Finance / Politics

160 Million-Plus Americans See More Money in Pay Checks Thanks To Trump Tax Cuts

money-wallet-income money tax cuts TrumpFeb. 15 has passed and the IRS is complete with processing the new withholding tables that take into account the new tax cuts enacted by Congress and President Donald Trump.

If all has gone according plan, your employer has applied the new rates — full disclosure: my employer has — and about 80 percent of you should be seeing a tax cut in your paycheck. Out of 200 million or so taxpayers, that is 160 million people or so, who are now be feeling the benefits of the Trump tax cuts.

Overall, the lower rates will account for $94 billion of additional pay for Americans in 2018 on the individual side of the ledge before deductions, or about $7.8 billion extra a month, according to the Joint Committee on Taxation. In 2019, that will jump up to more than $135 billion, or $11.3 billion a month.

That should provide nice improvement to the economy, which is more great news for the American people. Gross Domestic Product has not grown above an inflation-adjusted 4 percent since 2000 and not above 3 percent since 2005.

If anything might help increase how much we spend, it’s giving people back more of their hard-earned tax dollars. That’s a real stimulus.

The biggest boost could come on the business side of things, with the corporate rate being lowered to 21 percent below the global average. That will be worth $101 billion in 2018, and $125 billion in 2019.

Repatriation also looms large, with trillions of dollars of foreign earnings kept overseas expected to be repatriated over the coming years. Apple alone said it would repatriate $350 billion over the next five years and create 20,000 jobs here.

All of this should help increase growth, which can have an economy-wide job-creating effect. As growth has slowed, so has the rate of working age Americans entering the labor force.

It’s all prospective, but now there is real reason to be hopeful that those numbers start to move into the right column. But there are no guarantees. In the 1980s, the Reagan tax cuts became effective Aug. 1981, but you know what happened? There was a big, ol’ recession, which had already begun in July 1981 when the business cycle peaked. Unemployment spiked and growth contracted.

The headwinds at the time including sky-high interest rates as the Federal Reserve sought to slay the inflation dragon from the 1970s. Once the dust settled, however, in 1983 and beyond, the economy roared.

There are some signs that in the U.S. we have once again reached or are ready to reach the end of the business cycle. The stock market, particularly, the Dow Jones Industrial Average peaked above 26,000 and now is in a corrective mode.

On the other hand, interest rates have not yet inverted, that is, the distance between long-term and short-term interest rates. In fact, the 10-year, 2-year constant maturity has actually risen in 2018. Usually, the business cycle ends sometime after the yield curve is inverted, meaning the short-term interest rate was higher than the long-term interest rate. Right now, we’re not there yet. That might be bullish in 2018 if there’s another rally.

Either way, whether the business cycle is over or has a little more juice left, thanks to the Trump tax cuts, about 160 million Americans will have more cash to spend and invest to take advantage of hopefully the next boom, even if there is a major correction first. Hang tight.

From - NetRightDaily - by Robert Romano

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Mike
3 years ago

I have yet to see any explanation of how the new tax plain effects SS recipients that also get “required distribution “ from IRA’s

Kim
3 years ago

Ir’s not only the tax cuts that will benefit our bottom line, but also the increased standard deduction. Taxes filed in early 2019 will reflect that.

Scottar
3 years ago

The tax cuts are good and desirable but won’t cover the budget deficit nor pay down the debt. It’s not the same situation that Reagan presided over. If congress can pass a tax cut package why can’t they pass significant spending reductions as well?

The current budget is slated to add $1.2 trillion to the debt this year, according to the Committee for a Responsible Federal Budget.

The bill also threw in more than $17 billion in tax loopholes to special interests, including tax rebates for rum producers in Puerto Rico, accelerated depreciation for racehorse investors, special expensing provisions for Hollywood producers, and tax subsidies for electric vehicles.

It even suspended the federal government’s $20.5 trillion debt limit through March 1, 2019. Suspending the debt limit functionally raises the borrowing authority of the federal government by over $1 trillion—and it does so without any effort to reduce or reform federal spending.

Starting in 2019, deficits are projected to begin a rapid incline, and by 2027 they are projected to exceed $1.4 trillion annually. Deficit spending does not come cheap. The Congressional Budget Office projects that by the end of 2027 interest on the debt alone will exceed the nation’s defense budget (not including spending on war or other emergencies).

Demographic and economic factors combine to drive spending in Medicare, Medicaid (including Obamacare), and Social Security to unsustainable heights. The major entitlements and interest on the debt are on track to devour all tax revenues by 2038. All other federal spending could cease, and entitlement and interest spending alone would still outpace revenues.

By 2017 if spending is not significantly cut back, interest on the debt along is projected to be over $800 billion, 3x of today’s amount. by 1040 the debt will be 120% of GDP.

Read the rest at: http://solutions.heritage.org/promoting-economic-growth/federal-spending-and-debt/ with charts.

Congress needs a change of attitude by voting some significant RINOs, along with the worse of the Democrats, out of office. President Trump is the only one trying to reduce spending and institute significant reform in the government which ends up treading on the good ol’ boys toes. He’s bucking a lot of headwind.

SARGE
3 years ago

My friend gets paid twice a month (thats not every two weeks) no wait, im sorry, he gets paid every two wks Same amount as last yr. He gets $62 more a check. So thats about $1688 a yr?? So I guess that’s just chump change to that old wind bag Pelosi.

nan
3 years ago

Silly me! I thought AMAC was working to help mature citizens. The tax cuts are great for working people and I am all for that. HOWEVER, as a retired person, I think I will be paying much more because of elimination of certain deductions by the new tax code. You save your entire working life for retirement and end up paying more taxes (not what we were told by our planners).

Rick
3 years ago

It seems to have long since been forgotten that while Reagan’s tax cuts did get enacted, Tip O’Neill’s spending cuts never materialized. Republicans in Congress need to be reminded of this as they continue to spend like drunken sailors!

Bob Ross
3 years ago

President Trump and the Republican party were right and the Democrats were absent on the vote for tax reform, but the sure were able to criticize the Tax plan afterwards. Why will anyone vote for lame Democrats?

Phillip
3 years ago

I guess that I will look forward to a bigger refund in 2019, but right now, my SSA payment has increased around 1%, not the 2% advertised.

Rich
3 years ago

One thing that AMAC (unwillingly I hope) just did in this fine article and as so-called learned politicians, journalists, pundits, etc. always do is to say regarding tax cuts: “government is giving back our money”. No, no, that is so wrong and anger-inducing: “government is forcibly taking (stealing) less”. In that regard, I refer to my Social Security benefits as “partial theft restitution”.

Ervon Fairbanks
3 years ago
Reply to  Rich

Here is my experience with SSA. I received a letter dated October 20, 2016. It states “We found that your prior amount was incorrect.” The reduced my amount from $2,289.30 to $2,183.00, a reduction of $106.30. I received a 2nd letter from SSA dated October 23,2017. It also states, “We found that your prior amount was incorrect. You will receive $1,995.80, a further reduction of $187.20. I received a 3rd letter from SSA dated November 2217. It states my benefits will increase
2 percent and that my payment will be $1,941.80. My monthly payment has been reduced $347.50. SSA must be managed by a bunch drunken shoe makers.

PaulE
3 years ago

Did you ever follow up with an actual person at SSA to determine why your amount kept getting scaled back? I mean I would think you would at least want a better explanation than “your prior amount was incorrect”.

Jerry
3 years ago

I sure wish the tax rates would have already been in place when I figured my taxes last week. Going to have to send in more to cover a “shortage”. To those getting a “return”, you’re welcome. :-)

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