Post by the Scribe on Jun 12, 2020 21:33:52 GMT
For the last 40 years corporations have been given major tax cuts (from 70% to 21%) they have been given major deregulation that has allowed them to break unions, reduce workers benefits, out source millions of jobs. For many of these corporations the upper management have increased their salaries and benefits to the tune of millions of dollars, the major stockholders have become multimillionaires and often the major stockholders are also the upper management of the company so they are double dipping. The wealth gap has increased from 70 to 1 in the 1970's to well over 400 to 1 today and many of these companies have been bailed out by the tax payers when they've lost money, especially the major financial corporations. In that 40 year history, the corporations and the wealthy that own most of the stock have gone from being millionaires to being billionaires and under Republican control the economy has repeatedly gone into recession or near depression but the wealthy at the top don't suffer much pain. When they destroyed the housing market they got bailed out while millions lost their homes and their savings/retirement funds. Since Reagan started the trickle down policies the Republicans keep repeating, average citizens have paid the price in lower wages, higher health care costs, fewer benefits and lost savings and retirement pensions. In short, for 40 years the wealthy and corporations have been feeding on the best of everything paid for by the rank and file workers.
If Trump isn't re-elected as president, here's what may happen to corporate profits
www.yahoo.com/finance/news/if-trump-isnt-reelected-as-president-heres-what-may-happen-to-corporate-profits-165502096.html
Brian Sozzi
Editor-at-Large
Yahoo FinanceJune 8, 2020
Higher corporate taxes (and personal taxes, too) and lower profits could be lurking in 2021 if former Vice President Joe Biden wins the presidency from President Trump, suggests strategists at Goldman Sachs. The billion-dollar question is whether markets would tank in the lead-up to signs a Biden presidency —and its era of higher taxes on businesses and households — is inevitable.
finance.yahoo.com/news/is-trumps-economy-really-like-a-big-beautiful-rocket-ship-173416739.html
“For many clients, the most important equity market implication is the potential for higher corporate tax rates,” cautioned Goldman Sachs strategist David Kostin in a new note on Monday.
The Trump tax cuts enacted in 2017 reduced the federal statutory rate for corporations to 21% from 35%. In turn, the effective corporate tax rate fell to 19%. The lower taxes have unleashed higher corporate profits, rising dividends and a fresh wave of stock buybacks. Verdict is still out if corporations have upped capital investments as aggressively as hoped for originally under the tax cut scheme.
The U.S. stock market touched all-time highs in February just before COVID-19 took root in the U.S. — many on the Street would point to the tax cuts as the main driver of surging valuations.
But under the former vice president’s plan, the tax structure is likely to look rather different, Goldman notes. Biden’s tax plan, per data from the Tax Foundation, would lift the federal tax rate on domestic income to 28% from 21%. In addition, it would double the GILTI tax rate on certain foreign income, impose a minimum tax rate of 15%, and add an additional payroll tax on higher earners. Goldman adds that changes to the personal tax code could be made, too, including an increase in the tax rate applied to capital gains and dividends for high-income earners.
taxfoundation.org/gilti-2019/#:~:text=GILTI%20is%20a%20newly%2Ddefined,percent%20on%20an%20annual%20basis.
WASHINGTON, DC - DECEMBER 31: U.S. Vice President Joe Biden leaves a closed-door meeting with Senate Democrats to urge them to support a tentative tax agreement with Republicans on Capitol Hill on December 31, 2012, in Washington DC. The Senate stayed in session on New Year's Eve to try to deal with the looming fiscal cliff issue. (Photo by Drew Angerer/Getty Images)
Former Vice President Joe Biden leaves a closed-door meeting with Senate Democrats to urge them to support a tentative tax agreement with Republicans on Capitol Hill on December 31, 2012, in Washington DC. (Photo by Drew Angerer/Getty Images)
Former Vice President Joe Biden leaves a closed-door meeting with Senate Democrats to urge them to support a tentative tax agreement with Republicans on Capitol Hill on December 31, 2012, in Washington DC. (Photo by Drew Angerer/Getty Images)
Should these tax changes kick in (in the process lifting the corporate tax rate to 26%), Goldman estimates S&P 500 earnings in 2021 would drop 12% to $150 a share from $170 a share. Goldman’s Kostin mentions the new tax law “could also effect corporate earnings and equity valuations.” Kostin stays clear of predicting the magnitude of the impact to equities.
