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Post Reply Watch out this new GOP tax bill is going to reduce write-offs to the rich. #endofthemiddleclass
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Posted 12/20/17 , edited 12/21/17

Rujikin wrote:

Trump also wants to reduce government spending not increase it. Last I read he reduced about 50 billion worth of government expenses. We should keep reducing this to both pay less taxes and have a balanced budget.


Well, kind of.

First of all, there are many areas where Trump plans to increase spending. Most notably, Trump consistently pushes for a large increase in military spending (so large that it creates issues with sequestration). Then we have the infrastructure spending plan that he has been pushing recently. Overall, Trump doesn't really have a concise "shrink the government" platform. Moreso, he throws money at the things he likes (business) and takes it away from things he doesn't:

The poor.

The areas where he largely aims to cut spending, is on programs designed to help the poor. However, just as injecting money into the system by reducing business taxes has an effect on economic growth, removing money from the system by reducing spending on the poor also has an effect on economic growth. In fact, largely due to differences in how money is spent between the poor and the rich (and businesses), spending on the poor is some of the most efficient spending when it comes to fueling the economy.

Because of that, if spending is decreased in the way Trump seems to want it to be, you will see money taken from the poor which had a strong positive impact on economic growth, in order to give that money to corporations and rich which has a significantly weaker positive impact on economic growth. If you are keeping tabs, that equals a negative impact on economic growth (outside of the stock market at least).

Basically, you are balancing the books into the red.

Overall, general economic logic states that a strong economy is not the time to be reducing government spending on principle. While we should always be looking at ways to improve efficiency and we should be looking to balance the budget, generally, government spending should increase when interest on that spending is low, as it is now. That means now is the best time for the government to be spending money to set us up for the future. The strong economy also means that companies don't really need an injection of cash. Companies actually have tons of capital right now. The things that are limiting the economy are largely things like infrastructure, lack of qualified workers and the global economy (two of the three should be handled by increasing spending, not decreasing revenue).

I wholly believe that if this money was spent intelligently, it could have maybe double the positive impact of this tax bill, while reaching further than this tax bill will be able to at remedying some major issues that are facing this country.
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Posted 12/20/17 , edited 12/20/17

Rujikin wrote:
Holy shit Trump just got companies to raise their own hourly rate to $15/hour.


Not that you will listen as you didn't the first time but here we go anyway:


AT&T:
The 1k bonuses are going to its union employees. AT&T just got out of a major worker strike with its union employees. As in literally they were still wrangling with workers all of 5 days ago. They've been fighting an internal battle with their employee standards since last spring because they've been dicking them around. A Christmas bonus to quell worker morale they can paint as part of the tax plan is a win/win for them. Remember, Trump is also handing them the keys to the Net Neutrality kingdom so they stand to make a lot of money and Trump's admin sunk their merger plans so they need some brownie points back.

They also pledged to increase capital expenditure by 1 billion for next year.

Their annual revenue is 163 billion with a net profit of 12.98 billion.

Not bad! Except their capital expenditures are actually 21 billion so this actually only represents a 5% increase over business as usual and would frankly have been the increase for 2018 anyway without the plan. Oh, and there's a little provision in the bill that allows more deductions on capital expenditures. But more on that later.

( On the other hand, a few hours after AT&T's press release about the tax plan they also quietly announced they would be "restructuring" their Dallas call center which would result in a "Separation of employment' for those at the center. )


Boeing:
Boeing was just handed a completely absurd win against Bombardier under Trump over a product they don't even make. They are investing 300m as a result of the tax plan. 100m to charitable programs ( they already do this to the tune of a few hundred million a year. The press release doesn't specify if this 100m is in addition ). 100 in workforce development ( good cause, little money ). 100 to "infrastructure and facility enhancement ( read: automation ).

Perspective:

Boeing has an annual revenue of 94.57 billion and a net profit of 4.9 billion.

Boeing has announced 18 billion in stock buybacks for its shareholders.

