Bacon's Rebellion

Democracy Thrives in Sunlight

Tax Act Impact on Virginia: 5,782 Jobs

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James A. Bacon
in , ,

The Tax Cuts and Jobs Act of 2018 will create 218,000 full-time equivalent jobs across the United States this year, asserts the center-right Tax Foundation, which specializes in analyzing the impact of tax policy on the U.S. economy.

Using its Taxes and Growth econometric model, the Tax Foundation provided a job-creation estimate for each of the 50 states and Washington, D.C. In Virginia, predicts the model, the economic stimulus of corporate and personal income tax reform will create 5,782 jobs.

That number compares to 20,100 total jobs created between Dec. 2017 and May 2018, according to U.S. Bureau of Labor Statistics data. Annualized, Virginia was on track for creating 48,200 jobs in 2018, suggesting that the tax cuts are accounting for about 12% of the state’s job growth.

The tax cuts’ impact on Virginia falls in the middling range compared to other states. The 5,872 jobs created in Virginia amounts to 678 jobs per 1 million population, according to Bacon’s Rebellion calculations. On a jobs-per-population basis, the impact ranges from 1,640 in Washington, D.C. to a mere 110 in Oklahoma, both of which appear to be anomalies. Excluding those two, the impact ranges from 564 jobs per million population in Mississippi to 824 in North Dakota.

 

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10 responses to “Tax Act Impact on Virginia: 5,782 Jobs”

  1. Malcolm Baldwin Avatar
    Malcolm Baldwin

    I don’t see an incontrovertible argument that the tax cuts have helped either Va. or the U.S. How compare these numbers with what might have happened anyway? And doesn’t the tax act encourage, rather than discourage, economic polarization, as by all accounts I’ve seen corporations are largely putting their tax savings into stock buy backs?

    And of course, when one considers the Administration’s overall economic policies — alienating economic/political allies, creating a trade war already adversely affecting many American businesses — our economic future doesn’t look rosy.

    1. James A. Bacon Avatar
      James A. Bacon

      “I don’t see an incontrovertible argument that the tax cuts have helped either Va. or the U.S.”

      The Tax Foundation does not present an “incontrovertible argument.” It presents the results of its economic modeling. You can believe or disbelieve that modeling as you choose — garbage in, garbage out, as they say.

      But let’s be clear. The Tax Foundation isn’t claiming that the tax cuts account for all the economic growth. Indeed, by my calculations using their data and census data, the tax cuts account for only 12% of Virginia’s economic growth. To my mind, that is a startlingly small number. The Tax Foundation is making a very modest claim.

      As for corporations “largely putting their tax savings into stock buy backs,” I guess that depends upon your definition of “largely.” Yes, some are doing stock buybacks. Some are boosting dividends. But corporations are undeniably spending more on capital investment. See this chart from Bloomberg:
      https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iFHKzjvChZjY/v1/620x-1.png

      1. TooManyTaxes Avatar
        TooManyTaxes

        Paying higher dividends subject the money to a double tax – once as corporate earnings and a second time as taxable income to the investor. I thought “progressives” like people to pay taxes.

        1. djrippert Avatar
          djrippert

          Well, as you know, profits and cash flow are different things but (in the long run) they are supposed to converge. Stock buybacks are also paid for with after-tax cash flow and they theoretically increase the value of the underlying shares. That increased value generates additional tax revenue through capital gains when the shares are sold.

      2. LarrytheG Avatar
        LarrytheG

        In years past – the GOP has largely opposed “stimulus” even during recessions on the premise that adding to the deficit/debt – even to help the country out of a recession was bad fiscal policy.

        Make no mistake. While Trump proposed it – it took a majority of Congress and a majority of the GOP to pass it and many of the GOP voted against stimulus under Obama so it was a 180 degree turn for many.

        The party that has staunchly opposed increasing deficits and debt and who has run on that basis against many Dems they characterize as “tax and spend” …. has completely abandoned their core principles in the face of Trumpism….

        All these folks who claim they vote GOP because they are fiscal conservatives!

        And the Tax Foundation? They too – used to preach fiscal conservatism… and now… look at them… !!! “center right” bhahahahah

        What do you call folks who advocate adding to deficit/debt to provide tax cuts and then pretend they are just in favor of tax cuts and forget how those “cuts” were funded?

  2. Steve Haner Avatar
    Steve Haner

    Back on my hobbyhorse: All this means very little until we see what the state does to adjust (or not) its own tax structure. If the state takes full advantage of the federal changes to boost state revenue, any net benefit from the federal changes is reduced.

  3. LarrytheG Avatar
    LarrytheG

    These are NOT tax cuts. They are loans from the US Treasury. We did not finance the tax cuts with reduced govt spending. We basically borrowed money from the future and increased the deficit and debt.

    It’s like one of us going out and getting a loan and claiming we are better
    off now that we now have more money…

    This is the kind of thing some of us say that we should teach in school so that people know that going into debt – whether for a car or a college education is not the same as earning more money so you can pay in cash for what you want.

    1. Steve Haner Avatar
      Steve Haner

      Like Nixon said, we’re all Keynesians now……

  4. djrippert Avatar
    djrippert

    There are two solutions to income and wealth inequality – demand greater than supply for the labor of people in the bottom three economic quartiles and socialism. I’m glad President Trump decided to try the former before attempting the latter.

  5. LarrytheG Avatar
    LarrytheG

    Trump (and the GOP) did something that to this point in time the GOP has
    staunchly called “left wing socialism”.

    We did not “create” jobs. We borrowed a crap-load of money that will be owed by the sons/daughters of those who got “helped” with jobs.

    The GOP even opposed it when there was a recession – and stimulus is the usual way you end a recession.

    This stimulus/tax cut .. increased the deficit/debt when there was no recession….

    So here’s the question. The Dems have usually proposed such policies to provide jobs for people – i.e borrow money… run a deficit…etc.

    Does the GOP now also embrace that concept?

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