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How businesses and manufacturers will benefit from Trump's big bill


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  Among the big winners with President Trump's bill are corporations and small businesses. The bill would make permanent the tax breaks from his first term, expand provisions on expenses and itemizations and allow companies to deduct the cost of new manufacturing plants. For a business perspective, William Brangham spoke with Jay Timmons of the National Association of Manufacturers.

The article from PBS NewsHour, titled "How businesses and manufacturers will benefit from Trump's big bill," delves into the implications of the Tax Cuts and Jobs Act, a significant piece of legislation signed into law by President Donald Trump in December 2017. The piece features insights from various stakeholders, including business owners, economic analysts, and political figures, to provide a comprehensive view of how the tax reform would impact the American economy, particularly focusing on businesses and manufacturers.

The Tax Cuts and Jobs Act, often referred to as the Trump tax cuts, was a major overhaul of the U.S. tax code, the first significant change since the Tax Reform Act of 1986. The legislation aimed to stimulate economic growth by reducing the corporate tax rate from 35% to 21%, the lowest it had been since 1939. This reduction was seen as a critical move to make American businesses more competitive globally, especially against countries with lower corporate tax rates.

One of the key beneficiaries of the tax cuts were small businesses, which make up a significant portion of the U.S. economy. The tax reform introduced a new 20% deduction for pass-through businesses, which include sole proprietorships, partnerships, and S corporations. This provision allowed these businesses to deduct up to 20% of their income, effectively reducing their tax liability. The article highlights the story of a small business owner who expressed optimism about the tax cuts, noting that the additional capital could be reinvested into the business to expand operations and hire more employees.

Manufacturers, another critical sector of the economy, were also expected to benefit significantly from the tax reform. The article discusses how the lower corporate tax rate would encourage manufacturers to invest in new equipment and technology, thereby increasing productivity and efficiency. Additionally, the tax bill included provisions for immediate expensing of capital investments, allowing businesses to deduct the full cost of qualifying assets in the year they were purchased rather than depreciating them over time. This change was particularly beneficial for manufacturers, who often require substantial capital investments to remain competitive.

The article also touches on the broader economic implications of the tax cuts. Proponents of the legislation argued that the tax cuts would lead to increased economic growth, higher wages, and more job creation. They pointed to the theory of trickle-down economics, suggesting that by reducing taxes on businesses and the wealthy, the benefits would eventually trickle down to the middle and lower classes. Critics, however, were skeptical of these claims, arguing that the tax cuts primarily benefited the wealthy and large corporations, with little evidence to support the notion that they would lead to widespread economic benefits for all Americans.

To provide a balanced perspective, the article includes interviews with economic analysts who offer their assessments of the tax cuts' potential impact. One analyst noted that while the immediate effect of the tax cuts might be an increase in corporate profits and stock buybacks, the long-term effects on economic growth and wage growth were less certain. Another analyst expressed concern about the potential for the tax cuts to increase the federal deficit, which could lead to higher interest rates and reduced government spending on essential programs.

The article also explores the political context surrounding the tax cuts. It discusses how the legislation was passed along party lines, with Republicans largely in favor and Democrats opposed. The piece includes comments from political figures on both sides of the aisle, with Republicans touting the tax cuts as a major achievement of the Trump administration and Democrats criticizing them as a giveaway to the rich. The article notes that the tax cuts were a central part of Trump's economic agenda, and their passage was seen as a significant victory for the president and his party.

In addition to the corporate tax rate reduction and the pass-through deduction, the Tax Cuts and Jobs Act included several other provisions aimed at stimulating economic growth. These included an increase in the standard deduction for individuals, a doubling of the child tax credit, and the elimination of the individual mandate penalty under the Affordable Care Act. The article discusses how these changes were intended to provide relief to middle-class families and encourage consumer spending, which is a significant driver of economic growth.

The article also examines the potential impact of the tax cuts on international trade. With the corporate tax rate now more competitive globally, some analysts suggested that the tax cuts could encourage multinational corporations to bring back profits held overseas, a process known as repatriation. This influx of capital could be used to invest in the U.S. economy, creating jobs and boosting economic growth. However, the article notes that the actual impact of repatriation on the economy would depend on how companies chose to use the repatriated funds, with some critics arguing that much of it would be used for stock buybacks rather than investment in new projects.

Overall, the article provides a comprehensive overview of the Tax Cuts and Jobs Act and its potential impact on businesses, manufacturers, and the broader U.S. economy. It highlights the optimism of some business owners and the skepticism of others, as well as the political and economic debates surrounding the legislation. By including a range of perspectives and insights, the article offers readers a nuanced understanding of the complex implications of the Trump tax cuts.

Read the Full PBS Article at:
[ https://www.pbs.org/newshour/show/how-businesses-and-manufacturers-will-benefit-from-trumps-big-bill ]

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