300m vs d 18 billion for its shareholders. So that 300m is just bullshit to distract you with a token PR move.



Fifth Third:
They're raising their minimum wage to $15 an hour. ( This is absolutely not a snap decision they made overnight because of a tax plan )

Perspective:

Fifth Third has an annual revenue of 6.89 billion and a net profit of 1.56 billion.

Fifth Third has bought back $273 million worth of their stock in the past 48 hours alone.

The wage hike effects 2600 of their 13,000 employees. This is much harder to quantify without knowing what they currently pay minimum wage employees as they do business in a few different states. Or how many of said employees are actually full time. Labour expenses are 1.9 billion for them annually, however and it's safe to say those 2600 employees are by no means the biggest factor in that.

Fifth Third sounds good on paper but the devil is in the details they haven't provided while they are also pouring money into stock buybacks.


Wells Fargo:
They are raising their minimum wage to $15 an hour. They also pledged 400m to charity for 2018.

Wells Fargo's reputation and PR are in the shitter right now due to getting caught opening fake accounts and credit cards in their customer's names. So they could reaallly use a good PR story right now. If they can tie it to a tax windfall though its two birds with one stone.

Wells Fargo has an annual revenue of 88.3 billion and a net profit of 21.94 billion.

They have not announced any buyback moves but they have announced that they project a stock increase of 13% now. Raising stock price is one of the points of doing buybacks.

Wells Fargo's $15 / Hour sounds impressive but it is only an 11% increase over what they already pay their minimum wage employees ( 13.50 / Hour ). This affects about 25,000 of their 268,800 employees.

Wells Fargo sounds good on paper till you see the details. The 400m in charity is a 40% increase over last year and they are pledging to aim for 2% of their net profit to charity in 2019. So that's tentatively good but we'll see if that actually pans out.



Now, let's look at what some other companies who aren't horn tooting are doing:

Home Depot: 15 billion in stock buybacks.
Oracle: 12 billion in stock buybacks.
Pzifer: 10 billion in stock buybacks.
Honeywell: 6.5 billion in stock buybacks.
Bank of America: 5 billion in stock buybacks.
Anthem: 5 billion in stock buybacks.
Mastercard: 4 billion in stock buybacks.
United Airlines: 3 billion in stock buybacks.
PPG: 2.5 billion in stock buybacks.
American Tower: 2 billion in stock buybacks.
T-Mobile: 1.5 billion in stock buybacks.
Prudential: 1.5 billion in stock buybacks.
Waste Management: 1.2 billion in stock buybacks.
Edwards Lifesciences: 1 billion in stock buybacks.
Johnson Controls: 1 billion in stock buybacks.
Humana: 750 million in stock buybacks.
Jetblue: 750 million in stock buybacks.
Morningstar: 500 million in stock buybacks.
Ciena: 300 million in stock buybacks.
NVR: 300 million in stock buybacks.
Westco: 300 million in stock buybacks.
Fortune Brands: 250 million in stock buybacks.
Trinity Industries: 250 million in stock buybacks.
LINN Energy: 200 million in stock buybacks.
Synopsis: 200 million in stock buybacks.
MSG Networks: 150 million in stock buybacks.
Veeco: 100 million in stock buybacks.
Verifone: 100 million in stock buybacks.


As a final note: Do you know who else's stocks soared? Companies that make automation equipment and manufacturing robots. Because that little provision I mentioned in the bill allows companies to write off the purchase of new equipment against profits in the first year. Instead of over several years. The idea was to let companies more readily invest in new equipment but the effect is that companies can now splurge on new automation equipment for manufacturing.

But you keep celebrating the token change thrown out for PR reasons. >.>




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Posted 12/21/17 , edited 12/21/17

Rujikin wrote:

Holy shit Trump just got companies to raise their own hourly rate to $15/hour.







Bernie austistic screaming when? No, I'm sure he's happy no matter how it got done right? Good news though.
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Posted 12/21/17 , edited 12/21/17

MysticGon wrote:

Bernie austistic screaming when? No, I'm sure he's happy no matter how it got done right? Good news though.