iQ Capital CEO Keith Bliss told Yahoo Finance’s The First Trade he is concerned about the prospect of higher taxes under Biden and how the “manufacturing renaissance” under Trump is kept alive by the former vice president. Ultimately, Bliss said the market is unlikely to start pricing in election risk until midway through the third quarter as debate season begins and Election Day comes more into focus.
finance.yahoo.com/show/firsttrade/
Others in the market say higher taxes are a small price to pay right now for a change in leadership inside a White House struggling to deal with a major health pandemic and growing social unrest.
“That is something we’re certainly concerned about [higher taxes]. It has been favorable for our clients tax wise. However the majority, at least here in California, people are willing to take that hit. They realize that for their children, for their grandchildren, for the next generation, I feel like that change is necessary. They feel like that’s something they could do, take that tax hit if Joe Biden gets election,” Sun Group Partners founder Winnie Sun said on The First Trade.
finance.yahoo.com/show/firsttrade/
COMMENTS
Joeyrob4 days ago
Since corporations have done nothing for their workers why should they not expect higher taxes. When they start paying higher salaries to the workers and lower salaries to the CEOs and executives then the economy will go up because the workers can now afford to buy homes and products. Salaries should be based on percentages of the CEO's salary in order to lose the 1% and start treating all American citizens fairly.
Nick4 days ago
The third paragraph said all you need to know: "The lower taxes have unleashed higher corporate profits, rising dividends and a fresh wave of stock buybacks. Verdict is still out if corporations have upped capital investments as aggressively as hoped for originally under the tax cut scheme."
The tax cuts did nothing for small businesses and individual wage earners. Wages stayed stagnant. Very little capital was re-invested back into the businesses. It all went to executive pay, dividends and stock buy-backs.
Richter4 days ago
Trump Tax Cuts Helped Billionaires Pay Less Taxes Than The Working Class In 2018. -
For the first time in American history, the 400 wealthiest people paid a lower tax rate than any other group, according to a new study by economists Emmanuel Saez and Gabriel Zucman at the University of California, Berkeley.
The startling data was brought to light on Monday in a New York Times column, and is based on an analysis by Saez and Zucman in their new book, The Triumph Of Injustice.
Some critics of the new research say that the data is skewed, or even potentially wrong. However, the fact that the ultra-rich potentially pay a lower tax rate than the working class is a massive problem. The Trump administration’s tax cuts for the wealthy highlight the fact that policy is moving in the wrong direction. Especially when there’s worry of a potential recession.
Bill Gates agrees and has previously said, “There’s no doubt that what we want government to do in terms of better education and better health care means that we need to collect more in taxes. And there’s no doubt that as we raise taxes, we can have most of that additional money come from those who are bett
bill4 days ago
Right... lower corporate profits, higher corporate taxes, higher individual taxes for the rich, lower individual taxes for everyone else. More money for better schools, more access to better health care, alternative energy, job training, reducing student debt, infrastructure renewal, immigration reform, etc.
Too much of the profits of corporations come from tax loopholes and low rates, which result in some of the largest corporations (e.g.Amazon) paying zero US federal income tax on 7 billions in profits year after year. The time for the inequities in our economy are reduced and a 21st century middle class is created and supported.
XxxXxx4 days ago
Two points:
First, The trump tax cuts resulted only in corporations paying higher dividends, buying back their stocks (to run up value) and increasing executive pay. They haven't resulted in capital investments, bringing jobs back to America from overseas, or expanding the number of workers.
