On Marginal Revolution, Tyler Cowen quotes from a news item in the Financial Times:
There are several investment implications of Trump back in the White House,” said Jack Ablin, chief investment officer at Cresset Capital. “[Most notable would be] a higher-for-longer Fed, as monetary policymakers increase the likelihood that the corporate tax cuts will be extended next year.”
Did you spot the error in the quote from Jack Ablin? Neither Tyler nor, as far as I can tell, any of his many commenters did.
The corporate tax cuts, if by that you mean the drop in the corporate tax rate to 21%, don’t need to be extended next year because they don’t expire next year. They are one of the few parts of the 2017 tax cut that are permanent unless Congress explicitly changes them. And thank goodness for that because they are one of best parts of the 2017 law. (The other one is the restriction on the deduction for state and local taxes, which does expire next year.)
I’ve seen a number of people claim on line that the cut in the corporate income tax rate was temporary. I corrected a Reason writer who made that claim. To his credit, he updated his post to reflect the truth.
READER COMMENTS
Jim Glass
Jul 2 2024 at 1:51pm
There are implications a heck of a lot bigger than that…
Why Does Trump Want to Crash the Dollar?
Why focus on an ant hill when there is a mountain range ahead?
Michael Stack
Jul 3 2024 at 5:47pm
I dislike the idea that somebody shouldn’t comment on D if there exists A, B, or C which is more important. Maybe he’s writing about it because it is interesting?
Jim Glass
Jul 3 2024 at 6:35pm
A tax rate extension that can’t happen because the rate is set permanently?
It’s when ignoring the mountains to try to appear clever about an ant hill that one makes this kind of mistake.
Andrew_FL
Jul 2 2024 at 1:53pm
What does he mean by “a higher-for-longer Fed”? Fewer or no rate cuts? Why? Seems like a non sequitur.
Craig
Jul 2 2024 at 2:54pm
The higher for longer could mean no rate cuts or perhaps just fewer rate cuts than originally anticipated, the thought process behind the quoted passage is that higher for longer will be a ball and chain on the economy causing some type of slow down/recession which will thus ensure that C corp tax rates won’t go up. I am admittedly reading a bit between the author’s lines there, but that is how I interpret it.
steve
Jul 2 2024 at 2:00pm
Surprised everyone there missed it though it has been pointed out elsewhere. Maybe we get lucky and they just eliminate it altogether. What I find really surprising is very little discussion about Trump’s claims he will put tariffs on everything or replace the income tax with tariffs.
Steve
Jon Murphy
Jul 2 2024 at 7:47pm
There’s been a decent amount of analysis on that proposal in some economic focused outlets. The short version is: tariffs cannot raise enough revenue to offset eliminating the income tax. Other cuts would be needed to ensure no additional debt is incurred.
Craig
Jul 3 2024 at 2:34pm
“The short version is: tariffs cannot raise enough revenue to offset eliminating the income tax.”
Schucks. Oh, right, that’s a feature, not a bug of the scheme! Starve the beast! 😉
Jon Murphy
Jul 3 2024 at 4:18pm
If it were coupled with spending cuts, I’d agree. But given spending cuts were not discussed, there appears to be no starving being done
Matthias
Jul 4 2024 at 12:05am
If you find that a feature, I would suggest replacing all existing taxes not with tariffs, but the forceful extraction of people’s gold teeth.
That’s just about as stupid but at least it won’t destroy the economy as badly.
Craig
Jul 6 2024 at 9:49pm
Well I would abolish the federal government entirely/national divorce. Short of that if the federal government is to exist it should exist and actually be a limited government of enumerated powers. Prior to the Civil War tariffs were about 90% of federal revenue and for the most part restrained its activities to the ones that are actually supposed to be federal.
Thomas L Hutcheson
Jul 4 2024 at 6:16am
This is good news to me. We really ought not have a tax on business income. Business profits are income of owners and should be taxed as such. Even if business taxation did not introduce inefficiencies — look at the difference between the statutory and te effective rage — it would be unjust to tax owners a a single rate instead of at each owner personal rate.
We should find other ways — a personal consumption tax would be best of all — to pay for public expenditure.
Comments are closed.