View from the US: Trump’s Tax and Jobs Act fallout, gloom for Manhattan property prices – and who will conduct the 2020 census?
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Trump’s Tax Cuts and Jobs Act will cost the US Treasury “hundreds of billions” more than expected
Corporate lobbyists have secured tax exemptions worth billions of dollars for multinational firms, according to the New York Times reporting early in January 2020. This is on top of the savings to business arising from the Tax Cuts and Jobs Act of 2017, which cut the US corporate tax rate to 21% from 35%.
To offset the loss of revenue, the Act introduced two new taxes designed to prevent large corporations taking advantage of differing global tax rates to reduce their tax bills.
However, it was left to the US Treasury department to fill in the detail of how to implement the “hastily written law”. Lobbyists sensed an opportunity. “Senior officials in President Trump’s Treasury Department were swarmed by lobbyists seeking to insulate companies from the few parts of the tax law that would have required them to pay more. The crush of meetings was so intense that some top Treasury officials had little time to do their jobs,” The New York Times’ article claimed.
It concluded that the lobbying bore fruit and that the Act will end up costing the US coffers far more than expected: “The federal government may collect hundreds of billions of dollars less over the coming decade than previously projected. The budget deficit has jumped more than 50 percent since Mr. Trump took office and is expected to top $1 trillion in 2020, partly as a result of the tax law.”
Flexible hours and attractive pay… any takers?
With US unemployment at 50-year lows the government could struggle to find the staff it needs to complete the 2020 national census, suggests the Wall Street Journal. The Census Bureau needs around 500,000 people for the mammoth task, which takes place every 10 years.
“Most of the workers will be census takers, a job that involves visiting households that don’t respond to the census questionnaire by mail, phone or online." In 2010, there was a large pool of unemployed workers willing to take on temporary, part-time work.
Today, the government has to pursue a different strategy, targeting those already in work. It has increased spending on advertising the jobs, raised the hourly pay rate and is promoting census work as a way of fulfilling a “civic duty”.
Manhattan property market dragged down by “shadow inventory”
Sales of luxury apartments in Manhattan continue to struggle, Bloomberg reported on 6 January. There are over 7,000 unsold, newly built units, it claimed, yet only a fraction of these have been formally listed for sale. Their existence creates a “shadow inventory” which is acting as “a heavy weight on a market in which sales, especially of higher-end properties, have slowed to a crawl”.
Bloomberg estimated that if sales remain at 2019’s sluggish pace, it would take six years to clear the backlog.
Pig farmers' "wasted year"
The year 2019 should have been “the opportunity of a lifetime” for US pig farmers – but that was before the US-China trade conflict, says the Wall Street Journal.
Swine fever “decimated hog herds in Asia last year,” driving pork prices to record highs in China and raising the entire country’s rate of inflation.
That might have been helpful to US farmers at other times, but so far they have not benefited “because of the long-simmering trade war between the two countries.” Rather than pay a 72% tariff on US pork imports, Chinese consumers turned to pig farmers in the European Union and Brazil, the article said.
With large amounts of pork in frozen storage in the US, prices received by American farmers dwindled over the course of the year. “However, farmers and livestock traders are anticipating a reversal of fortunes in 2020, hinging that is expected to be signed by the U.S. and China later this month.”
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