Second, the "markets will crash if the Democrats win" canard is raised by Republicans (and Republican friendly businesses and media) before EVERY presidential election. The start with, there have been two major crashes during the trump presidency, earlier this year and a 20% drop at the end of 2016 (and they don't come any more business-beholden than trump).Looking further back, markets didn't tank as the result of Obama's election (either term) -- GW Bush's deregulation measures resulted in a toxic housing loan market which began the bear market decline of 2007 and was punctuated by the crash of Sept 16, 2008 (well before Obama's election). The markets didn't crash when Bill Clinton was elected (either term). The early 90's recession occurred during George HW Bush's term. The massive (for then) crash of 1987 was in the second Reagan term. Markets were sludgy during the Carter presidency, but no worse than they were during the Nixon/Ford years of "stagflation." In fact, you have to go all the way back to the Kennedy presidency to find a short (December '61-June -62) bear market (called the "flash crash"), and Kennedy was very pro- business. Then you have to go all the way back to 1929 for a major crash -- under the Republican president (whose inaction to crisis was strikingly similar to trump's), Herbert Hoover.
Toni4 days ago
With this Nation in crises, the wealthiest 1% getting richer, doesn’t concern most US citizens. If Americans are living in poverty, receiving minimum wages, unable to afford decent housing and have difficult feedIng their families. The highs and lows of the stock market, will not effect them. The majority of US citizens, don’t have the funds to pay rent or bills. Affordable medical care and the best teaching facilities for young people is a constitutional right. The markets ups and downs, affects only individuals with money to invest. This group may pay higher taxes, but they can afford it.
Anonymous4 days ago
I pay a 35% tax rate, and unlike the big corporations, I don't have tax lawyers that whittle this down to 0 to 10%. I just pay it. So can Goldman, et al.
Rich4 days ago
The stock market, and corporate profits, have been artificially inflated by the Republican policies and the actions of this administration. There is already a huge disconnect between the stock market and the rest of the economy. For 40 years they have pursued the consolidation of wealth, at the expense of the country. It needs to change, and now.
Eddy4 days ago
I have a friend who graduate at the top of his class from one of the best accounting law schools in the United States. At a recent Holiday dinner he showed us how the company he works for (one of the biggest in the world) can easily zero out federal taxes following the current laws by using depreciation on new unused assets and transferring those assets between umbrella off shore company branches. It was a jaw dropping and upsetting conversation.
R4 days ago
The wealthiest 10% of US citizens own 86% of the stocks and get nearly all the benefit of the corporate tax cuts and received all the benefit of the republican/trump tax cut for the wealthy because what the middle class received is fading away. Time to start worrying about the middle class, not make the piles of cash the wealthy have bigger
DWW4 days ago
Trump LOWERED the Corporate Taxes for businesses and the Wealthy personal tax returns. On the other hand as a retired person my Tax Liability has gone up the last three years. I have to pay each year. I know for a fact that he Middle Class Tax burden has risen. My son who use to get %k back now has to pay 16K, so a 22K change.
G4 days ago
Concern is that they might have to give back the billion dollars Trump gave them and they might actually have to contribute. No more buy backs and huge management bonuses.
Bob4 days ago
For the most part the tax cuts were a transfer of wealth with little of the promised investment or increase of wages. More importantly tariffs were a tax on business and lower income people and stunted investment.
PaterNo4 days ago
Please! So many corporations hide income overseas to avoid taxes that the effective rate is far from 19%. The effective rate was lower than that before trump's tax cuts.
fortune.com/2019/12/19/low-effective-corporate-tax-rates/
"The biggest corporations enjoyed an average effective tax rate of 11.3%...."
Matt4 days ago
So what? Big companies still aren't sharing their huge gains with their employees, and they're still doing everything possible to not pay taxes. They should pay their fair share.
Keith4 days ago
Corporate profits aren’t the only thing that matters to humans.