The article “Trump’s tax cuts have boosted bottom lines, but not much else” by Matthew Townsend and Brandon Kochkodin appeared on Economics on December 21, 2018. In this article, the two authors examine if President Trump’s tax cut through tax savings for corporate has achieved the intended purpose of spurring dramatic expansion of companies and increase their profitability. The article depicts that this has not been achieved instead, rather than using tax savings policy to boost net margins, companies seem to be using their savings. The authors present profits and sales information for some companies in the Standard & Poor’s 500 Index to prove this effects Trump’s tax savings policy. The results indicate that the net profit margins for companies have been increasing with tax savings and such net margins lower if they incur some costs. From the view of the authors, the move by the executive to implement this tax policy was prudent since these tax cuts only helped companies offset the cost that is rising as the economic cycle expands. Otherwise, nothing else much has been achieved regarding investment by companies and boost their profitability.
This article by Matthew Townsend and Brandon Kochkodin presents facts to support their arguments on whether the tax cuts by Trump have achieved the intended purpose of increasing investment in America. They have examined the results of profits and sales for S&P 500 Index companies and other surveys. All have indicated that besides tax savings, the operating margin has been doing poorly leading to increased cost forcing companies to cut off cost to increase their net profit.
Examining the topic of tax cuts and the effects on the profitability of the companies as related to the costs of the companies as presented in the article, probably the most affected party involves the clients of these firms. The move by the federal government to cut off corporate tax for companies would mean the government would increase the federal income tax for large groups of workers within these farms to compensate for corporate tax cuts. Additionally, the income tax increase would be inevitable as these companies would lay off most workers in response to increased costs as the economy continues to expand.
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