to earn a raise, they'll just continue to do what they've done before with no gain in job skills.
    This is proven by the savings rates of people. We have 75% of Americans living paycheck to paycheck.
    They have no self control.
     
  6. Technarchy macrumors 603

    Technarchy

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    #6
    Trump, Clinton and most politicians are out of touch with current economic realities. They still have 1940's-1970's labor romanticism in their minds. Not surprising since most of them are old and white.

    Truth is most Gen-X and Gen Y don't want the type of jobs and lifestyles associated with labor work. I sure as hell don't.

    You want to increase the middle class, make college free for any American going to STEM and medical, and put a $200K penalty on ALL H1B type visas.
     
  7. vrDrew, Jul 16, 2016
    Last edited: Jul 16, 2016

    vrDrew macrumors 65816

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    #7
    The link between tax cuts and job growth is slender at best.

    Americans are right to be concerned about Globalization. Because it has fundamentally changed the way the world's economy works. And with it the way jobs are done, and the sort of people who do those jobs.

    But its not that simple to say that Chinese factories and workers are "stealing" American jobs. The reality is that automation has probably been responsible for far more job losses than anything else. Which is tough on the affected workers, but overall makes our economy much richer.

    The reality is that there is a hell of a lot of work to be done in the United States. Work that can only be done by people living here. Take infrastructure, for one. We could easily spend five to ten trillion dollars over the next decade fixing our nation's bridges; highways; ports; airports. Our power distribution and generation grid. Our telecommunications networks. Then there is environmental cleanup and remediation. Concerned about unemployment among urban youth? Put together a program to train and employ them removing lead paint; replacing lead pipes in our water systems. Rehabilitate and insulate our urban housing stock. Concerned about the looming demographic implications of an aging population; about long-term care for our senior citizens? Then train young people to work as home health aides. And reform Medicare and Medicaid so we can do the job humanely, decently, and efficiently.

    Think, for a moment, of all the benefits that would accrue to our society - in terms of things like drug abuse; crime; unplanned pregnancy; welfare costs - if any poor African-American kid could easily find meaningful, rewarding work in his or her local community. Think of the business opportunities that a newly emerging class of young urban people with disposable income might create.

    But doing that will take political vision and leadership. Because McDonalds and Apple and Boeing aren't going to make those things happen. No matter what tax breaks we give to them as corporations. No matter what the tax rate on stock options windfalls might be. Its got to come from States and cities. And the Federal Government. And none of that is going to happen so long as our political discourse is dominated by Tea Party idiots going on Fox News and blathering about deficits and the evils of big Government.

    And its certainly not going to happen if Donald Trump starts a trade war with China or Germany.
     
  8. DearthnVader macrumors regular

    DearthnVader

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    #8
    Do you care to clarify what that means?

    Government is already the largest sector of our economy, yet every dime Government gets is diverted from somewhere else. We need at least a balance of trade, running a half a Trillion Dollar trade deficit or greater every year is a drain on our money supply.

    You can't, as a nation just issue debt to pay for all these new Government Programs you've listed and raising taxes to pay for them just reverts money from the private sector, it doesn't grow the economy to take money out of my pocket and put it in yours.

    Our so called "Trade Partners" are growing at our expense, you want to grow our economy we need to return to a balance of trade, people will have more money, the Government will have a wider tax base and be able to spend on infrastructure.
     
  9. juanm macrumors 65816

    juanm

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    #9
    Universal basic income. As of now, it's the only way. Increasing the minimum wage is, as nice as it sounds to those who earn minimum wage, a short term patch that will only accelerate automation in the long term.
    Also, make no mistake, high level jobs are also at risk, it's not just low wage jobs.
     
  10. DearthnVader macrumors regular

    DearthnVader

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    #10
    ...And how do you intend to pay for it?
     
  11. juanm, Jul 16, 2016
    Last edited: Jul 16, 2016

    juanm macrumors 65816

    juanm

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    #11
    As long as there's no tax evasion and it's kept balanced, it's self sustaining through taxation. It's essentially creating a closed circuit to make money flow and keep the economy alive, while solving other problems (poverty, unemployment, etc). Of course, it's not plug an play into an existing unbalanced economy, changes would need to be made.

    Also necessary: a complete shift towards renewable energy, a dramatic decrease in natality. Simply put, before it used to be more people = more wealth, whereas in the same wealth will be achievable with less people, so without a decrease in population, it'll have to be shared among more people and thus more people = less wealth.
     
  12. 1458279 Suspended

    1458279

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    #12
    Earned income is live work for income whereas unearned income is rents, investment income, etc. For many unearned income would come from retaining the fruits of their earned income.

    Most people consume all the fruits of their labor, when they should retain as much of that as they can.

    Imagine if everyone was told they would be forced to retire in 5 years and never allowed to work again. They would be forced to save and invest like crazy.

    The goal would be a more balanced earned/unearned model so that people aren't living paycheck to paycheck.
     
  13. juanm macrumors 65816

    juanm

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    What about future generations and younger generations who haven't had the time yet to save/build/invest?
     