These are short-term salary improvements to compensate for the tax plan becoming law as soon as 12 days from now.
We had an emergency executive meeting yesterday to cover the same discussion where I'm employed.
We've raised everyone's salaries from $15.50 to $21.75 per hour (roughly, about a 40% increase).
This is to offset some of the issues that our payroll department would encounter if we kept the salaries the same throughout 2018.
Payroll/Accountancy provided an estimate showing that we can decrease this to $16.25 per hour in 2019 and it's been signed by the board of directors that this will happen.
Employees have been informed that they have two options:

A) Take the 40% salary hike for a year
B) Take a one-off bonus of $1,200.

They have until Tuesday to decide so that payroll can be processed on time.
Those who do not send a response via email will default to A.

I'm pretty sure the companies that are bragging about it are in the same boat but have decided A or B at the executive level without providing their employees an option.
Plus, their raises may be extended for another 2-3 years on top of what we're offering, as they have more employees - but it's not as much of an increase, either.
In my opinion, most people are only looking at the next year or two in terms of personal gain without looking at the overall impact of the economy.
It's not the "death of the middle class" (we seem to be throwing "death of" something every other week these days) but it will cause higher taxes on those who make less than 250k a year in the next five years (and this will only increase within the next decade).
I'm going to be taxed more out of the gate.

The only good news is that there isn't going to be much differentiation when it comes to capital gains.
The downside is that you can no longer write off expenses for investing (this will impact those who are making sub-100k but are investing while writing off investment costs for cheap, online investment sites that are focused more on fee-based advisory brokerage firms but will help those who use commission-based firms).
There are other nuances when it comes to the tax bill that people aren't really looking at.
Instead, they see news from companies that are tooting their own horn for increasing salaries or giving a bonus - but those who aren't informed as to why the companies are doing these things are in the mind that "the tax plan worked".
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Posted 12/21/17 , edited 12/21/17
Convenient how the GOP manufactured their own tax rate platform for the next few years when the rates are set to go up. And in the meantime, they get pretend myopia on immediate rates while disregarding long term impacts on the budget.
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Posted 12/21/17 , edited 12/21/17

Cydoemus wrote:

These are short-term salary improvements to compensate for the tax plan becoming law as soon as 12 days from now.
We had an emergency executive meeting yesterday to cover the same discussion where I'm employed.
We've raised everyone's salaries from $15.50 to $21.75 per hour (roughly, about a 40% increase).
This is to offset some of the issues that our payroll department would encounter if we kept the salaries the same throughout 2018.
Payroll/Accountancy provided an estimate showing that we can decrease this to $16.25 per hour in 2019 and it's been signed by the board of directors that this will happen.


Could you clarify two things for me? a) what kinds of problems would come up if there wasn't a salary increase. And b) why it's only short term?
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Posted 12/21/17 , edited 12/21/17

Mishio1 wrote:

Could you clarify two things for me? a) what kinds of problems would come up if there wasn't a salary increase. And b) why it's only short term?


Sure.

A) The main issue is making sure that all of the provisions are appropriately being implemented into the payroll calculations.
Doing so within 12 days is a massive task - both for the accounting department as well as the payroll system that they're using.
The salary increase is the easiest way to make sure everything is covered in such a short time frame.

B) Because the payroll system (software company) that the accounting department uses has informed them that it will have these provisions built into the software by Q3 2018 (reason #1).
Also because we don't have the runaway to continue paying that salary if the tax bill isn't changed within the 2018-2019 year (which, as we all know, will not be revisited by Congress or President Trump as this was "their best effort").

