PLEASE EXPLAIN: How will I get $4000 increase in my income if corporate taxes go down?

[Toddsterpatriot]

How much of our energy usage is supplied by solar energy today?

Solar and wind combined make up 10% of US electricity, which is up from less than 1% in 2010.

The U.S. set a new renewable energy milestone in March, in data released Wednesday. For the first time, wind and solar accounted for 10 percent of all electricity generation, with wind comprising 8 percent and solar coming in at 2 percent.​

While fossil fuels still dominate energy production overall in the U.S., solar and wind production are on a growth trajectory (especially in China, India, and some other developing countries, as well as parts of Europe). 2015 was the first record-setting year that more new infrastructure for renewable energy was installed than new infrastructure for nonrenewable energy.​

You say solar supplies 2% but takes more workers than all fossil fuels.

View attachment 156846

What is U.S. electricity generation by energy source? - FAQ - U.S. Energy Information Administration (EIA)

According to the EIA, larger scale solar is 0.9% of 4.08 trillion kWh, about 37 billion KhW.
Small-scale solar, another 19 billion kWh.
Call it 56 billion kWh, or about 1.4%.

Natural gas and coal, 64.2%.

Fossil fuels provide more than 45 times the power, with fewer workers.

That's why I can honestly say solar power jobs have low productivity.

I have a black garden hose (actually three of them). Leaving the hose off but with water in them creates water in a short time to hot to handle. Decades ago my neighbor added black PC pipe along his fence in a loop to loop which he added to the out part of his water filter, diverted to the pipe, and when it emptied into the pool, was too hot to touch.

Solar power is very simple.

That's awesome!
In Chicago, during winter, I'll continue to heat my home with natural gas, despite your discovery.

 

[2aguy]

Can any explain Trump's claim that a cut in the corporate tax rate from 35 percent to 20 percent would boost incomes of U.S. workers by at least $4,000 a year?

The White House Council of Economic Advisers put out a paper this week that says:

"Reducing the statutory federal corporate tax rate from 35 to 20 percent would, the analysis below suggests, increase average household income in the United States by, very conservatively, $4,000 annually."

I suppose that if you average all of the households in America, and include the millions of dollars that the CEOs from corporations will get as well as the $0 that everyone else gets, it might average out to $4,000.

But I don't see any way that my household income will increase by $4,000.



At this point, Trump is a liar until someone can come forward and prove that he is not.

Here...

Why Trump says his tax plan could mean a $4,000 raise for the middle class

Actually, the estimate is a $4,000 raise over eight years.

Economist Kevin Hassett, who chairs the CEA, introduced this estimate during a speech last week, when he noted that despite a big jump in U.S. corporate profits in recent years, workers' pay hadn't kept pace.

In the past, Hassett said, workers typically saw a 1.1% raise for every 1% increase in corporate profits. Today, he added, they get just 0.4%.

Why? Hassett believes it's because companies kept a lot of their profits offshore to protect them from the high U.S. corporate tax rate.

"In 2016, U.S. firms kept 71% of foreign-earned profits abroad. What would happen if they didn't do that? A simple back-of-the envelope calculation suggests U.S. workers in 2016 would have received a raise of nearly 1%. What if these firms didn't do that for the next 8 years? The median U.S. household would get a $4,000 real income raise."

So, for example, if you make $50,000 (which is somewhat below today's median income), a 1% raise is $500 per year, which works out to $4,000 over 8 years.

 

[skews13]

Can any explain Trump's claim that a cut in the corporate tax rate from 35 percent to 20 percent would boost incomes of U.S. workers by at least $4,000 a year?

The White House Council of Economic Advisers put out a paper this week that says:

"Reducing the statutory federal corporate tax rate from 35 to 20 percent would, the analysis below suggests, increase average household income in the United States by, very conservatively, $4,000 annually."

I suppose that if you average all of the households in America, and include the millions of dollars that the CEOs from corporations will get as well as the $0 that everyone else gets, it might average out to $4,000.

But I don't see any way that my household income will increase by $4,000.



At this point, Trump is a liar until someone can come forward and prove that he is not.

You won't. It's another trickle down story.

