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Thread: Tax Reform Akbar

  1. #1

    Default Tax Reform Akbar

    The Republicans have answered the dawa of businesses across the nation, struggling to progress from years of so-called "progressive" smothering and being treated as dhimmis. These brave fadayeen have fought a tough jihad full of self-inflicted wounds. While not a total victory they have made progress against the confiscatory kuffar.

    Long live the supply side jihad! Tax reform akbar!

  2. #2
    I like having more money in my pocket.

    Good analysis here.

  3. #3
    I can't remember was it rule 11 or rule 12? Either way that reads like Dread is in violation of it.
    Quote Originally Posted by Ominous Gamer View Post
    Being upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  4. #4
    No, it's a sober recognition of the religious nature of supply side economic policy in the US.
    “Humanity's greatest advances are not in its discoveries, but in how those discoveries are applied to reduce inequity.”
    — Bill Gates

  5. #5
    It is worth pointing out that all these economic and budgetary "forecasts" are pretty dubious. We have had a bipartisan consensus on improvements to our corporate tax system for a while now. We have not had much consensus on the personal income side. We've made progress on that consensus for corporate taxes (despite the Democrats being unable to grow a spine and negotiate). So be it, Tax Reform Akbar.

  6. #6
    Donald Trump accidentally admits Republican tax bill was deceptively sold as boost to middle classes

    While talking about the corporate tax rate being cut from 35 percent to 21 percent, Trump said, “That's probably the biggest factor in our plan.”

    The problem? Republicans have been selling this legislation as a middle-class tax cut, first and foremost.


    And polls show Republicans have bought into this, with roughly six in 10 believing the bill favoured the middle class over the wealthy - despite the biggest cuts going to the wealthy and the corporate cuts being permanent (unlike the personal tax cuts).


    "The bill includes some tax cuts for families, but these cuts are both temporary and tilted toward high-income households. Even in the initial years, millions of families end up paying more. And in the long run, the bill uses reduced spending on health programs and permanent middle-class tax increases to pay for these corporate cuts."

    Bonus quote:

    "But Obamacare has been repealed in this bill. We didn't want to bring it up. I told people specifically 'be quiet with the fake news media because I don't want them talking too much about it. Because I didn't know how people would - but now that it's approved, I can say the individual mandate on health care, where you had to pay not to have insurance, okay, think of that one. You pay not to have insurance. The individual mandate has been repealed."
    -Donald Trump
    "In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."

  7. #7
    Tax reform akbar! It's not a panacea, but it helps!

    The Tax Law, Just One Month Old, Is Roaring Through U.S. Companies
    From acquisitions and equipment purchases to stock buybacks, firms are rapidly recalibrating their business plans

    By Theo Francis, Peter Loftus and Heather Haddon
    Jan. 25, 2018 11:57 a.m. ET

    Just weeks after the federal government adopted the biggest tax overhaul in three decades, the effects are rippling through corner offices and boardrooms, with companies large and small dusting off once-shelved plans, re-evaluating existing projects and exploring new investment in factories and equipment.

    Specialty drugmaker Amicus Therapeutics Inc. has decided to spend as much as $200 million on a new production facility in the U.S. instead of Europe. Kimberly-Clark Corp. , maker of Kleenex tissues, is spending hundreds of millions of dollars to put new machinery in one of its U.S. factories, even as it closes others and cuts thousands of jobs. Aramark , the catering and uniform giant, expects to save nearly $500 million on two recently completed acquisitions.

    The rapid adaptation goes well beyond the early announcements of $1,000 bonuses or minimum-wage increases for rank-and-file workers. And this is just the beginning. The U.S. Treasury and the Internal Revenue Service have offered guidance on just a few of the two dozen provisions in the law that will likely require formal regulations. Companies must navigate complex rules imposing minimum taxes on foreign income, tax breaks for partnerships, faster deductions for capital spending and new limits on interest and operating-loss deductions.

    “We’re only 30 days into the tax reform process,” Lowell McAdam, chief executive of Verizon Communications Inc., told investors on Tuesday. “We’re all trying to understand the implications and what we can accelerate and how we can accelerate.”

    Along with announcing its repatriation of cash held overseas last week, Apple Inc. pledged to invest $30 billion in the U.S. that it had held abroad, despite having to pay $38 billion under a one-time tax on those accumulated foreign profits. Goodyear Tire & Rubber Co. now estimates it won’t pay cash taxes until 2025, because its existing credits will stretch out an additional five years when used to offset taxes at new, lower corporate rates.

