The economic analysis of the US Treasury on the proposal for tax reform shows how a still uncoordinated and unfinished bill will increase the receipt of federal taxes amounting to $ 300 billion over the next 10 years. Obviously, this is a good indicator of the quality of government work.
However, according to the columnist CNBC Ron Insana, at any economic faculty anyone who compiled this analysis would have received a “2” for a thoughtless and careless attitude, not to mention intellectual laziness when it comes to predicting the impact of the tax reform proposals being considered currently.
The Senate’s plan was prepared so hastily that it reintroduced the corporate alternative tax, eliminated tax incentives for research, raised the upper marginal tax rate to 100% for some companies, and raised taxes for middle-income and low-income groups.
How this stimulates economic growth is incomprehensible. However, the Ministry of Finance asserts that there will be growth.
“This could be the first tax reduction plan in modern American history that will lead to economic downturn, not growth,” CNBC columnist Ron Insana writes.
With the exception of a short-term increase in capital expenditures, few “reforms” can support growth above its current trajectory.
It is unlikely that people will see revenue growth, therefore, it is hardly worth waiting for a large increase in consumer demand, which would justify the increase in capital expenditures by enterprises.
The Ministry of Finance, without explanation, states that half of the additional revenue from the projected average annual growth of 3% over the next decade will come from higher revenues from corporate taxes and higher taxes from small businesses.
The Ministry of Finance says that tax benefits will justify themselves.
This is a statement for which there is no economic evidence, in addition, no attempts have been made to implement other incentive measures that accompany tax cuts, such as low interest rates, increased public spending or accelerated global growth.
It seems that this administration does not take economic analysis seriously. In the “analysis” is almost not paid attention to the budget calculations, so that the “pink scenario” Reagan looks modest in comparison with this.
The political “victory” for the White House and Congress is not the same as the economic victory for the American people. It seems that the developers of the tax reform practically did not reflect on its consequences, just as there was no long and detailed reflection on Obamacare when the Congress tried to cancel and replace it.
Of course, a small number of measures in current tax reform proposals are beneficial to a select group, and this is reflected in the prices of shares and is almost not reflected in the measure of consumer and business confidence according to public opinion polls. It is better for this government to buy bitcoin futures and hope that the price will be high enough to pay off the national debt.
This will have the same meaning as the above analysis, presented on Monday by a senior official of the Ministry of Finance of the country.