Learning from the past to assess the impact of the recent Republican Tax Law. Where to invest? “Trickle Up” economics will eventually ”trickle down.”

1. Will the US ever regain its 1998
budget surplus?
By Paul H. Carr
1998
Surplus

2. Will the US ever regain its 1998
budget surplus?
• Learning from the past to assess the
impact of the recent Republican Tax Law.
• Where to invest?
• “Trickle Up” economics will eventually
”trickle down.”
• ASPEC “Philosopher Kings” Gerry
Talbot, Peter Kent, Bob Tuite, et. al.
Tax Recommendations.

3. 1998
Surplus

4. Clinton raised the
top tax rate from
28% to 40%
The DOT-COM
Boom, peaking in
2000, stimulated
the economy &
increased
productivity.

5. The NASDAQ peaked in 2000

6. The DOT COM Boom was a historic economic
bubble and period of excessive speculation that occurred
roughly from 1997 to 2001, a period of extreme growth in
the usage and adaptation of the Internet by businesses and
consumers.
The Netscape browser made it easy for everybody to use
the internet, that was originally developed so that nuclear
scientists could communicate with each other.
The DARPA net was developed for national defense.
Al Gore advocated its use for the general public.
Tim Bernes Lee invented html, hypertext documents which
are in common use today. During this period,
many Internet-based companies, commonly referred to
as dot-coms, were founded, many of which failed.

7. Between 1990 and 1997, the
percentage of households in the United
States owning computers increased
from 15% to 35%.[4]
Information and communications
technology progressed from a luxury to
a necessity.
The shift to an economy based on
computerization is known as
the Information Age.

8. WHERE TO INVEST?
PREDICTIONS ARE
DIFFICULT,
ESPECIALLY ABOUT
THE FUTURE.

9. Gross National Product Increase (GDP) =
Productivity X
Number of People Working.
Number of people working will not increase
because unemployment is down to 4.1%, the
lowest in the last 30 years.
To increase productivity, we will need more
automation.
The cut in the corporate tax rate will make
more capital available.

10. DOT COM
BOOM
DOT COM
BUST

13. Top industrial robotics companies in the world:
ABB Ltd.
Mitsubishi
Fanuc Corp.
Yaskawa Electric Corp.
Omron Adept Technology Inc.
Apex Automation and Robotics
Aurotek Corp.
Stäubli
Kawasaki Robotics Inc.
Rockwell Automation Inc.

14. The Handoff: The robot DRC-Hubo+ receives the Olympic flame from UCLA
professor Dennis Hong.
Robots Ready to Ski, Paint, and Clean at South Korea’s
2018 Winter Olympics
South Korea’s best roboticists have spent two years preparing 80 robots for
a wide range of roles at the 2018 Winter Olympics .
https://spectrum.ieee.org/robotics/artificial-intelligence/robots-ready-to-ski-paint-and-clean-at-south-koreas-2018-winter-olympics

15. The recently passed law was not as drastic cut in taxes as in
1980 - 1988
Corporate rate of
48% decreased
to 35%
Top individual
tax rate of 70%
decreased to
28%
21%
1980. 1990

16. 16
Taxes
higher
Than US

17. 1998
Surplus
Reagan tax
cuts
decreased
deficit
temporarily..
After1929 crash,
Hardly any deficit
spending until WWII

18. Pres. Reagan’s deregulation of the banks was
a major contributor to the economic crash of
2008.

19. WHICH COUNTRY HAS NOT EXPERIENCED A SINGLE BANK FAILURE?
• Canadian banks are typically leveraged at 18 to 1, avoided subprime
--compared with U.S. banks at 26 to 1.
• In 2008, the World Economic Forum ranked Canada's banking
system as the healthiest in the world.
-America's ranked 40th, Britain's 44th.
• Canada’s banking system, made up five national banks with
branches from coast to coast, was inspired by Alexander Hamilton. -
Fewer banks are easier to regulate.
• Home loans in the United States are "non-recourse,"
-If you go belly up on a bad mortgage, it's the bank's
Problem. -In Canada, it's yours.
• Fareed Zakaria's Article in NEWSWEEK, 16 Feb 2009
ECOSYSTEMS TEACH THE IMPORTANCE OF DIVERSITY

