Risky GOP tax cuts won’t trickle down, may lead to economic disaster in future

From today’s Politico News:

Republicans are on the cusp of passing the biggest corporate tax cut in American history, betting it will ignite an economic boom that creates better jobs and fatter paychecks for middle-class Americans.

That boom may never trickle down.

Some economists and corporate executives are already warning that simply lowering tax bills won’t necessarily cause companies to hire more people and pay them better. Instead, they could just wind up returning the extra cash to shareholders.

That could leave President Donald Trump and congressional Republicans celebrating a short-term legislative win that hurts them in the long run, with bigger deficits and little to show for it. And an already deeply unpopular bill — one that includes immediate hikes on some individual taxpayers — could become a serious political headache in 2020 and beyond.

“Frankly, I think they are bonkers,” David Mendels, former chief executive officer of software firm Brightcove, said of the GOP banking on a lower corporate rate to generate bigger worker paychecks. “It really doesn’t work that way. No CEO sits there and says, ‘When my tax rate goes down, I’m going to hire more people and pay them more.’”

Tax legislation cleared a key procedural hurdle in the Senate on Wednesday ahead of a formal vote as early as Thursday. House and Senate lawmakers will need to convene in coming weeks to hash out a compromise between their two bills.

Even some Republicans seem deeply unconvinced by predictions from members of the Trump administration and more aggressive budget forecasters that slashing the top corporate rate from 35 percent to 20 percent will generate enough economic growth to offset the additional $1.5 trillion in debt the Senate tax plan envisions over the next decade.

Read the entire article here.