    That the tax bill will have significant effects on corporate finances is certain, though the effects can vary widely by company. Already, analysts expect the legislation to provide a 7% to 8% boost in aggregate per-share profits for the companies in the S&P 500 this year, said Joseph LaVorgna, chief economist for the Americas at Natixis , an international financial-services arm of France’s Groupe BPCE banking firm.

    A big part of that comes from companies spending more, feeding revenues to other firms in what can quickly become a virtuous cycle, Mr. LaVorgna said. He believes analysts and the market may be underestimating the effect.

    “Somebody else’s capital outlay is another company’s income,” he said. “If there’s a surprise, things may actually be better.”

    Some economists caution the economic impact may not quite measure up to the growth in profits. Oxford Economics, a forecasting and consulting firm, estimates the legislation will contribute 0.4 percentage points to already-robust economic growth in 2018, and another 0.1 to 0.2 points in 2019, said Gregory Daco, head of U.S. economics for the consultancy.

    About half of that is likely to come from business spending, and the rest from households, Mr. Daco said. Oxford estimates that each $1 of corporate tax cut will lead to 40 cents of spending, based on historical precedent, Congressional Budget Office studies and conversations with corporate executives.

    That’s mostly a one-time gain. A reduction in taxes frees up profits to spend, but that then becomes the new normal, with further growth coming from general economic expansion or other factors.

    At Amicus Therapeutics, the new tax law solved a geographic dilemma. The Cranbury, N.J., company is developing an experimental drug to treat Pompe disease, a rare inherited disorder that causes muscle weakness and can be fatal.

    After early results for a new drug proved promising, Amicus wanted to increase production for further clinical testing and potential commercial sales.

    Amicus, which had been using Chinese contract manufacturer WuXi Biologics to supply the drug, decided in August to build its own facility. The U.S. was at a disadvantage to Europe, due to its 35% statutory federal income-tax rate for companies. Ireland’s corporate tax rate, by contrast, is 12.5%.

    Those financial considerations threatened to overshadow other advantages that a U.S. plant would offer, including the ease with which company officials could visit it, and the availability of talented workers in some regions.

    “Our strong assumption was that it would be very challenging to establish a new bio-manufacturing facility in the U.S.,” Chief Executive John Crowley said in an interview.

    As the tax legislation advanced in Congress last fall, however, building in the U.S. began to look more attractive. On Dec. 21, a day after Congress passed the final measure, which lowered the statutory corporate rate to 21%, Mr. Crowley recommended to his board the company focus on finding a U.S. site. The company has narrowed its choice to three East Coast cities Mr. Crowley declined to identify, and expects to decide in the next month or two. It expects the plant to cost $150 million to $200 million, and to employ at least 200 people at an average pay of $100,000 a year.

    “With the changes in the tax law, it now makes the U.S. competitive with these geographies we’re looking at,” he said.

    The rules of deal making, too, are changing. In the past two months, Aramark completed two acquisitions with a price tag of $2.35 billion as it snapped up hotel procurement and supply firm Avendra in December and uniform-rental and linen-supply firm AmeriPride Services Inc. last week.

    Both are a kind of deal that, thanks to the new tax law, has become cheaper. One provision lets companies deduct the cost of buying some sorts of assets immediately, instead of over several years as prior tax law required—and expanded this treatment to used assets as well as new ones.

    That essentially lets a buyer like Aramark get an immediate discount on the cash cost of part of its deals, the portion that reflects the acquisition of equipment, machinery and other tangible property.

    Aramark’s acquisition of Avendra, a partnership, is automatically treated as an asset purchase, New York tax consultant Robert Willens notes, while deal documents indicate Aramark and AmeriPride agreed to treat that acquisition as an asset purchase as well for tax purposes. (Although the Avendra deal closed in December, the new tax treatment applies to assets acquired after late September.)

    “The cost of deals structured in this manner have taken a turn for the better,” Mr. Willens said. “You’re getting a full 21% discount.”

    In news releases, Aramark described its after-tax cost for the two deals as $1.86 billion, 21% less than the pretax price. Aramark said in a statement that it continues to evaluate the impact of the new tax law with accounting firm KPMG LLP, and plans to update investors on the acquisitions when it reports quarterly earnings on Feb. 6.

    The same provision, speeding up tax deductions for capital spending, has prompted Kimberly-Clark, the diaper- and tissue-maker, to accelerate at least one major project, CEO Tom Falk said. The company’s board votes next month on a U.S. factory retooling expected to cost hundreds of millions of dollars. There wasn’t a timeline for the project previously.

    “It gives us more incentive to invest, particularly in the U.S.,” Mr. Falk said in an interview. “The project made sense before the tax benefit. It makes more sense after the tax benefit.”

