Paul Krugman writes: "As Greg Leiserson of the Washington Center for Equitable Growth points out, 'every month in which wage rates are not sharply higher than they would have been absent the legislation, and investment returns are not sharply lower, is a month in which the benefits of those corporate tax cuts accrue primarily to shareholders'. A tax cut that might significantly raise wages during, say, Cynthia Nixon’s second term in the White House, but yields big windfalls for stock owners with only trivial wage gains for the next five or 10 years, is not what we were promised..." See Greg Leiserson: Assessing the economic effects of the Tax Cuts and Jobs Act: "Key takeaways: An assessment... should focus on the impact... on wage rates... [on] the return on business investment, and... [on] future federal budget deficits, as these will determine the impact... and the fiscal sustainability of the law...

...A central challenge... will be determining the counterfactual.... Today, the law’s corporate tax cuts are primarily benefitting shareholders. Wage rates would need to increase about 1 percent above the level that would have prevailed absent the law to shift the benefits of the corporate tax cuts from shareholders to workers—more if revenue-raising provisions of the new law scheduled to take effect in the future are delayed or repealed. There is no indication that anything of this scale has yet occurred.... The best estimates... suggest... that only a small portion of these corporate tax cuts will be shifted to workers from shareholders even without taking the effects of rising federal budget deficits into account, and most of those gains will accrue to more highly paid workers. The increase in budget deficits and the resulting increase in U.S. government debt due to the new law will require offsetting fiscal policies. The net impact of the tax legislation on the public will thus reflect the combination of the effects of the tax cuts as enacted and these future as-yet-unspecified fiscal policy changes, as well as any impacts from rising budget deficits and federal debt in the interim...


#shouldread

Comments