Same as the last trickle down story.

 

[2aguy]

Can any explain Trump's claim that a cut in the corporate tax rate from 35 percent to 20 percent would boost incomes of U.S. workers by at least $4,000 a year?

The White House Council of Economic Advisers put out a paper this week that says:

"Reducing the statutory federal corporate tax rate from 35 to 20 percent would, the analysis below suggests, increase average household income in the United States by, very conservatively, $4,000 annually."

I suppose that if you average all of the households in America, and include the millions of dollars that the CEOs from corporations will get as well as the $0 that everyone else gets, it might average out to $4,000.

But I don't see any way that my household income will increase by $4,000.



At this point, Trump is a liar until someone can come forward and prove that he is not.

You won't. It's another trickle down story.

Same as the last trickle down story.

Trickle down...or as normal people call it....people buying things with the money they earn....actually works, every time it is tried.....

 

[Wry Catcher]

How much of our energy usage is supplied by solar energy today?

Solar and wind combined make up 10% of US electricity, which is up from less than 1% in 2010.

The U.S. set a new renewable energy milestone in March, in data released Wednesday. For the first time, wind and solar accounted for 10 percent of all electricity generation, with wind comprising 8 percent and solar coming in at 2 percent.​

While fossil fuels still dominate energy production overall in the U.S., solar and wind production are on a growth trajectory (especially in China, India, and some other developing countries, as well as parts of Europe). 2015 was the first record-setting year that more new infrastructure for renewable energy was installed than new infrastructure for nonrenewable energy.​

You say solar supplies 2% but takes more workers than all fossil fuels.

View attachment 156846

What is U.S. electricity generation by energy source? - FAQ - U.S. Energy Information Administration (EIA)

According to the EIA, larger scale solar is 0.9% of 4.08 trillion kWh, about 37 billion KhW.
Small-scale solar, another 19 billion kWh.
Call it 56 billion kWh, or about 1.4%.

Natural gas and coal, 64.2%.

Fossil fuels provide more than 45 times the power, with fewer workers.

That's why I can honestly say solar power jobs have low productivity.

I have a black garden hose (actually three of them). Leaving the hose off but with water in them creates water in a short time to hot to handle. Decades ago my neighbor added black PC pipe along his fence in a loop to loop which he added to the out part of his water filter, diverted to the pipe, and when it emptied into the pool, was too hot to touch.

Solar power is very simple.

That's awesome!
In Chicago, during winter, I'll continue to heat my home with natural gas, despite your discovery.

My wife is from Wisconsin, no where in my post did I write we should supplant green or renewable energy for fuel oil. I grew up in CA, blocks from the Pacific Ocean, and spent many of my winter holidays as a kid surfing - I had a wet suit and survived.

As long as you have warm clothes, and don't kiss a metal pool, you too can survive in Chitown, simply insulate your house and use wind power to create energy and apply a little physics to the home, and you'll be okay (generations before you survived, but most moved to California and became the Democrats - the smart ones anyway).

 

[Spare_change]

Bottom line - $4000 raise claim is bullshit

[/thread]

I read the first 100 posts - I got tired of the whining, childish personal attacks, and misdirection - and I didn't see an answer to the original question.

So - here is the analysis the generated the claim. https://www.whitehouse.gov/sites/whitehouse.gov/files/documents/Tax Reform and Wages.pdf

From it, I quote the summary: (the justification data is presented in the actual report.)

Wage growth in America has stagnated. Over the past eight years, the real median wage in the U.S. rose by an average of six-tenths of a percent per year. But even as Americans’ real wages stagnated, real corporate profits soared, increasing by an average of 11 percent per year. The relationship between corporate profits and worker compensation broke down in the late 1980s. Prior to 1990, worker wages rose by more than 1 percent for every 1 percent increase in corporate profits. From 1990-2016, the pass-through to workers was only 0.6 percent, and looking most recently, from 2008-2016, only 0.3 percent.1 The profits of U.S. multinationals are still American profits, but, increasingly, the benefits of those profits do not accrue to U.S. workers.