    Similar reconsiderations are under way elsewhere. At United Natural Foods Inc., a grocery distributor with about 10,000 employees and more than $9 billion in annual revenue, the tax law has prompted a wholesale re-evaluation.

    Projects previously viewed as risky are being given new consideration, Mike Zechmeister, the company’s finance chief, said in an interview. The return on investment improved by 4 percentage points on a warehousing project in the Pacific region of the U.S. that the company had already decided to pursue, he said, primarily because of the new lower tax rate.

    “It’s going to impact all the decisions we make,” Mr. Zechmeister said. “Almost all investments look better from an investment standpoint because we won’t have to pay as much tax.”

    The tax break comes at a particularly good time for United Natural Foods, which has struggled to keep pace with surging demand for natural and organic goods. The company’s net sales rose 8% year-over-year during its last quarter to $2.5 billion, driven largely by Whole Foods, the chain acquired by Inc . last year and United Natural’s biggest customer.

    That sudden growth proved costly. The Providence, R.I., company had an additional $25 million in lost sales from out-of-stock goods during its last quarter, along with higher labor costs and storage fees. Any expansion would help ease capacity bottlenecks that the company intends to resolve in coming months.

    Some companies are holding pat, either because they want to see how the new rules shake out, or because they are worried about moving too fast.

    Verizon said it would use most of its tax savings—$3.5 billion to $4 billion in extra cash in 2018—to pay down some of its $117 billion debt, rather than increase investments. It will also donate to its charity and give employees company stock.

    Mr. McAdam, the Verizon CEO, said the wireless giant would remain disciplined about capital spending. “It’s very inconsistent that just because tax reform comes through, we are all of a sudden going to draw the line at a different place or lose that discipline,” he said on Tuesday.

    Several firms have announced plans to plow most of their tax savings into dividends or share repurchases, about a third of which flow to foreign investors, by some estimates.

    Bank of America Corp. is exploring how it might invest in branches, technology and its workforce, CEO Brian Moynihan told investors last week. “However, to be clear, we’d expect most of the benefits from tax reform will flow to the bottom line through dividends and share buybacks over time,” he added. A spokesman said payouts to shareholders will also help local economies.

    The tax overhaul is altering corporate operations in sometimes surprising ways. Netflix Inc., for example, has changed the compensation it will pay three of its top officers, raising their salaries by a combined $19 million.

    Its reasoning: The new tax law prevents companies from deducting any sort of pay over $1 million apiece for key executives. Prior law allowed companies to deduct that pay if it was tied to performance. So, having lost the benefit of a tax deduction for paying performance-based bonuses instead of salary, Netflix announced days after the tax law was passed that its board was scrapping the performance measures and converting the pay into straight salary instead, as it used to do before 2014.

    The tax-law change is likely to eliminate tax deductions on $92 billion of pay, according to an analysis of Russell 3000 firms by Equilar. Several large companies—including Johnson Controls International PLC and drugmaker AmerisourceBergen Corp. —have said their boards are considering how the tax change affects their approach to compensation. Willis Towers Watson , a compensation-consulting firm, found that 40% of 333 employers it surveyed were either considering executive-pay changes or had already made some.

    The ripple effects are hitting small businesses, too. Matthew Wells, president of Western Mechanical Contractors Inc. in Federal Way, Wash., is considering whether to restructure how his business is organized to maximize his benefits under the new tax law.

    The 32-person plumbing and mechanical contracting firm is currently set up as an S corporation, a so-called pass-through structure in which the business itself isn’t taxed and its income goes to the owners, who reflect it on their individual tax returns.

    Mr. Wells is trying to determine whether his tax bill would fall if he switched to a C corporation, which pays its own income taxes directly to the Internal Revenue Service—now at a 21% rate, down from a top rate of 35% before the new law.

    Mr. Wells’ accountant is still poring over the new law, but has suggested the potential benefits may not be as great as the contractor initially believed. “I think they are going to try and talk us out of it,” said Mr. Wells. “But it is certainly something we are looking into.”

    —Sharon Terlep, Ruth Simon and Ryan Knutson contributed to this article.

  8. #8
    Update on the Tax-Jobs and Cuts Act:

    (see also: - and a million other articles)


    “Humanity's greatest advances are not in its discoveries, but in how those discoveries are applied to reduce inequity.”
    — Bill Gates

  9. #9
    Yeah, mission accomplished.

  10. #10
    Quote Originally Posted by Dreadnaught View Post
    Tax reform akbar! It's not a panacea, but it helps!
    It made a lot of CPAs and tax attorneys happy at least. Attending all those tax update seminars and updating their computer programs means they can charge higher rates for anyone not filing the new "simple" postcard-sized 1040 form. The loopholes are still there, and you can still pay someone to find them.

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