At least, this is the most I can say without getting into internal stuff that would be a violation of my NDA.
But, from what accounting has informed us - many other companies are in the same boat and that's why they're pushing out these kinds of changes.
Companies like AT&T will likely keep these salary increases on a more permanent basis as they can afford a little bit of a "scuffle" with the IRS (smaller companies cannot).
Bonuses are the easiest way to avoid complications (as they're taxed differently for the employer) but it also means that you'd have to have the ability to pay all those bonuses the moment the bill is signed into law.
Small to medium businesses often cannot do this as they're just surviving from one investment term to the next.
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Posted 12/21/17 , edited 12/21/17

Cydoemus wrote:

Sure.

A) The main issue is making sure that all of the provisions are appropriately being implemented into the payroll calculations.
Doing so within 12 days is a massive task - both for the accounting department as well as the payroll system that they're using.
The salary increase is the easiest way to make sure everything is covered in such a short time frame.

B) Because the payroll system (software company) that the accounting department uses has informed them that it will have these provisions built into the software by Q3 2018 (reason #1).
Also because we don't have the runaway to continue paying that salary if the tax bill isn't changed within the 2018-2019 year (which, as we all know, will not be revisited by Congress or President Trump as this was "their best effort").


So, if I'm understanding this correctly, it's the company's way of playing things safe insofar as obeying the new tax bill's provisions, while the accounting decision and payroll software company are trying to get a handle on the new provisions?
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Posted 12/21/17 , edited 12/21/17

Mishio1 wrote:

So, if I'm understanding this correctly, it's the company's way of playing things safe insofar as obeying the new tax bill's provisions, while the accounting decision and payroll software company are trying to get a handle on the new provisions?


In so few words, yes.
Have to play it safe to avoid penalties or allowing a high chance of filing employees' W-2s incorrectly (which could burn them at the start of 2019 and then it would be a bigger issue than a temporary raise or a one-off bonus).
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Posted 12/21/17 , edited 12/21/17

Cydoemus wrote:

In so few words, yes.
Have to play it safe to avoid penalties or allowing a high chance of filing employees' W-2s incorrectly (which could burn them at the start of 2019 and then it would be a bigger issue than a temporary raise or a one-off bonus).


Okay then. Thank you very much for explaining that.
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Posted 12/21/17 , edited 12/21/17

runec wrote:


Rujikin wrote:
Holy shit Trump just got companies to raise their own hourly rate to $15/hour.


Not that you will listen as you didn't the first time but here we go anyway:

As a final note: Do you know who else's stocks soared? Companies that make automation equipment and manufacturing robots. Because that little provision I mentioned in the bill allows companies to write off the purchase of new equipment against profits in the first year. Instead of over several years. The idea was to let companies more readily invest in new equipment but the effect is that companies can now splurge on new automation equipment for manufacturing.
But you keep celebrating the token change thrown out for PR reasons. >.>


add to the list Wallmart:
Walmart: 20 billion in stock buybacks
Walmart lays off employees, replace them with machines
possibly as a side effect of the tax bill, Walmart employees who used to live in minimum wage will be laid off.
i also remember reading somewhere that the tax bill would make it cheap for the companies to invest in automated machines, and if i remembered right, then Walmart ceos must be really happy, to put it mildly.

update: it just came to my attention that the second link is a bit of a conspiracy site, though Walmart, much like other brick and mortar stores, are looking to cut costs whenever possible.
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Posted 12/21/17 , edited 12/21/17

namealreadytaken wrote:


runec wrote:


Rujikin wrote:
Holy shit Trump just got companies to raise their own hourly rate to $15/hour.


Not that you will listen as you didn't the first time but here we go anyway:

As a final note: Do you know who else's stocks soared? Companies that make automation equipment and manufacturing robots. Because that little provision I mentioned in the bill allows companies to write off the purchase of new equipment against profits in the first year. Instead of over several years. The idea was to let companies more readily invest in new equipment but the effect is that companies can now splurge on new automation equipment for manufacturing.
But you keep celebrating the token change thrown out for PR reasons. >.>


add to the list Wallmart:
Walmart: 20 billion in stock buybacks
Walmart lays off employees, replace them with machines
possibly as a side effect of the tax bill, Walmart employees who used to live in minimum wage will be laid off.
i also remember reading somewhere that the tax bill would make it cheap for the companies to invest in automated machines, and if i remembered right, then Walmart ceos must be really happy, to put it mildly.

update: it just came to my attention that the second link is a bit of a conspiracy site, though Walmart, much like other brick and mortar stores, are looking to cut costs whenever possible.



