Markets are wrong: Trump is not going to launch roaring inflation in America
https://www.telegraph.co.uk/business/2024/11/13/markets-are-wrong-trump-not-going-launch-roaring-inflation/
Ambrose Evans-Pritchard:
The lesson of Trump 1.0 is that cuts in corporation tax did little to lift economic output or investment, and therefore barely moved the needle on inflation. Most of the windfall went on dividends and share buybacks – marvellous for share prices and for the owners of capital – and the same is likely to happen again if he cuts the rate from 21pc to 15pc. It took Joe Biden’s Inflation Reduction Act to trigger a secular surge in capex spending. But Biden over-egged the pudding.
Tax cuts for the rich also have a low demand multiplier because the money piles up in brokerage accounts. The rich spend a low share of their income. There may be a few nods to the working stiff: tax exemptions on tips, over-time pay, and social security, and more generous child credit. These will be more than offset by a consumption tax (i.e. tariffs) that hits the poor hardest, with a negative effect overall on US demand and economic growth.
https://www.telegraph.co.uk/business/2024/11/13/markets-are-wrong-trump-not-going-launch-roaring-inflation/
Ambrose Evans-Pritchard:
The lesson of Trump 1.0 is that cuts in corporation tax did little to lift economic output or investment, and therefore barely moved the needle on inflation. Most of the windfall went on dividends and share buybacks – marvellous for share prices and for the owners of capital – and the same is likely to happen again if he cuts the rate from 21pc to 15pc. It took Joe Biden’s Inflation Reduction Act to trigger a secular surge in capex spending. But Biden over-egged the pudding.
Tax cuts for the rich also have a low demand multiplier because the money piles up in brokerage accounts. The rich spend a low share of their income. There may be a few nods to the working stiff: tax exemptions on tips, over-time pay, and social security, and more generous child credit. These will be more than offset by a consumption tax (i.e. tariffs) that hits the poor hardest, with a negative effect overall on US demand and economic growth.