Tag Archives: Donald Trump

Tax revenues increased from $94 billion in 1961 to $153 billion in 1968 with lower taxes

The Gross Domestic Product in the United States expanded 2,30 percent in the third quarter of 2017 over the same quarter of the previous year, and President Donald Trump is not satisfied with that. His next action to fix that is to cut the taxes.

John F Kennedy was also dissatisfied with economic growth in the early 60s with a growth rate at «only» 2 percent. What he wanted is 4 or five 5 percent growth. Exactly what Mr Trump want, but what happened to Kennedys taxes and is it something to learn?

In a speech John F Kennedy said: “We have to secure 25,000 new jobs a week for the next 10 years in order to provide jobs for all of the people coming into the labor market. That is a terribly difficult task at a time when automation and new machinery has taken the jobs of men. And at the present rate of economic growth or productivity increase, we are not going to have those jobs for people.”

So, automation and new machinery made it difficult in the 60`s? Wow.

The labor force in the U.S in 1960 was 70 million. Now, it is more than twice (160,381 million as of October 2017). The unemployment rate under President Trump is 4,1 percent as the number of unemployed persons decreased by 281,000 to 6,5 million in October 2017.

The unemployment was 5,2 percent in 1964, but it sooner declined to 3,8 percent later on the same year. It continued to fall to 3, percent in 1969. In other words: JFK`s tax cuts were working, and economic growth creates jobs.

Kennedy`s tax cuts were not passed by Congress until his death on February 26, 1964, in the Revenue Act of 1964. Kennedy had the right mindset. Their tax rates was too high and their tax revenues too low.

In 1964, the bill reduced the top marginal rate from over 90 percent to 70 percent. Tax revenues increased from $94 billion in 1961 to $153 billion in 1968. Cutting taxes at that time was not to incur a budget deficit, but to achieve the more prosperous, expanding economy which could bring a budget surplus. And it did.

After the tax bill, made by President Lyndon B Johnson, real GDP grew at 5,8 percent in 1965, and 6,6 percent in 1966. Lower taxes generated more revenue for Uncle Sam.

The concept is very simple but difficult for many to understand. When people have more money, they spend it which means additional tax receipts. Not only that.

Lower taxes will reduce risk-taking which is good for the U.S entrepreneurship. You can imagine what entrepreneurs like Steve Jobs, Mark Zuckerberg, Jeff Bezos, Sergei Brin and Elon Musk have added to the growth of the economy using their ideas to create new firms and jobs?

What would have happen if they all had taken a new job as an ordinary employee with IBM? The answer is very simple: a slower tech industry.

John F Kennedys tax cut model were the model for Reagans. Now, it is time for Mr Trump and it remain to see his model.

 

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Lower tax rate should stimulate economic activity and generate more revenue to the government than higher tax rate

The U.S Senate was positive to President Donald Trump`s tax reform and passed the tax reform bill in the early hours of Saturday morning. The U.S tax cuts are a move to a simpler tax system. Mr Trump said the Americans will love the new system.

It is the largest tax cut in the U.S in history, and it is the biggest package in terms of tax cuts ever. Mr Trump said something beautiful will come out of that picture. The tax cuts will be tremendous and that`s what this country need, he said.

(Picture: United States Debt to GDP)

 

This is a bold decision for Mr Trump. He is trying to do what no other president in the U.S has done since Ronald Reagan in the 80`s; rewriting the tax code. The congress agreed on a tax reform package 31 years ago, and now they are doing the same.

Senate Republicans passed a bill overhauling the federal tax code, and 51 senators voted for the «Tax cuts and jobs act,» with just 1 Republican voting against.

No Democrats supported the legislation.

A significant individual tax cut was proposed by President John F. Kennedy and signed into law by President Lyndon B. Johnson with the belief that cutting tax rates would stimulate investment and spending, with overall beneficial effects (including replenishment of some lost tax revenues).

President Ronald Reagan signed tax cuts into law, which some belive stimulated a doubling in total tax revenues (from 500 Billion to 1 Trillion dollars) during the period from 1980 to 1990.

On the other side; the deficit and national debt more than tripled (from $908 Billion in 1980 to $ 2 Trillion in 1990) because government spending rose even faster than increases in tax revenue.

As a result, income tax receipts as a percent of GDP fell from 11,3% to 9,3% in 1984 and did not to revert to original levels until the late 1990`s, even though overall revenue skyrocketed in terms of real dollars.