The walmart article is legit. it's been trending on FB and the link I found was Business Insider.

it actually gets better.

So they're using the same tech as Amazon's employeeless brick and mortar test stores, and the idea is that they charge you a membership fee to shop in these test stores where they're already saving money by not having employees...


Sauce:http://www.businessinsider.com/walmart-is-developing-high-tech-store-with-no-cashiers-report-2017-12

"Few details are available, but the initial sketch of the idea sounds very similar to Amazon's Amazon Go store, which uses tracking cameras and machine learning software to charge customers for things they take off the shelf and needs no cashier.

Recode also reports that Walmart is testing tech-heavy personal shopping service geared toward higher income "busy" moms. It allows customers to buy products or get recommendations simply by snapping a picture and sending it to the company.

Walmart will likely charge a membership fee for some of Code Eight's new projects when they roll out, Recode said."
mxdan 
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Posted 12/21/17 , edited 12/21/17
I guess AT&T secretly laid off 600 employees right before Christmas after their 'look a this trickle down' PR stunt. So not only are they getting huge tax deductions but they are effectively cutting out a large part of the cost entirely by fucking over 600 people, while acting like they are hitting the high ground here. Unreal. But lets keep acting like these rent seeking unregulated monoliths operate with some sort of ethical procedure.

http://fox4kc.com/2017/12/20/hundreds-of-metro-att-employees-laid-off-just-before-christmas/
runec 
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Posted 12/21/17 , edited 12/21/17

namealreadytaken wrote:
possibly as a side effect of the tax bill, Walmart employees who used to live in minimum wage will be laid off.
i also remember reading somewhere that the tax bill would make it cheap for the companies to invest in automated machines, and if i remembered right, then Walmart ceos must be really happy, to put it mildly.



serifsansserif wrote:
it actually gets better.

So they're using the same tech as Amazon's employeeless brick and mortar test stores, and the idea is that they charge you a membership fee to shop in these test stores where they're already saving money by not having employees...


Yes, that's the capital expenditures provision in the bill. What they did is put in a 5 year provision that lets companies immediately write off capital spending on equipment and upgrades against their profits. Whereas normally they were only allowed to write off a % of new equipment investment per year and gradually write off new equipment over time. So any companies that were looking for a chance to make a huge shift towards automation just got 5 years to go completely hog wild.

It's not a surprise either. This is exactly what Wall Street said would happen and what companies themselves said they would do.

For those of us that scream Fake News into the wind here's even Fox News reporting it way back in October:
http://www.foxbusiness.com/markets/2017/10/09/us-companies-might-use-tax-reform-profits-to-invest-in-automation-experts-say.html

As for Walmart; Nothing they do surprises me at this point. Even up here in Canuckistan they have been desperately trying to automate their stores. The one Walmart near me has, in the past few years, gone from 8 check outs to 2 check outs and 4 automated "self serve" check outs. Which no one likes and which don't even work that well.

The only saving grace is the automated check outs suck so much they still need an employee to stand near them and help people resolve errors and glitches. -.-



mxdan wrote:
I guess AT&T secretly laid off 600 employees right before Christmas after their 'look a this trickle down' PR stunt. So not only are they getting huge tax deductions but they are effectively cutting out a large part of the cost entirely by fucking over 600 people, while acting like they are hitting the high ground here. Unreal. But lets keep acting like these rent seeking unregulated monoliths operate with some sort of ethical procedure.

http://fox4kc.com/2017/12/20/hundreds-of-metro-att-employees-laid-off-just-before-christmas/


Looks like that's on top of the 300 I mentioned being "seperated from employment" in Dallas too. So that's 900 in 48 hours after the tax bill passed.




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