The Trump Tax Plan will not Pass Congress Part 2. : ThyBlackMan

Thursday, December 14, 2017


The Trump Tax Plan will not Pass Congress Part 2.

November 21, 2017 by  
Filed under Business, Money, News, Opinion, Politics, Weekly Columns

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(ThyBlackMan.com) (“Excerpts from the book titled, “The Fix This Time”@ amazon.com/dp/B00MI3PD2M). In regard to the Trump administration wanting to give corporations a 15 percent tax cut, let’s take a closer look at that initiative. On the face of it, it appears logical as, if we are able to reduce taxes for corporations and businesses, they should then turn around and invest that money in factories, equipment and new products creating high paying jobs that will not be shipped off to low wage income countries. Don’t count on it! The American working class needs help. It would be nice if businesses and corporations were more like their counterparts of the past, where one worked at and retired from the same job after many years.

Globalization, the act of seeking the lowest production price to maximize profits, is at odds with the American worker’s goal of stability and a steadily increasing income. Even jobs resulting from the so call green economy of the future are subject to exportation. The American worker is upset and in some instances downright angry because he sees the politics and the policies of the two most powerful political parties indifferent to his concerns when it comes to globalization.

If businesses and corporations were going to produce new good paying jobs after a proposed 15 percent tax cut, they should be doing that now. You see, what the Trump administration will not tell you and does not talk about when they call for a 15 percent tax cut for businesses and corporations, is that these enterprises are already enjoying an effective tax rate on average of 18 percent. And many business enterprises pay no taxes at all. Effective rate of taxes simply means that after corporations and businesses take allowable tax deductions, they end up with what is their true tax rate and that rate on average is 18 percent. So, where is the growth?

You think giving these enterprises even more tax payer money will generate growth? Additionally, the Federal Reserve Bank has invested over $4.0 trillion dollars since the 2008 Great Recession, when you count the dollars it has spent on its Quantitative Easing (QE) programs to hold interest rates near zero percent. This has benefited businesses and corporations at the expense of pensioners and savers. Also, consider the billions of dollars the Bush and Obama administrations spent.

Corporations and businesses in this almost zero percent interest rate environment have benefited handsomely as they were able to refinance their debt at very low interest rates saving them money. This almost zero percent interest rate environment did not result in businesses and corporations creating new factories, and new high paying jobs. Many businesses invested their savings and earning into stock buybacks. In doing this, they get an increase in the price of their stock. As the share prices rise, and the price of a company stock is usually tied to whatever compensation the Chief Executive Officer (CEO) is getting; the CEO, stock holders, and upper management are rewarded.

The near zero percent interest rates have created an environment in which corporations have stopped looking for ways to grow their businesses, expand operations, or hire more employees. Thus, what the Trump administration is asking corporations and businesses to do is something that is just basically not a part of their DNA and that is hire workers and expand output in advance of a resurgence of American consumer demand. Even with a cut to 15 percent in the corporate tax rate, past behavior signals that that is not enough of a tax cut for corporations and businesses to take such a risk.

In stating what American corporations are doing with the money they are saving in this low interest rate environment, I am not saying it is wrong, as it is the right of businesses and corporations to take advantage of every legal opportunity they can to save their stockholders money, and increase their business value.

What I am saying, is that we as consumers should not count on corporations and businesses putting any money back into the system in terms of expanding and hiring new employees without first seeing a credible program that will generate consumer demand and consumer demand is predicated on consumer spending. Doesn’t that make common sense? This of course, is what the Davis Deficit Neutral Job Creation and Stimulus Plan brings to the table, a way to generate consumer spending without increasing the national deficit.

Staff Writer; James Davis

This talented brother is a graduate of Florida A. and M. University(FAMU), a former stockbroker, and a human rights activist who resides in Sanford, Florida. He was awarded the prestigious Governor Haydon Burns Scholarship to attend FAMU and while at FAMU was awarded the first Martin Luther King Scholarship. He is also author of three books, among them are “The Fix This Time,” Expanding Social Security Benefits to Create Jobs and Spur Demand(http://www.amazon.com/dp/B00MI3PD2M ) and “Hey…God’s Talking To You,” The Study Book (http://www.amazon.com/dp/B00GYI3VQW ).

He can be reached through his blog @, (http://www.thefixthistime.com).


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