20. A RISING TIDE FLOATS ALL BOATS ?
TRICKLE-DOWN ECONOMICS
The objective of the top tax cuts from 70% in
1980 to 28% in 1988 was to stimulate the
economy, ie increase GDP. Everyone was
expected to be better off including an increase
in the tax revenue to the government.
1. No GDP increase.
2. Contributed to increased income inequality.
3. Lowered national deficit temporally.
.

21. From 1980-1987, growth decreased from 3.5% to 3.0% as per the trend.
Reagan tax cuts did not increase GDP growth downward trend.
Dot Com
boom
increased
GDP
above
trend line

23. “Trickle up”
capital, for
the needy at
the bottom,
will eventually
be available
to the rich.
Will it
“trickle
down”?

24. 24
1929
Recession
2008
Recession
“Trickle-UP” Economics started in 1941. In
1980 wealth started to become available to
the rich. Will it “Trickle-Down?”

25. WWII POSTER
How we defeated Hitler
Germany and Japan’s
Rising Sun (1945).
Paid off WWII, Korean and
Vietnam Wars debt (1980),
& Landed Man on the
Moon (‘69)
Patriotism against
enemies is the
Social Capital
that bound us together.
”Tickle-Up Economics”
GI Bill enabled the “poor
fellows” who won the war
to get a college education.

26. Bonuses Aside, Tax Law’s Trickle-Down Impact Not Yet
Clear
By JIM TANKERSLEYJAN. 22, 2018
https://www.nytimes.com/2018/01/22/us/politics/bonuses-tax-laws-trump-
impact.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=first-column-region&region=top-
news&WT.nav=top-news
Bank of America’s bonuses will cost the bank $145 million in 2018, or about 5 percent
of the nearly $2.7 billion in savings it is expected to reap in 2018 from a lower, 21 percent
corporate tax rate.
Apple’s bonuses will cost $300 million, a fraction of the $40 billion, at least, that the
tech giant is saving from a single provision in the law,
And two days before Walmart snagged glowing headlines for handing out $400 million in
bonuses and lifting its minimum wage at a cost of $300 million, the nation’s largest retailer
by sales unveiled a plan to buy back company-issued debt. The cost of the buyback: $4
billion.
“Certainly, a lot of what you’re seeing is bonuses, rather than wages. It’s a one-time thing —
you don’t have to do it again. It’s political, obviously. It’s P.R.,” said Jim O’Sullivan, the chief
United States economist at High Frequency Economics.
An S&P Global report estimates that banks will return 75 percent of their windfall to
shareholders.
Investment in job skill training?

27. • Wages of those with
education beyond a
bachelor’s degree has
doubled since 1964.
High school dropouts are
earning less now than in 1962
Average US Income in
2012 dollars.
Top 10% $254,449
Bottom 90% $ 30,439

28. How C.E.O.s Should Spend Their Tax Cuts
Op-Ed By RICHARD C. LEVIN FEB. 8, 2018, Former President of Yale U.
Neglected in the public discussion is yet another strategy, with large potential
benefits for every company and for the nation as a whole: investing in human
capital.
Lost in the noise was Boeing’s announcement that it will spend $100 million
on work force development, training and education,
Disney’s investment of $50 million to cover tuition payments for its
hourly employees.
Technology is both destroying and creating jobs, and with the advent of artificial
intelligence and ever more powerful computational capacity to process almost
unimaginably large data sets from millions of interconnected devices, the pace of
creative destruction is likely to accelerate. McKinsey, the management consulting
firm, estimates that roughly half of all jobs in the United States are at risk of
automation in the next 20 years. If the country is to remain competitive, it needs
to invest in people to ensure that the high-skill jobs remain here.
https://www.nytimes.com/2018/02/08/opinion/ceo-tax-cuts.html?&clickSource=story-
heading&WT.nav=opinion-c-col-left-
region&module=ArrowsNav&contentCollection=Opinion&action=keypress&region=FixedLeft&pgtype=art
icle
Boeing Stock (BA) doubled in value in the last year

