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Thread: The End Of The Tax Cut Boost

  1. #1
    INGSOC GURPS's Avatar
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    The End Of The Tax Cut Boost

    Last week, I touched on the issue of corporate profits and tax cuts. While the promise was that tax cuts were going to a massive boost to economic growth, the reality has been quite different. To wit:

    “The benefit of a reduction in tax rates is extremely short-lived since we compare earnings and profit growth on a year-over-year basis.

    In the U.S., the story remains much the same as near-term economic growth has been driven by artificial stimulus, government spending, and fiscal policy which provides an illusion of prosperity.

    The reality is that what earnings growth there has actually been, as shown above, was indeed derived from tax cuts but also through the extensive use of share buybacks. While the mainstream media, and the Administration, initially rushed to claim that tax cuts would lead to surging economic growth, wages, and employment, such has yet to be the case. Instead, companies have used their tax windfall to repurchase shares instead.

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    Here is the real kicker. Since 2009, the reported earnings per share of corporations has increased by a total of 391%. This is the sharpest post-recession rise in reported EPS in history. However, the increase in earnings did not come from a commensurate increase in revenue which has only grown by a marginal 44% during the same period. This is an important point when you realize only 11% of total reported EPS growth actually came from increased revenues.

    While stock buybacks, corporate tax cuts, and debt-issuance can create an illusion of profitability in the short-term, the lack of revenue growth the top line of the income statement suggests a much weaker economic environment over the long-term.



    The End Of The Tax Cut Boost






    Queue Derision and Dismissive Behavior from the Forum Resident Expert



    'I Told Ya So'
    We’re tempted to suggest a conspiracy here — but it’s just liberals agreeing yet again that conservatives have hidden, evil motives, because modern liberals simply can’t conceive of any other reason to disagree with the liberal consensus.

    “Moral precepts are constant through the ages and not obedient to circumstances.”

  2. #2
    INGSOC GURPS's Avatar
    Member Since
    Nov 2012
    Location
    Peoples Republic Of Maryland
    Posts
    43,393
    We’re tempted to suggest a conspiracy here — but it’s just liberals agreeing yet again that conservatives have hidden, evil motives, because modern liberals simply can’t conceive of any other reason to disagree with the liberal consensus.

    “Moral precepts are constant through the ages and not obedient to circumstances.”

  3. #3
    Here..let me help...

    "I've got to start eating at home more" - J. Dahmer

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