timelets | (no subject)

Summers on the debate around the proposed corporate tax cut:

First, a cut in the corporate tax rate from 35 to 20 percent in the presence of expensing of substantial or total investment has very little impact on the incentive to invest. Imagine the case of full expensing. If a company is permitted to deduct all of its investment costs and then is taxed on all of its investment profits, the tax rate has no impact at all on the investment incentive.

https://www.washingtonpost.com/news/wonk/wp/2017/10/22/lawrence-summers-one-last-time-on-who-benefits-from-corporate-tax-cuts/

This is a non-intuitive point that most people don't understand. The most likely outcome of the reform, besides an increase in budget deficits, will be an increase in aftertax corporate profits that flow to shareholders and managers through dividends and buyback programs.

Flat | Top-Level Comments Only

"This is a non-intuitive point that most people don't understand."

Shareholders understand that point really well -- just take a look at DJIA.

Market makers understand it. Most investors participate in the market passively and don't make conscious decisions about specific allocations. The tax plan is being sold to the public as a boost to real investment that will result in long-term wage increase.

"The tax plan is being sold to the public as a boost to real investment that will result in long-term wage increase."

Это уж к бабке не ходи. И ещё будет подробно и многократно излагаться всем известный факт о том, что снижение налогов является самоокупаемой операцией. "Бляди, сэр."