The deteriorating relationship between wages of American workers and U.S. corporate profits reflects the state of international tax competition. The problem is not unique to America; countries around the world have responded to the international flow of capital by cutting their corporate tax rates to attract capital back from other countries. They have doubled down on such policies as they have seen business-friendly policies benefit workers.

This analysis from the Council of Economic Advisers reviews the evidence that has driven other developed countries to pursue the path of lower corporate tax rates and estimates how business tax reform in the Unified Framework for Fixing Our Broken Tax Code2 (hereafter, the “Unified Framework”) is expected to affect wages for American workers.

Reducing the statutory federal corporate tax rate from 35 to 20 percent would, the analysis below suggests, increase average household income in the United States by, very conservatively, $4,000 annually. The increases recur each year, and the estimated total value of corporate tax reform for the average U.S. household is therefore substantially higher than $4,000. Moreover, the broad range of results in the literature suggest that over a decade, this effect could be much larger.

These conclusions are driven by empirical patterns that are highly visible in the data, in addition to an extensive peer-reviewed research. While much of the academic literature predates the latest data, the covariation between the trajectory of inflation-adjusted wages ..."

Dispute it at your leisure - but, at least, the question has been answered. However, you can't dispute it with opinion - you must refute facts with facts.

Have fun.

The fact that over the last 8 years wages have been stagnant while corporate profits have soared, along with very little economic growth, is an indication that we need to try a different approach.

So my answer was going to be : (from the paper)
...the covariation between the trajectory of inflation-adjusted wages and statutory corporate tax rates (Federal and sub-Federal) between the most-taxed and least-taxed developed countries (OECD) over recent years, visible in Figure 1, is indicative of these papers’ findings. Data backed by empirical evidence and peer- reviewed research.

Until I realized that the OP posted a link to the paper with the answers and explanations - and all one needed to do was read it...leading me to believe that the question was merely rhetorical and the OP wasn't interested in an answer.

As the Obama-pologists aren't interested in addressing this...
...taking out a credit card from the Bank of China in the name of our children, adding to the debt...is irresponsible, it's unpatriotic.

The fact that over the last 8 years wages have been stagnant while corporate profits have soared, along with very little economic growth, is an indication that we need to try a different approach.

I'm afraid I'm going to have to challenge this postulation. There is no rational reason why the cost of labor (wages) should be proportional to the value of the product. Labor, in itself, is simply a product or service provided in return for a pre-negotiated price. It is no different than buying a piece of steel, a block of wood, or a plastic thingie.

If the product (the thingie) increases in value, or the provider is able to produce the product more efficiently, then he should be able to reap the benefit. It is, inherently, the responsibility of the provider to product his product in the most efficient and cost effective manner possible while, simultaneously, selling for the most profit possible. His investors should demand nothing less.

If the labor (product) increases in value, then the provider (the worker) should reap the benefit. The same rules apply.

Now, you claim that there needs to be a change -- and I agree. But, the change needs to be in the labor providers. They need to increase their value to the buyer of their product.

 

[SeaGal]

The fact that over the last 8 years wages have been stagnant while corporate profits have soared, along with very little economic growth, is an indication that we need to try a different approach.

I'm afraid I'm going to have to challenge this postulation. There is no rational reason why the cost of labor (wages) should be proportional to the value of the product. Labor, in itself, is simply a product or service provided in return for a pre-negotiated price. It is no different than buying a piece of steel, a block of wood, or a plastic thingie.

If the product (the thingie) increases in value, or the provider is able to produce the product more efficiently, then he should be able to reap the benefit. It is, inherently, the responsibility of the provider to product his product in the most efficient and cost effective manner possible while, simultaneously, selling for the most profit possible. His investors should demand nothing less.

If the labor (product) increases in value, then the provider (the worker) should reap the benefit. The same rules apply.

Now, you claim that there needs to be a change -- and I agree. But, the change needs to be in the labor providers. They need to increase their value to the buyer of their product.

That's fine.

