A few financial retorts

In an effort to pass a Tax Bill in the US that heavily favors the wealthy and increases the US debt, I have heard several platitudes that are no truer today than when they were first uttered years ago. Here are just a few odds and ends to sink your teeth into.

When a politician tells you a tax cut will pay for itself, the follow-up question is  why don’t we do away with all taxes then? The current tax bill has been projected to fuel only 1/3 of the cost of the tax reduction, which is a little higher than average tax cuts yields.

Most CEOs have said they will use the tax break to buy back shares, pay higher dividends and retain key executives with better incentives. The answer we were promised by legislators is they would spend it on their business investments. These folks are sitting on cash already, so if they are not investing now, when?

By the way, when a company says it is going to buy back shares, more often than not, that is a sign of weakness. In essence, management cannot figure out how to grow the numerator (earnings), so they lessen the denominator (outstanding shares). This is a less risky way to prop up EPS growth and gain a greater incentive payment.

I have talked ad nauseum about the US debt which is being ignored. As we see it grow by more than $10 trillion over the next ten years, at some point there will be a huge day of reckoning and all previous politicians will and should be held accountable. We will see some deck chair moving on our Titanic, but we are well past ignoring this problem. If a Republican tells you they are a deficit hawk, tell them that does not appear to be true.

Finally, the last major Tax Reform was in the mid-1980s. It was a bipartisan effort that took about four years to do, led by some of the smartest tax folks in the Senate and House. These Tax Bills are not bipartisan, have been rushed through without hearings, are not popular and are not authored by folks of the same caliber as before. This speaks volumes.

But, no one is listening to the push back. Talk is cheap. We are about to pass an unpopular Tax Bill that largely benefits corporations and the wealthy and adds to our building debt problem. And, the folks who will bear the brunt of this are the people in poverty and middle class. Please speak with your Senators and Congresspeople. Ask them not to pass any Tax Bill that will increase the debt. And, remember it is easy to pass a tax cut; the opposite is where it gets hard.

 

 

7 thoughts on “A few financial retorts

  1. I don’t have to be an American to see the wisdom in your post… and I truly admire the way you present your argument. Run for president, sir, and you’ll make me wish I were American just so I could vote for you.

    • Sha’Tara, many thanks. You are very kind. If I could run for office without fundraising, as I don’t want to be beholden, that would make it more inviting. Keith

      • I think you make a very good point about running for office. I ran for office once, raised most of my own money for low budget advertising but still, some people pitched in and it was embarrassing to not win – for them, and of course I was in no position to pay any of that back. I never did it again. There should be some way that the district, state or nation would have a sum of money a candidate, after passing whatever, certain tests, could access to run a campaign. The amount available would be the same for all and no other funding would be allowed under pain of jail time. At least that would take care of the funding part. The other thing: no more political parties. The rest, whether you are well known or not, how well you communicate, how knowledgeable and the contents of your platform, that would be up to the candidates to deal with, and the voters to detect quality from propaganda. Dream on, hey?

      • I am extremely impressed with your running for office. I agree about the equal funding for all candidates. I would love to shorten the election process and have term limits. Once the politicians are in too long they become more concerned with staying than governing. Keith

  2. Note to Readers: Early this morning the Senate passed their Tax Bill, complete with hand written amendments and no public hearings. Senator McConnell declared it a victory for the American people. But, which people? From my reading the people doing a touchdown dance already have an awful lot of money. 52% of Americans disapprove of this bill, but only the opinion of the privileged few matters.

    On NPR yesterday, I heard Congressman Kevin Brady, the Chair of the House Ways and Means Committee, smugly say we do not believe the projections of Congress nonpartisan Joint Committee on Taxation who measured the Senate bill as increasing the debt by $1 trillion and saying this bill is not as kind as portrayed to people in poverty and middle class. But, Congressman, why do the nonpartisan Committee for a Responsible Federal Budget, Fix the Debt and The Concord Coalition say pretty much the same thing.

    Without public hearings, Republicans did not take the time to know this. What should be surprising is the two Senators from Kansas voted for this bill after a similar bill had to be unwound last year after it decimated Kansas’ economy and budget.

    Smugness does not make you right, it just means you are smug.

  3. Gear Keith,

    This is where the republicans’ reliance on “fake news”, alt news. comes into play. Those who like to deal in the world of facts know that in the rosiest case scenario that a minimum of $1 trillion dollars will be added to the US tax deficit of around $20 trillion dollars projected to balloon to $30 trillion dollars by 2027.This assumes that the predicted reduction in corporate tax cuts will result in increased revenues of $500 billion dollars.

    What peoples need to know is that when the republicans say that these tax cuts will cost about $1.5 trillion dollars that this is a net number which is arrived at by the creation of the biggest tax increase in US history for the middle/ poor class at about $4.5 trillion dollars to pay for donor relief ( huuuge tax cut) at $6 trillion dollars.

    Hugs, Gronda

    • Gronda, even the mainstream media could report on this better. Very few articles speak of the projected $10 trillion increase and some leave off the existing $20.5 trillion now. The focus is on the $1 trillion or $1.5 trillion. But, as we know the bigger story is Congress not doing anything about the debt, only adding to it. This is offensive and Americans need to know this. Keith

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