Will the US benefit from Trump's tariffs?
The Miami man wanted to get rid of something, so he didn't go around the bush for long. The political right in the US, he said at the beginning of May, is still clinging to the misconception that if you only cut corporate taxes enough, the workers will get more money. The tax reform of President Donald Trump, which has been in effect since January 1, has shown that this is not the case: "There is no indication that the money has flowed on to the American worker on a large scale." On the contrary: Many companies would have used the savings to raise dividends and buy back their own shares.
One has heard this often from the opposition Democrats. Only: Marco Rubio is not a democrat. Rather, he sits in the US Senate as a Republican for his home state of Florida. The outcry in our own ranks was correspondingly great. In the meantime Rubio has rowed back a bit, the question that he raised, but remains: Is the tax reform now the "insane Christmas present for all hard-working Americans" that Trump announced when he signed it in December, or is it just a service of friendship for the richest of the rich?
The reform lowered the corporate income tax rate from 35 percent to 21 percent, flattened the income tax rate, and doubled the basic tax credit to $ 12,000 per person. Family businesses that pay income tax instead of corporation tax have only had to pay tax on 80 percent of their earnings since the beginning of the year. If a group transfers its income parked abroad to the USA, it is only charged once with eight to 15.5 percent. In addition, inheritance tax will be reduced for many estates.
But if even a Republican like Rubio has doubts about the broad impact of the reform, one might think that the matter must be a flop. But as is so often the case with taxes, things are more complicated. First of all, the fact is: Statistically speaking, all income groups benefit. Even the left-liberal Tax Policy Center recently stated that. There are even people who pay more than before, especially unmarried people with no children who live in a state with high state taxes. On average, however, the net income of the bottom 20 percent of income earners this year will be 0.3 percent or 40 dollars higher than in 2017. The top fifth is up 2.2 percent or 5790 dollars, the rest is somewhere in between.
It is only logical that high earners save a lot more money in a progressive tax system in which, as income rises, not only the absolute but also the relative burden rises. However, left-liberal politicians and economists criticize the fact that the percentage relief is so much higher. However, the experts at the conservative Cato Institute contradict this: In their opinion, the analysis must not stop with a comparison of new and old net income. Rather, the change there must also be measured by what part of his income someone surrenders to the tax authorities. If this is factored in, relatively speaking, the main beneficiaries of the reform are actually not top but average earners.
At Trump, managers make dear children
However, Rubio's main focus was not on income tax. He is more against the statement that tax breaks for companies through more jobs and higher wages ultimately end up with the employees. It is correct: a good 530 companies have so far announced that they will pay their employees a kind of tax reform bonus of $ 1,000 or more or higher wages. Others announced new jobs or the construction of factories, including the cell phone company Apple, the aircraft manufacturer Boeing, the telecom giant AT&T and the bank Wells Fargo.
Measured against the total number of US companies, however, the group is rather small. In addition, there is a suspicion that many managers simply presented investment projects that had already been decided in order to make Trump nice. One example is Apple CEO Tim Cook, who said in January that they would invest $ 30 billion over the next five years and create 20,000 additional jobs in the United States. That sounds huge - but it is significantly less than Apple has managed in the past five years.
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