Pharmaceutical Imports Soar After Trump's Tax Cuts

Mish

The TCJA was supposed to increase US corporate investment and repatriate corporate cash. It did the opposite.

TCJA Side Effects

The Tax Cuts and Jobs Act of 2017 added an estimated $2.289 trillion to the national debt over ten years,

It also led to greater income inequality, higher healthcare costs, and a higher trade deficit.

The TCJA was supposed to increase US investment and repatriate corporate cash held overseas but it had the opposite impact according to Brad Setser at Follow the Money.

The U.S. trade deficit in pharmaceuticals is one track to go from just over $50 billion dollars at the end of 2016 to close to $100 billion by the end this year.

This reality has fairly obvious implications for U.S. tax policy—the Tax Cuts and Jobs Act created a clear incentive to shift profits offshore, and the related provisions of the tax code clearly need to evolve. There is the formal incentive created by the tax treatment of intangible assets, but even more important is the opportunity, with enough tax engineering and actual production abroad, to shift the profit on U.S. sales of pharmaceuticals out of the 21 percent tax bracket.

The problem is bad tax policy that encourages capital flight and tax gains.

No Debt Concerns Until November

It's safe to say the Tax Cuts and Jobs Act lead to the creation of very few jobs while swelling the deficit and national debt.

Republicans will not be concerned about deficits or the debt until. they no longer hold the White House. 

That's coming right up.

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Mish

Comments (29)
No. 1-13
Sechel
Sechel

The bill was probably written by lobbyists. the point of the bill wsa to increase donations to the RNC not really to fix anything

PecuniaNonOlet
PecuniaNonOlet

48 days till election.

dr smock
dr smock

Is this the nail in the coffin for supply side economics, also called the Laffer curve? Ever since it was instituted in 1980 by Reagan, the dreamer who knew nothing about economics, the trade deficit has gone parabolic and along with the massive deregulation laws instituted by the slick Willie and crooked Hillary reign of terror, has bankrupted this country. And how dumb can Trump be to tell the people during his first campaign that he was going to do "nice things" for the working class, then almost immediately upon taking office, call for a massive tax cut for corporations? I think Trump underestimated the intelligence of the poor people who are rioting and are going to continue to riot?

JCPatriot
JCPatriot

So if a pharmaceutical trade deficit is bad, aren't other trade deficits bad, too? Finally, Mish recognizes that globalist policies don't work, and he will immediately stop supporting big-government political candidates that could care less about the average American citizen! NOT!

TimeToTest
TimeToTest

It’s funny to think things are R or D.

They realized this year they could print to infinity. There is one party. The Green($) Party.

I wonder if there is a chart that correlates fake news to the rise in the national debt. News is all about emotion now. Emotional people are not rational.

The medial field is the biggest scam that has ever existed.

Webej
Webej

Mish: Will Maven preserve the accounts?

Casual_Observer
Casual_Observer

I fail to understand why people continue to vote against their own economic interest. We knew before that TCJA wouldn't work and would only swell the deficit and allow more companies to get richer. If you think Amazon paying no taxes is a good thing, then you have to believe that deficits and debt don't matter.

dr smock
dr smock

Since the start of deregulation, the pharmaceutical companies have done a lot of mergers and takeovers to form monopolies. To "save money", they have sent most of the drug manufacturing jobs to foreign countries, even the drug test kits and covid masks. In the last year alone, drug prices have doubled in the US, while other countries like Canada have fought for and negotiated for their citizens such that drug prices are a lot cheaper

dr smock
dr smock

In the last couple of days, more than 800 nurses at the U of Illinois hospital in Chicago have gone on strike for better equipment, more workers, less hours, and an increase in pay. They are exhausted and burnt out from the Covid-19 pandemic. The drug companies are making big money, hospital charges have increased, and health insurance costs for people have gone up. The nurses are entitled to better conditions and more money, but so are a lot of US workers. Most of these public hospitals are still not making money and depend on federal government subsidies in order to pay their bills and stay open, which is frightening. Guess who is making most of the money?

magoomba
magoomba

The big med/pharma/edu/insuro cartels plan to control the world.

Augustthegreat
Augustthegreat

Many trumptards do not use their brains, and think they are the chosen ones I

WildBull
WildBull

So, the globalist weenies won. Too many traitors in Congress.

Realist
Realist

Almost every single aspect of American health care is a complete mess. You pay so much more than any other country for pharmaceuticals and health care, and get so much less in return.

Yet when someone recommends that America look at other countries for examples or advice on how to improve your health care system, you resort to disdain for anything non-American. It’s almost as if you prefer to settle for crap, as long as it’s USA crap.


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