My statement was in reference to expected benefits of a lower corporate rate as presented in the paper. The theory goes, and is supported by the research presented, that lowered corporate tax rates will lead to more investment, which leads to business growth, which leads to jobs - the more jobs available, the greater the competition for the best 'labor' providers - and there will be 2nd and 3rd tier 'support' personnel/industries needed also...tax payers all. Looking at labor as a commodity - it's then a case of supply and demand. Though I don't foresee a return to the steel mills of the past and the hordes of middle class men carrying thermos's and metal lunch buckets.

You disagree?

Maybe I didn't understand, it's a long paper - but I didn't take the correlation between lower corporate taxes and higher wages to infer that the tax savings merely appeared in the employees paycheck as a raise. It's possible the savings will just be passed on to investors in the form of higher dividends (I think this would be short sighted), or it's also possible that corporations will simply bring in lower wage folks from abroad via increased quotas for H1b visas. The only thing we know for sure - US corporations pay a higher tax than most of their competitors.

 

[Spare_change]

The fact that over the last 8 years wages have been stagnant while corporate profits have soared, along with very little economic growth, is an indication that we need to try a different approach.

I'm afraid I'm going to have to challenge this postulation. There is no rational reason why the cost of labor (wages) should be proportional to the value of the product. Labor, in itself, is simply a product or service provided in return for a pre-negotiated price. It is no different than buying a piece of steel, a block of wood, or a plastic thingie.

If the product (the thingie) increases in value, or the provider is able to produce the product more efficiently, then he should be able to reap the benefit. It is, inherently, the responsibility of the provider to product his product in the most efficient and cost effective manner possible while, simultaneously, selling for the most profit possible. His investors should demand nothing less.

If the labor (product) increases in value, then the provider (the worker) should reap the benefit. The same rules apply.

Now, you claim that there needs to be a change -- and I agree. But, the change needs to be in the labor providers. They need to increase their value to the buyer of their product.

That's fine.

My statement was in reference to expected benefits of a lower corporate rate as presented in the paper. The theory goes, and is supported by the research presented, that lowered corporate tax rates will lead to more investment, which leads to business growth, which leads to jobs - the more jobs available, the greater the competition for the best 'labor' providers - and there will be 2nd and 3rd tier 'support' personnel/industries needed also...tax payers all. Looking at labor as a commodity - it's then a case of supply and demand. Though I don't foresee a return to the steel mills of the past and the hordes of middle class men carrying thermos's and metal lunch buckets.

You disagree?

Maybe I didn't understand, it's a long paper - but I didn't take the correlation between lower corporate taxes and higher wages to infer that the tax savings merely appeared in the employees paycheck as a raise. It's possible the savings will just be passed on to investors in the form of higher dividends (I think this would be short sighted), or it's also possible that corporations will simply bring in lower wage folks from abroad via increased quotas for H1b visas. The only thing we know for sure - US corporations pay a higher tax than most of their competitors.

In fact, I agree with you (scary, huh?)

I believe that cutting the corporate tax rate will positively impact everybody. Is $4,000 the right number? I'll leave that to the experts, though I could make a strong case that it will be much more than that.

Perhaps,the most positive result of cutting the corporate tax is it will drive a realization at the federal government level that they must cut spending (yeah, I know --- fat chance)

I also think that those who want to draw a direct correlation between corporate tax rate and take-home pay are either being intentionally disingenuous, or incredibly uninformed.

 

[initforme]

The big picture is simply this.....if you are middle class...I'm other words id you earn between 75 to 115 grand or so.....you can live somewhat comfortably. But you will never really get ahead. Accept it. If you want to get ahead don't marry or have kids. As more and more people figure this out the nation wins.

 

[SeaGal]

In fact, I agree with you (scary, huh?)

Not at all.

Your posts are reasonable, and thoughtful - I aim to be just like that when I grow up. ...plus that's a beautiful paint in your avatar.

 

[Toddsterpatriot]

How much of our energy usage is supplied by solar energy today?

Solar and wind combined make up 10% of US electricity, which is up from less than 1% in 2010.

The U.S. set a new renewable energy milestone in March, in data released Wednesday. For the first time, wind and solar accounted for 10 percent of all electricity generation, with wind comprising 8 percent and solar coming in at 2 percent.​

While fossil fuels still dominate energy production overall in the U.S., solar and wind production are on a growth trajectory (especially in China, India, and some other developing countries, as well as parts of Europe). 2015 was the first record-setting year that more new infrastructure for renewable energy was installed than new infrastructure for nonrenewable energy.​

You say solar supplies 2% but takes more workers than all fossil fuels.

