There is an interesting dynamic that evolves when you write economic and financial articles every week. In my case, it can be like walking onto a car dealer’s lot and cringing at what is to come. Spending hours a day involved in research, the topics of the American economy, the world economy and the recent Trump/GOP tax reform bill are all areas of some expertise.
Yet, watching the news coverage of the bill as it made its way through Congress, and the subsequent reporting on it, have been much like listening to the car salesman’s pitch. That might also be compared to fingernails on a chalkboard; unpleasant, irritating and sigh-inducing.
The results, even in the early days of the bill being passed into law, has been nothing short of spectacular. The first reductions in payroll taxes haven’t even occurred (in February), yet tens of thousands, maybe millions, of Americans, have more money in their collective pockets already.
Some examples include the 125,000 Disney employees who received a $1,000 bonus, Starbucks employees who got a raise, Chase Bank giving raises to 22,000 employees and opening 400 new branches and the APS electric company in Arizona lowered customer’s bills; all as a result of the tax reform. After payroll withholding table changes kick in next month, the majority of working Americans will see more take home pay.
Many Americans Just Don’t Understand
Despite all this good news, a recent survey found that 46% or respondents believed that the new tax law was somehow a bad thing. How can they see reality and still be convinced of this false conclusion?
Much of the problem has to be blamed on fake news.
This is where it becomes more painful for someone who writes about economics and financial topics. The realization that the stock market has hit so many record highs in recent months, unemployment among blacks and Hispanics has recently hit an all-time low and companies are repatriating billions of dollars back into the American economy.
From an economic standpoint, it just doesn’t get any better.
A Bing search of this last point, about the repatriation of billions, finds a number of negative articles at the top of search results. Bing puts some unknown websites opinions at the top of its search results on the topic.
IBM’s CEO says that repatriation is a great thing yet a Google search of “companies repatriation of earnings,” brings up a NY Times article at the top of search results that claims that the bill would mostly benefit companies that moved money offshore.
No wonder that the average person is stymied in their appreciation of what this tax law has already accomplished for America and the majority of people.
Deregulation has Launched the Stock Market
It is hard to also ignore the impact of deregulation on the equity markets.
The stock market, the Dow and the S&P, have seen new record highs. By mid-December last year, the S&P 500 had reached its own record high. The Dow hit 20,000 in January of last year, and by January this year, it had hit 25,000. What many average working Americans tend to forget is the positive impact this has on their 401k and IRA plans. It means they are wealthier. When companies are wealthier, resulting from lower taxes, they will spend money to buy back stock, making many middle-class investors better off yet.
When I hear people still moan and groan about tax reform, calling it a giveaway to give corporations or the rich, I have to roll my eyes.
It is good for every American. There are few exceptions.
This is a Republican project though; not one Democrat in the Congress voted for the bill. The fact that 46% of Americans don’t think it’s a good thing may be telling of how information is disbursed in our culture. As an economics and financial writer, I know that lower taxes are a darn good thing. It’s just finding the truth about the benefits of the bill that makes it a challenge. It benefits many not to let the average American know just how good it is.
© 2018 K Richard Douglas
