Worrisome Business Investment Numbers
U.S. Business Investment Remains Sluggish but Could Pick Up in 2020
U.S. business investment appears to struggle in third quarter
Posted on 12/26/2019 7:39:00 AM PST by Diana in Wisconsin
The corporations didn’t invest the money, they gave it to the shareholders.
buybacks helping the market to record highs, some have sold a percentage to take profits , large increase in dividends ...this is extra disposable income into the US economy....
plus from here on out...Now when somebody in India buys diapers from Kimberly-Clark or whatever....the profit from that doesn’t just sit in a piggy bank overseas...it is more likely to be brought back here .....
I think this repatriation of American dollars should be one of the biggest stories out there. But watch it come out during the election: I can just hear Ms. Warren declaring, "On day one, I'll make those greedy corporations bring those dollars home and I won't let them and their rich biddies get out of paying their fair share of taxes back to us either, while hard working middle-class Americans suffer, that's for sure!!"
Worrisome Business Investment Numbers
U.S. Business Investment Remains Sluggish but Could Pick Up in 2020
U.S. business investment appears to struggle in third quarter
We are one of the few countries that taxes our corporations on their world-wide earnings. A Japanese firm that earns a profit anywhere in the world can bring that profit home with no additional tax.
In that sense, our corporations are double taxed. And we had one of the highest corporate rates in the world.
Silly comment. After receiving the money, the shareholders did what??
Answer....they either spent it or re-invested it...both of which grow the economy. The net effect is exactly the same.
It’s amazing how some of us do not go one step further to see what happens ...what’s the next step.
It’s as though all those billionaires are stuffing it in their faux fireplaces.
The Left, notoriously, has NO FORESIGHT. It’s more convenient.
Re: wage increases - where are they? As an over-50, white male in a larger corporation that does yearly reviews and “merit” increases, I don’t see the three percent claimed, especially if you include the offsetting significant increase in insurance premiums.
Is it indexed to the $15/hour program, where someone going from $10 to $15 is counted as a 50% increase? Or it is a real combined average?
Then again, the 20% increase the CEO and the rest of the board got, along with the rather large bonuses might be boosting the average as well.
I’d like to see what the average 20-year employee is getting for an increase. Not these skewing exceptions.
Don’t get me wrong - I am doing OK. But with near-zero raises for the last 10 years it is very frustrating to feel that 3% might be the limit.
And, again, over-50, white, male. Job hopping just isn’t in the cards.
The money was made outside of the US taxation authority. It was taxed as if it was made here. It’s double taxation. If you work in state A and deposit your pay check in a bank operated in NY should you pay NY state income tax at all ? No. If you did would you call that double taxation (taxed in 2 states). Why should the federal government get its hands on it. Also the old 35% rate was one of the highest in the world.
Interesting Chart. But isn’t “Business Equipment” a pretty narrow filter on the economy as a whole?
Thanks Diana in Wisconsin.
The consumers pay the tax as part of the purchase price. The corporation always passes the tax along, just like any business or any organization.
None of them pay any tax, we pay it all.
+1
There is no such thing as a corporate tax.
However, to be 100% fair, to the extent that US Corporations sell goods abroad, some of that "corporate tax" is actually exported to consumers in other countries.
And the shareholders either:
(a) let it ride,
(b) invested it in other companies, who did invest it, or
(c) spent it.
IMHO, any of those 3 things benefited the US.
Which do you think didn't benefit our country?
There's nothing wrong with distributing money to shareholders.
That's not how the tax cut plan was sold, however. We were told the corporations would take the money and invest in plants, equipment and other capital expenditures and the result would be more jobs and economic growth.
I always thought that was a silly argument because American companies were already sitting on lots of cash before the tax cuts.
Companies don't invest capital just because they have it, they invest when they think the market is going to be there if they increase production.
It was just the first chart I came across but it tracks pretty well with overall business investment.
Here's a broader measure.
If you're genuinely interested that site and the other FED sites have as much granularity as you want.
They also look at after-tax return, before they invest.
Which rate has a higher after-tax return, 35% or 21%?
Which rate has a higher after-tax return, 35% or 21%?
That plus the first year bonus depreciation provisions make it even more striking that they decided not not to invest the repatriated money.
So maybe the tax cut sales job was a little overdone...
Maybe? And maybe it prevented a recession from starting already?
Either way, there is no bad time to reduce the highest corporate tax rate in the world.
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