Thursday’s top personal finance stories
By Heather Long
The Senate plans to vote on the largest change to the U.S. tax code in 30 years tonight (or early Friday). Lowering taxes for American businesses and families is the heart of President Trump’s plan to boost the economy, although not everyone gets a tax cut in the plan.
“We are going to be saying Merry Christmas again, with a big, beautiful tax cut,” Trump said Wednesday at a speech in Missouri.
The driving force of the Senate GOP tax bill, dubbed the “Tax Cuts and Jobs Act,” is to cut taxes on businesses. Lawmakers on the right and left agree that the United States’ 35 percent top tax rate on corporations is too high and not competitive with the rest of the world. The Senate bill would lower that rate to 20 percent, the biggest reduction ever for corporations. The big business cut would be permanent, while the rate reductions for real people are set to expire after 2025.
The Tax Cut and Jobs Act is more than a tax bill. It also makes sweeping changes to health care that are expected to lead to 13 million Americans dropping insurance, and it alters the treatment of state and local taxes, which could affect local government budgets for schools and roads.
Senate Majority Leader Mitch McConnell (R-Ky.) said he is hopeful he has enough votes to pass the bill by the end of the week. The final version of the bill has not been made public yet, leaving little time for analysis and debate. Many senators are also asking for last-minute changes to the bill. Some are concerned that the bill would add $1 trillion to the already sizable U.S. debt. Others don’t think the bill does enough for the middle class …read more
A 50/50 portfolio keeps you in stocks and lowers risk, writes Howard Gold.
A Google street view car on display at the Google I/O developers conference at Moscone West Convention Center in San Francisco in 2013. (John G. Mabanglo/European Pressphoto Agency)
A team of computer scientists has derived accurate, neighborhood-level estimates of the racial, economic and political characteristics of 200 U.S. cities using an unlikely data source — Google Street View images of people’s cars.
Published this week in the Proceedings of the National Academy of Sciences, the report details how the scientists extracted 50 million photographs of street scenes captured by Google’s Street View cars in 2013 and 2014. They then trained a computer algorithm to identify the make, model and year of 22 million automobiles appearing in neighborhoods in those images, parked outside homes or driving down the street.
Street View scene with parked vehicles in Brooklyn (Google)
The vehicles seen in Street View images are often small or blurry, making precise identification a challenge. So the researchers had human experts identify a small subsample of the vehicles and compare those to the results churned out by their algorithm. They that the algorithm correctly identified whether a vehicle was U.S.- or foreign-made roughly 88 percent of the time, got the manufacturer right 66 percent of the time and nailed the exact model 52 percent of the time.
While far from perfect, the sheer size of the vehicle database means those numbers are still useful for real-world statistical applications, like drawing connections between vehicle preferences and demographic data. The 22 million vehicles in the database comprise roughly 8 percent of all vehicles in the United States. By comparison, the U.S. Census Bureau’s massive American Community Survey reaches only about 1.6 percent of American households each year, while the typical …read more
Treasury Secretary Steven Mnuchin (Carolyn Kaster/AP)
Dear Lawrence Summers and Jason Furman,
We read with interest your Dear Colleague letter in The Washington Post in response to ours in the Wall Street Journal.
You ask if we have considered several points you make. The answer is ‘yes’ — we have considered each before coming to our conclusion. Responses to each of your points follow:
First Point You Raised: Our letter addresses the impact of corporate tax reform on GDP; we did not offer claims about the speed of adjustment to a long-run result (though official revenue estimators will obviously need to do so for short-run analysis). We did not approach Marty Feldstein as a signatory, as he generally is not a ‘signer’ of letters, and he can certainly speak for himself. In fact, he did in Project Syndicate on November 27: “I dislike budget deficits, and I have long warned about their dangerous effects. Nonetheless, I believe the economic benefits resulting from corporate tax changes will outweigh the adverse effects of the increased debt…”
Second Point, Part (a) You Raised: The studies we cite all find that reductions in corporate taxation have important positive effects on economic growth. Ultimately, we are confident that the estimates in our piece are closer to the mark and are at the same time broadly consistent with other estimates from empirical studies of effects of corporate tax changes on growth.
Second Point, Part (b) You Raised: We refer to the estimate we believed most accurately reflects likely saving responses and thus capital accumulation.
Second Point, Part (c) You Raised: We state explicitly in the letter that the figure calculated on the basis of the OECD study is a long-run estimate (the OECD study estimates effects on GDP per capita, not GDP per se). We wanted …read more
Check an investment service’s performance through bull and bear markets, writes Mark Hulbert.