  14. Desertrat macrumors newbie

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    #14
    Universal basic income? Whence cometh the moolah? Government only has whatever money it can acquire from the private sector. Increasing the deficit reduces discretionary government spending. We see that now, with entitlements taking money away from infrastructure.

    Worldwide, economies are slowing in growth; many are contracting. Corporate survival thus means reducing overhead, and thus robotics. What we have is excess production capability, already. Investment opportunities and high-pay jobs are limited.

    Sure, in a growing economy, tax cuts result in more business activity and history shows that there is increased tax-take to government. JFK, Reagan, Bush 2. In the present and likely-future stagnant economy, tax cuts would benefit the recipients, but deficits would have to increase.
     
  15. vrDrew macrumors 65816

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    #15


    Why not?

    You need to keep in mind the fundamental economic reality that unemployment, or underemployment, is a total dead loss to the economy as a whole. A person sitting unemployed for a year or six months means X number of potholes don't get filled. That X amount of contaminated water gets drunk. That unemployment means more money has to be spent on police, and prisons. On drug treatment programs. Etcetera, etcetera.

    You also need to keep in mind that money spent on productive public works projects (everything from the army to building bridges to lead paint remediation) eventually makes its way back to the Government, one way or another, in tax revenues.

    To begin with, paying someone $30,000 a year to fix lead paint, immediately saves the Government $12,000 in Unemployment or Welfare payments.

    Then there is the additional economic activity this newly employed person engages in. They start buying more at local businesses. Who end up paying more in sales and use taxes. In UI and WC taxes. And end up hiring more cashiers and fry cooks. And so the virtuous cycle continues.

    Look a little further down the road: Less unemployment means less crime. Less need for prisons. And getting the lead out of urban housing environments has an incredible return on investment in terms of social problems down the road.

    Think of Government spending, not as a a pure expense, but an investment in our country's most precious resource: Its citizens. And one that is likely to pay handsome dividends down the road. If only we can stop focusing on the wrong things, and start looking to the future.
     
  16. DearthnVader macrumors regular

    DearthnVader

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    #16
    OK, now I get it, thanks for the clarification, I completely misunderstood what you where implying.
     
  17. Arran macrumors 68040

    Arran

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    #17
    "unearned-income" sounds parasitic.

    Sure, it works for a lucky few, but it doesn't scale to a national level because somebody, somewhere, has to do some actual work (i.e. create value out of nothing) in order to support the folks who are living their "unearned-income" lifestyle.

    I guess it's appropriate for retired folks. Everyone else needs a job.
     
  18. DearthnVader macrumors regular

    DearthnVader

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    #18
    The closest thing there is to eternal life, is a Government Program.

    Sounds like a Socialist pipe dream to me, we don't need the private sector to drive job growth, we'll just rely on debt based Government spending.
     
  19. samiwas macrumors 65816

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    #19
    You really don't even need to raise taxes that much to put a million of Americans to work, at least as far as wages go. The government currently collects some $1 trillion in payroll taxes each year. Let's say they collect 5% more, which would bring an additional $50 billion in. Currently, payroll taxes are about 7.65% on each employee and employer. To raise that 5%, would mean they would go up to 8.03%. Let's make it 8.05%.

    So, say you make a good $104,000 salary, $2000 a week. Currently, you pay $153 in payroll taxes per week. Your taxes would go up $8 a week to $161. That's only raising payroll taxes. Not touching income taxes or investments/capital gains at all, which is where most rich people make their money. And that's $8 a week for someone making over $100k. The typical worker making $40,000? A whopping $3 per week difference.

    Now, what could that $50 billion do? Employ over 1.5 million people at a decent $30,000 salary. This is enough to remove most of those people from welfare, housing assistance, food stamps, etc. Now, of course, this does not pay for equipment, offices, or any of that, so either not that many people would be employed, or the rate would need to be a little bit higher. But, think about 1.5 million people out cleaning our cities, repairing broken fences, rails, etc. or doing any of tons of jobs that need to be done but which don't have a revenue stream/profit source. Those people would then be going out and spending at restaurants, stores, gaining skills...all sorts of things.

    I'd gladly have $10 a week taken out of my check if it meant it was going into a system that was putting a million Americans to work.
    --- Post Merged, Jul 16, 2016 ---
    Well, the private sector hasn't really done a great job in the last 30 years, now have they? Maybe it's time to try something different.
     
  20. DearthnVader macrumors regular

    DearthnVader

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    #20
    Taking $50 Billion from over here and putting it over there won't grow the economy.

    Well our so called "Trade deals" which aren't really "Trade" are killing us. The decline in the American middle class and the corresponding lose in American manufacturing are a direct cause and effect.

    [​IMG]

    A Trade is defined as I give you something of value, and you give me something of value in return. That's not what we're doing with our "Trade Partners", they give us something of value and we give them our money, they don't take our goods in return for the "Trade". When I go to the store and buy something I don't say I "Traded" for it, I say I bought It, because I did.

