TAX PLAN BALONEY

Once again with Trump's tax cuts,* we have the Republican myth that tax cuts more than pay for themselves.**   Years ago, I explained why this is not so.  But for openers how about why then not cut taxes to zero and have infinite money?  Baloney, yes, but that is what is claimed.

There are those who say that tax cuts pay for one-third of their cost.  Well maybe.  But often economic benefits of tax cuts (e.g. successful new startups), such as they are, come years into the future and do little now.

Business tax cuts may be something else.  One analysis concludes that a decrease of the business tax cut from 35% to 22% would pay for itself (But taxes paid vary widely.  Currently average companies pay around 28% so this would mean the average company would pay about 15%).  But Trump wants to cut it to 15% for an effective tax rate of around 8%.

Few companies pay the full tax rate:
But by taking advantage of myriad breaks and loopholes that other countries generally do not offer, United States corporations pay only slightly more on average than their counterparts in other industrial countries. And some American corporations use aggressive strategies to pay less — often far less — than their competitors abroad and at home. A Government Accountability Office study released in 2008 found that 55 percent of United States companies paid no federal income taxes during at least one year in a seven-year period it studied.***
.............................................................................
Not all American companies are willing or able to reduce their taxes drastically. Taxes vary more by industry here than abroad, according to a study released in February by Kevin S. Markle of Dartmouth and Douglas A. Shackelford of the University of North Carolina. At the high end, American retailers paid 31 percent in total income taxes, construction 30 percent and manufacturers 26 percent. Financial services companies paid an average of 20 percent, real estate 19 percent and mining 6 percent.

http://www.cnbc.com/2017/04/26/the-white-house-just-outlined-its-tax-plan-heres-whats-in-it.html
** http://stopcontinentaldrift.blogspot.com/2010/05/effectiveness-of-taxes.html
http://stopcontinentaldrift.blogspot.com/2010/07/trouble-with-income-tax-cuts.html
http://stopcontinentaldrift.blogspot.com/2012/06/lowering-tax-myth.html
*** http://www.nytimes.com/2011/05/03/business/economy/03rates.html