(Picture: United States Government debt)

 

President George W. Bush signed two major tax cuts into law: one in 2001 and one in 2003. These are often collectively referred to as the «Bush Tax Cuts». Some people claimed the Bush tax cuts have led to the rich shouldering more of the income tax burden and the poor shouldering less.

Washington Times credit the Reagan tax cuts with the eventual surplus of the late 1990`s. Others doubt this claim however, and instead belive the surpluses were a result of a combination of a decrease in government spending, the passing of the Omnibus Budget Reconciliation Act of 1993 (which dictated several tax increases), and the use of the PAYGO system.

Others claims the Bush tax cuts have conferred the «largest benefits, by far on the highest income households. At the state level, former Democratic Governor Bill Richardson in recent years has supported tax cuts to spur economic growth.

A tax cut is a reduction in the rate of tax charged by the U.S government. The immediate effects of a tax cut are a decrease in the real income of the government and an increase in the real income of those tax rates have been lowered.

Due to the perceived benefit in growing real incomes among tax payers, politicians have sought to claim their proposed tax credits as tax cuts.

In the longer terms, however, the macroeconomic effects of a tax cut are generally not predictable because they depend on how the taxpayers use their additional income and how the government adjusts to its reduced income.

Depending on the original tax rate, tax cuts may provide individuals and corporations with an incentive investments which stimulate economic activity. Some politically conservative opinion-makers, such as Art Laffer (better known for the Laffer curve), have theorized that this could generate so much additional taxable income that a lower tax can generate more revenue than was collected at the higher rate.

(Picture: Laffer Curve: t* represents the rate of taxation at which maximal revenue is generated. The grey curve is as drown by Laffer, however, the curve might not have only a single peak, nor must it peak symmetrically at 50%)

 

However, basic math states that cutting tax rates in half would require an economy twice the size to generate the same amount of tax revenue.

High tax rates doesn`t necessarily mean large revenue to the government. Lower tax rates can increase the government’s revenue. It seems difficult for some people to understand that.

100% tax rate means theoretically zero revenue because taxpayers lose their incentive to work. The economic effect of a 100% tax rate is to decrease the tax base to zero. If this is the case then somewhere between 0% and 100% lies a tax rate that will maximize revenue.

The tax cut shouldn`t be a bearish sign for the investors. Lower tax for the corporations means reduced unemployment and an incentive for investors to invest in new stocks and that will create more new jobs.

A corporate tax cut from 35% to 20% will boost the stock market, and the Senates $1,4 trillion tax bill will also boost the corporate earnings and thats positive for the stocks and the stock market.

The economy is a complicated system. Inflation, political uncertainty and the Fed`s monetary policy can add volatility. It remains to see.

I have said so many times and need to say it once again; this is the most unloved bull market in history.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Chinese President Xi Jinping said President Donald Trump`s state visit is a successful and historic visit

President Donald Trump visited Asia and China last week, and what a visit it was. We all know that Mr Trump want to Make America great again, but the relationship between China and America will not only Make America great again, but also the world.

China treated Mr Trump like a pop star with red carpets, military bands, a goose-steppping honor guard of soldiers and a twenty-one gun salute to name a few. Kids were jumping up and down with American flags as Trump`s motorcade passed. They also dined with Chinese president Xi Jinping in the Forbidden City.

Mr Trump is the first foreign leader accorded that honor since the founding of the Peoples Republic in 1949. Wow!

Xi Jinping said at the end of his speech that Trump`s state visit is a successful and historic visit. What did they do?

President Donald Trump is a business man. He colaborates with a lot of business people in China and have negotiated with Chinese businesses for a long time, so he know this game. In addition; he is a great negotiator.

Before he was leaving China, he and Xi Jinping announced business deals worth $250 billion. This deal is by many called Trump “miracle” deals.

Mr Trump is trying to correct the $350 billion trade deficit between China and the U.S, and he is on the way.

President Trump withdrew the United States from the Trans Pacific Partnership (TPP) in January this year and called it a bad deal. It seems like Mr Trump is trying to make a better deal and he is doing it for the American people.

They try to better protect labor and intellectual property rights. One TPP chapter spelled out commitments on environmental issues such as illegal wildlife trade and marine fishery protection.

Many of the other countries were not enthusiastic about the intellectual property rights and labor clauses in the original TPP agreement, because it tended to favor U.S interests.