    Money only comes from Debt, when people take bank loans money is created. If they spend that money on Chinese goods and the money goes to China, it is no longer in our economy. They can't compete for it to repay the debt that created it. If we had a balance of trade that money would eventually work it's way through the global market and return, and they could compete for it to repay the debt that created it.

    Running a massive trade deficit means your Government must issue debt and sell it to the foreign holders of our money to repatriate that money, then spend it out into the economy, so it can be competed for to repay the debt that created it.

    The Government can not keep issuing debt into infinity, the more they issue, the more debt plus interest they owe to foreign debt holders. Sooner or later the interest payments on the debt alone consume the entire tax base.

    I agree we need to spend on infrastructure, and putting people on Government assistance to work is always a good idea, tho I'd raise the Top Marginal Tax Rate on capital gains to pay for it.
     
  21. samiwas macrumors 65816

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    #21
    Possibly not. But, taking minuscule amount from everyone, and creating a million new median-income earners who now have money to spend would probably make a few changes.

    It's a very interesting graph. One thing to note..manufacturing rose a lot from 1961-1969. Started falling right afterwards, and pingponged until 1975, after which it rose until about 1980. Fell somewhat from 1980 until 1983, gaining some, then pingponging until 1989, after which it fell steadily until 1993. Rose somewhat steadily after 1993, with a slight drop about 1998-1999. After 2001, though, manufacturing steadily lost the largest amount ever, never gaining, until 2009, after which it has risen steadily. As an overall trend, manufacturing rose up until the early 80s, after which it has fallen a lot. The most interesting part: the biggest gains came during Democratic presidencies.

    Our country is large enough to do the vast majority of it on our own. But, as long as windfall profits, ever increasing returns, and massive salaries are expiated, we will choke ourselves until we die.

    I only chose payroll taxes to show how little would need to be done, spreading it amongst everyone. Do you have a source on how much capital gains brings in currently? I haven't yet been able to locate it, and now I'm being asked to go to the store...
     
  22. skinned66 macrumors 65816

    skinned66

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    #22
    "**** them" is the common refrain I've been hearing - and everyone else too - except me of course.
     
  23. 1458279 Suspended

    1458279

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    #23
    With a good blend, the current worker can increase discretionary income. With a recursive focus on reducing the cost of living a person can reduce the number of labor hours needed to support a middle class lifestyle. The discretionary income allow people to balance job growth with investment growth and allow the next generation to be absorbed into the same system.

    The education system will have to step up, both in terms of cost and effectiveness. Keeping the population growth under control is also a must, there's just no way to make things work with open borders.
    --- Post Merged, Jul 16, 2016 ---
    What logic do you use to come to the conclusion that it won't work at scale? How would someone outside of a micro economy know if the dollar in your pocket came from earned or unearned income?

    The basics of economics is when someone does something that improves the economic value of something. It improves when you improve the relationship between time and money. Just as much as you can spend your day watching reruns of sitcoms, you can spend that same time chopping wood with an ax.
    Just as much as you can chop wood with an ax, you can chop wood with a machine. Just as much as you can chop wood with a machine, you can write a program that better analyzes inventory levels for a company and use those profits to buy chopped wood.

    Just as much as innovation begets innovation, so to does economic activity beget economic activity. The real parasitic loss is over taxation and regulation. When the government takes too much of your chopped wood and uses it to enrich themselves or "chase the rabbit" games like welfare or trying to make everyone come out even. The worse one is probably public funds used for vote-buying or enslaving the nation.

    Soon, we will see the answer. When automation takes the root of all human substance and renders all humans economically worthless. When the robots can do anything you can do, it'll all come falling down. That's when all the king's men and all the king's horses won't be able to put it back together again.

    Jim Jones proved that people are willing to commit mass suicide rather than admit what they're doing is wrong.
     
  24. vrDrew macrumors 65816

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    #24


    That is certainly true.

    But I'd argue that letting America's wealthiest people keep an extra $50 or $100 billion a year; much of which they park in low-interest savings accounts, or simply use to bid up the prices of Manhattan real estate or Jackson Hole condos - isn't really growing the economy much either.

    Now, taking some of that extra money the wealthiest have made thanks, in large part, to Globalization - and turning around and spending it on infrastructure and other "public good" projects, arguably would do a much better job of growing the economy. Because if much of that money goes towards wages, which are far more likely to be spent - then that Government spending really does have a multiplier effect. A far more powerful one than simple tax cuts alone will do.

    The reality is that there is not, at present, a shortage of capital for private investment. Rather the contrary, if the truth be told. The biggest IPO this year, which happened just this week, was for a company with a messaging app that makes its money by selling stickers. That, to me, says a lot about the excess of capital in the world.

    If Government borrowing was really starving capital markets of the cash they needed to build factories and make other truly productive investments - I'd agree with a lot of the rhetoric about Debt and Deficits.
     
  25. thewitt macrumors 68020

    thewitt

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    #25
    Well we all know you guys think government creates jobs and wealth, so the positions here are not surprising.

    Anything to justify the largest debt in history.
     

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