The scam of the tax cut story continues…
pgl responded to the post below…
“Corporations… make profits appear in low-tax countries; but there’s very little real production or employment behind those profits…. Tax-haven countries… show… ridiculously high levels of profits relative to wages… because the profits aren’t being earned where they’re being reported…. Ireland….”
Krugman is referring to transfer pricing manipulation. One would have hoped tax reform would make enforcing the arm’s length standard more vigorous by beefing up the IRS team and making the tax code less complex. The 2017 tax act made the system a lot more complicated which has led the tax lawyer profession very happy as they know get to bill a lot more hours further gaming an overly complicated tax code. And of course the Republicans in Congress are slashing IRS budget.
In other words, Republican leaders are not serious about any of this as all they want is more tax cuts for the rich.
Bradford DeLong writes at Grasping Reality with Both Hands:
There were “economists” last fall telling us that the Trumpublican tax cut was going to raise real wages in America substantially and soon: Robert J. Barro, Michael J. Boskin, John Cogan, Glenn Hubbard, Lawrence B. Lindsey, Harvey S. Rosen, George P. Shultz, John. B. Taylor; Larry Lindsey and Douglas Holtz-Eakin; James Miller, Charlie Calomiris, Jagdish Bhagwati; Kevin Hassett; Greg Mankiw; and the others. The people who last fall were telling us that the Trumpublican tax cut was going to raise wages by boosting growth by a number they decided was 0.4% per year—get us an extra 80 billion dollars of prosperity each year growing over time—all did so by pointing to the investment channel: (a) the tax cut would make investment more profitable, (b) we would then have about 800 billion a year of extra investment, (c) the added production made possible by that investment would be 80 billion a year, (d) and eventually wages would rise. (a) has happened. (b) was supposed to take effect quickly—this year. But (b) has broken down: business investment “should” be jumping from 13% to 17% of total production. It is not. So far it has jumped from 12.4% to 13.1%—one-sixth of the jump we were promised: (Dan here,,,follow the link to data)
Click on this Reddit link and then the WSJ title. WSJ will appear- just hit the “X” and the letter will appear: https://www.reddit.com/r/politics/comments/7fsjxa/how_tax_reform_will_lift_the_economy/
Interesting Poll of Economists from various school at the Chicago Booth IGM Forum on the same topic IGM Forum.
Anyone who trusts anything a mainstream economist says is an idiot. There ought to be no more thoroughly discredited profession in America these days–except maybe politician.
Not sure why you say that Karl. Maybe it depends on your definition of mainstream. My sense is that most mainstream economists do not buy into the repeatedly discredited ideas of the so called “supply siders” aka voodoo economics, most believe Keynes was mostly right–I do not believe Keynes ever suggested that an economy run massive deficits during boom economic times. And I believe that the Friedman branch of mainstream economists is willing to admit that there are limits to what can be done with monetary policy after our recent experience experimenting with negative interest rates. Am I missing something?