Washington pushed for the labor, environmental and intellectual property commitments to save its own companies. Workers get paid more and treated better on average in the U.S compared to developing countries on the TPP roster.

They`re required to follow environmental laws at home, and American courts protect their trademarks, patents and copyrights. If equivalent firms in other countries avoid these practices, they can cut costs, or snag an outside trademark without paying.

This is very important for Mr Trump and the White House, and they will probably be patient and continue with its meetings regarding the best agreement possible. In the meantime, the other countries will continue its agreement without the U.S.

Mr Trump is the first foreign diplomat to be given a rare tour and private dinner in the Forbidden City since the People`s Republic of China was founded in 1949.

Donald and Melania Trump shared an afternoon tea with Xi Jinping and his wife Peng Liyuan at the Forbidden Palace Hall, and it was intentionally chosen for its historical and cultural significance that underscores cooperation between the two countries.

Mr Trump is doing everything he can to make America great again. Since he was elected a year ago, the stock market have gone straight up. Up, up, up and up. The stock market is up in all months so far this year, and that hasn`t happened in many decades. It is unbelievable.

People in America is also beginning to be very positive about the U.S economy. Consumer Confidence has gone straight up in months after months. That too, is unbelievable.

If Trumpism is the policies advocated by Donald Trump, especially those involving a rejection of the current political establishment and the vigorous pursuit of American national interests, and a controversial or outrageous statement attributed to Donald Trump, this is what it is;

TRUMPISM.

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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If the Fed`s neutral rate is as low as they estimate or even lower, they will be glad to have their unconventional tools in their toolkit

President Trump will announce the next Fed Chair very soon. This is happening at a time were Mr Trump is planning a new tax reform. At a time were Mr Trump want to spend more money on infrastructure.

Mr Trump attacked Ms Yellen on the campaign trail and accused her for holding the rates too low, but he has halted any criticism of Yellen and the Fed since his inauguration. Now, Mr Trump say he like Ms Yellen and refuse to close down the possibility of reappointing her.

 

Ms Yellens term as a Fed Chair is about to end and the term is up for renewal early next year, but Yellens term as a governor on the Federal Reserve extends until January 2024.

So, if Mr Trump wants to “fire” Ms Yellen as a Fed Chair, she will still stay on the board even is Mr Trump dont want her to win the next term as a Fed Chair.

John Taylor and Jay Powell are among two of the other candidates on Mr Trumps shortlist. Anyway, whats interesting is their policy on interest rates.

Fed Chair Janet Yellen wrote an article about A Challenging Decade and a Question for the Future on the Fed`s own website. Her headline was a key question for the future. As the financial crisis and Great Recession fade into the past and the stance of monetary policy gradually returns to normal, a natural question concerns the possible future role of the unconventional policy tools we deployed after the onset of the crisis, Ms Yellen said.

My colleagues on the FOMC and I belive that, whenever possible, influencing short-term interest rates by targeting the federal funds rate should be our primary tool. As I have already noted, we have a long track record using this tool to pursue our statutory goals. In contrast, we have much more limited experience with using our securities holdings for that purpose.

Where does this assessment leave our unconventional policy tools? I belive their deployment should be considered again if our conventional tool reaches its limit, that is, when the federal funds rate has reached its effective lower bound and the U.S economy still needs further monetary policy accommodation.

Does this mean that it will take another Great Recession for our unconventional tools to be used again? Not necessarily. Recent studies suggest that the neutral level of the federal funds rate appears to be much lower than it was in previous decades.

Indeed, most FOMC participants now assess the longer-run value of the neutral Federal funds rate as only 2-3/4 percent or so, compared with around 4-1/4 percent just a few years ago. With a low neutral federal funds rate, there will typically be less scope for the FOMC to reduce short-term interest rates in response to an economic downturn, raising the possibility that we may need to resort again to enhanced forward rate guidance and asset purchases to provide needed accommodation.

Of course, substantial uncertainty surrounds any estimates of the neutral level of short-term interest rates. In this regard, there is an important asymmetry to consider. If the neutral rate turns out to be significantly higher than we currently estimate, it is less likely that we will have to deploy our unconventional tools again.

In contrast, if the neutral rate is as low as we estimate or even lower, we will be glad to have our unconventional tools in our toolkit.

The bottom line is that we must recognize that our unconventional tools might have to be used again.

If we are indeed living in a low-neutral-rate world, a significantly less severe economic downturn that the Great Recession might be sufficient to drive short-term interest rates back to their effective lower bound.