29. For most Americans, the proposed tax cuts are tiny and
temporary.
They will shrink in just a few years. And some middle class
Americans will actually get a tax increase.
Meanwhile, the top one percent will get a gigantic tax cut.
The Tax Policy Center estimates that the current plan will
save the bottom 80 percent between $50 and $450 in taxes
per year, but that it saves each person in the top one
percent an average of $129,000 a year.
The Tax Policy Center predicts that it will cut federal revenue
by $2.4 trillion over the next 10 years.
When that happens, the only way out of the crisis will be
something dramatic – exactly the cuts in Medicare and
Medicaid, and maybe even Social Security – that
Republicans have wanted for years.

30. GINI INDEX IS A MEASURE OF ECONOMIC EQUALITY
GINI = 00 Income completely equal
GINI = 100 One person owns everything = INJUSTICE
Germany, Scandinavia, Japan, etc. have more income equality than the US.

31. Reagan Tax Cuts
70% to 28%
I voted for Pres. Reagan twice because his “Star
Wars” program stimulated the R&D that won the
Cold War.
WWII Ends
Won Cold
War
Recession from
deregulation of Banks

32. ’ ‘09. ‘18
02
’04
Federal Budget Deficit from the Congressional Budget Office.1
$1.2
trillion

36. 10/9/15
Our Founding
Fathers may have
had the ideal
government of
Philosopher
Kings in mind
when they
established the
Electoral College.

37. 37
Members of the Electoral College were ideally
“Philosopher Kings” with more wisdom than
“the average voter.”

38. ASPEC Budget, Taxation and Long-Term Fiscal Survivability
by “Philosopher Kings” Gerry Talbot, Peter Kent, Bob Tuite, et. al.
Phase out all or most tax expenditures
Introduce a carbon/energy tax that fully funds infrastructure by the end of the phase in
period
*Reduce existing tax brackets
50% tax on estates > $5M
80% tax on estates > $50M
Phase in a 6% VAT (food and medicine exempt)
Increase excise tax on alcohol, tobacco, marijuana
**Establish tax code conditions to repatriate multination corporate funds currently held
offshore
5% surtax on income >$2M
***Reduce corporate tax rate to 20%
38
Estate Tax to Phase Out in 7 years

41. 10/9/15
TRICKLE-UP ECONOMICS ?
44 million people
collectively carry $1.4
trillion in student debt.
According to the Levy
Institute paper, canceling
all student debt would
increase GDP by between
$86 billion and $108 billion
per year, over the next
decade. This would add
between 1.2 and 1.5 million
jobs to the economy, and
reduce the unemployment
rate by between 0.22 and
0.36 percent.
http://nymag.com/daily/intelligencer/2018/02/lets-
cancel-everyones-student-debt-for-the-economys-
sake.html?utm_source=fb&utm_medium=s3&utm_cam
paign=sharebutton-b

42. 42
Piketty’s Conclusions
• The history of income and wealth inequality is always political, chaotic and unpredictable;
it involves national identities and sharp reversals; nobody can predict the reversals of the
future
• The ideal solution: progressive wealth tax at the
global scale, based upon automatic exchange of
bank information
• Other solutions involve authoritarian political &
capital controls (China, Russia..), or perpetual
population growth (US), or inflation, or some mixture
of all.

43. Will the US ever regain its 1998
budget surplus? Not Likely.
• Learning from the past to assess the
impact of the recent Republican Tax Law.
• Where to invest?
• “Trickle Up” economics will eventually
”trickle down.”
• ASPEC “Philosopher Kings” Gerry
Talbot, Peter Kent, Bob Tuite, et. al.
Tax Recommendations.