Jobs! Jobs! Jobs! TaxCutsAndJobsAct Is it the TrumpEconomics Era?

Jobs! Jobs! Jobs! TaxCutsAndJobsAct Is it the TrumpEconomics Era?

Are we at the cusp of a historic structural shift of the same magnitude as the Reaganomics due to the Tax Cuts And Jobs Act passed last year 2017?

 

I think we are. Let me explain.

The biggest change in the Tax Code is the change to the Corporate tax for C corps. All publicly listed firms are C corps.

It is not the rate change from 35% to 21% that is the game changer.

Most corporations don’t really pay that top rate due to various tax strategies. All legal.

The bigger change is the change to a territorial tax system.

What does that mean?

It means US Corporations will now pay US taxes only on US Revenue minus US Costs.

So Tax = 21% x (Revenue in US – Cost in US)

Guess where most of the revenue comes from for most US multinationals?

From overseas. It is global economy. US is only 5% of world population. So this is not a surprise. Shouldn’t be. Right?

US based corporations have been shifting jobs overseas to lower costs since wages are lower.

Now there is a huge incentive to bring all those jobs back to the US due this new Tax Code.

Back to the Tax equation.┬áTax = 21% x (Revenue in US – Cost in US)

 

So that is why, Jobs! Jobs! Jobs!

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