Ms Yellen concluded with this summary: As a result of the Great Recession, the Federal Reserve has confronted two key challenges over the past several years: One, the FOMC had to provide additional policy accommodation after short-term interest rates reached their effective lower bound; and two, subsequently, as we made progress toward the achievement of our mandate, we had to start scaling back that accommodation in the presence of a vastly expanded Federal Reserve balance sheet.

Ms Yellen highlighted two points about the FOMC`s experience with those challenges. First, the monetary policy tools that the Federal Reserve deployed in the immediate aftermath of the crisis – explicit forward rate guidance, large-scale asset purchases, and the payment of interest on excess reserves have helped us overcome these challenges.

Second, in light of evidence suggesting that the neutral level of short-term interest rates is significantly lower than it was in previous decades, the likelihood that future monetary policymakers will have to confront those two challenges again is uncomfortably high.

For this reason, we must keep our in conventional policy tools ready to be deployed again should short-term interest rates return to their effective lower bound.

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Filed under Politics, Quantitative Easing

Most of the JFK files have been released, and 1% is still hidden for the public but can be released today

Most of the JFK files have been released, but 1% is still hidden for the public. Why is 1% of the documents still is secret? It must be something very special because CIA Director Mike Pompeo said to Mr Trump not to release the rest of the documents.

Earlier this morning Mr Trump Tweeted this: «JFK Files are being carefully released. In the end there will be great transparency. It is my hope to get just about everything to public»! Mr Trump Tweeted that at 6:38 am today.

Conspiracy theorists around the world have long been waiting for the rest of the documents during the JFK assassination. But bad news can be on the way. Mr Trump can block some of the thousands of classified files.

It is about 3,100 documents left which is never before released, and most of them is created by CIA. Many are letters written at the spy agency to a special federal review board.

The deadline to release the documents are set today, and the deadline is set by Congress under a 1992 law signed by President George H.W Bush that was intended to try to tamp down conspiracy theories about the JFK assassination.

One of the main problems with this release is that some of the records within this collection were not created until the 1990`s, and some of them can be harmful to the national security if made public.

Mr Trump can be under pressure to block the release of some of the assassination documents on national security grounds, possibly to protect CIA tradecraft and the identity of agency informants who might still be alive, according to spokesperson at Politico.

Much of the documents were released by the Congress in response to Oliver Stones film «JFK». Millions of documents were released in the 1990s, but a few are left. Most of the documents were made by CIA, FBI and the Justice Department.

Some conspiracy theorists belive Bush can be in trouble if they release the rest of the documents. Others say Lyndon B. Johnson was the mastermind. Another theory is the father of Senator Ted Cruz of Texas and his links to Lee Harvey Oswald.

Jesse Ventura said in an interview with Larry King that Dorothy Kilgallen was ready to blow the lid of this JFK case, but a few days later she was found dead. Oswald was like many other witnesses taken off. This is how this case is a hot potato.

JFK had more enemies within his administration than Soviet and the rest of the world combined. Jack Kennedy had enemies in the military-industrial complex because he would not invade Cuba and wanted to end the war in Vietnam. He also wanted to take away the oil depletion allowance.

He was the first President to bring in civil rights and equality. On top of that he wanted to break the CIA into a thousand pieces and fired their top three guys like Allen Dulles. He was also communicating with Nikita Khrusjtsjov and they were gonna end the cold war by 1965.

Nikita was a Soviet politician who led the first Secretary of the Communist Party of the Soviet Union from 1953 to 1964. He was responsible for the de-Stalinization of the Soviet Union.

In 1938, Stalin sent him to govern Ukraine. He was a political commissar during the Russian Civil War.

Jesse Ventura is so into this case so he wrote a book about it called 63 reasons to belive there was a conspiracy to assassinate JFK. Larry King interviewed the policeman who arrested Oswald in the move theater, and Oswald said only one thing in the drive down to the police station:

«Im a patsy», and Oswald said it twice. «Im a patsy».

Conspiracy theories will be held alive if they block any of the documents. Opinion polls in recent decades have shown that the American people belive there was a conspiracy in Kennedy`s death, despite governments investigations that concluded Oswald acted alone.

A huge team of lawmakers on Capitol Hill has worked together in months to call for full disclosure of the JFK files. Some of the documents can still be kept in secret to protect the country, agents and agency`s but most of the documents will be released about the case that changed America.

Under the law, everything can be released today, unless Mr Trump decides otherwise.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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