View attachment 156846

What is U.S. electricity generation by energy source? - FAQ - U.S. Energy Information Administration (EIA)

According to the EIA, larger scale solar is 0.9% of 4.08 trillion kWh, about 37 billion KhW.
Small-scale solar, another 19 billion kWh.
Call it 56 billion kWh, or about 1.4%.

Natural gas and coal, 64.2%.

Fossil fuels provide more than 45 times the power, with fewer workers.

That's why I can honestly say solar power jobs have low productivity.

I have a black garden hose (actually three of them). Leaving the hose off but with water in them creates water in a short time to hot to handle. Decades ago my neighbor added black PC pipe along his fence in a loop to loop which he added to the out part of his water filter, diverted to the pipe, and when it emptied into the pool, was too hot to touch.

Solar power is very simple.

That's awesome!
In Chicago, during winter, I'll continue to heat my home with natural gas, despite your discovery.

My wife is from Wisconsin, no where in my post did I write we should supplant green or renewable energy for fuel oil. I grew up in CA, blocks from the Pacific Ocean, and spent many of my winter holidays as a kid surfing - I had a wet suit and survived.

As long as you have warm clothes, and don't kiss a metal pool, you too can survive in Chitown, simply insulate your house and use wind power to create energy and apply a little physics to the home, and you'll be okay (generations before you survived, but most moved to California and became the Democrats - the smart ones anyway).

As long as you have warm clothes, and don't kiss a metal pool, you too can survive in Chitown, simply insulate your house and use wind power to create energy and apply a little physics to the home

I should build a windmill in my yard?
How much will that cost? What will it generate? A dollar or two of power a day?

 

[Spare_change]

The big picture is simply this.....if you are middle class...I'm other words id you earn between 75 to 115 grand or so.....you can live somewhat comfortably. But you will never really get ahead. Accept it. If you want to get ahead don't marry or have kids. As more and more people figure this out the nation wins.

This, too, has been proven to be statistically false. But, hey, it makes good copy.

 

[initforme]

Nothing is refutable.

 

[AntonToo]

The four grand comes from overseas companies that, with the lower corporate tax rate, will move capital from their operations in other countries to the United States. That expansion will increase competition for the limited supply of labor and thereby drive up wages.

Now, there are several problems with that analysis. FIrst, the primary source of that movement of capital is a Russian economic model that is rarely used in the United States. The numbers plugged in to that model include a current EFFECTIVE corporate tax rate of over 35%. Now that might be the stated rate, but with current tax incentives, rebates, and credits the EFFECTIVE corporate tax rate is usually calculated at less than 25%. Second, the studies only examined corporate tax rates. They did not calculate the VAT most European nations imposed. So when one European country with a VAT cuts it's corporate tax rate companies might move capital in to that country from another country that also has a VAT. That does not translate in to those companies moving capital in to a country that does not have a VAT. Perhaps more importantly, when those foreign companies move capital in to the United States and begin to hire workers they will have to provide HEALTH CARE to their workers. They don't have to do that in any other modern economy. Then there is our outdated infrastructure. The study assumes companies will move capital in to the country despite our outdated infrastructure. Again, the United States lags behind most modern economies when it comes to infrastructure, from highways to airports to rail.

In short, the analysis is disingenuous at best. It utilizes an inflated current effective tax rate and bases the transfer of capital to the United States on previous transfer of capital between mostly European economies. It ignores the historical record of previous corporate tax cuts in the United States that have always resulted in an increase in wealth inequality and the suppression of wages. I will state it again, with an effective corporate tax rate of 35% a dollar raise costs a company sixty five cents. When that tax rate declines to 20% it costs that same company eighty cents to hand out a dollar raise. Does anyone really believe those companies will start handing out raises when the "price" of that raise increases?

Amazing post, our RW friends need to read it a few times to get an idea of what solid analysis of economic issue looks like.