Home Depot co-founder Ken Langone says whether or not you are a supporter of President Donald Trump, his landmark tax-cut strategy will ultimately truly help “Make America Great Again” on every financial and economic level.
“It's going to help growth like it or not, it's going to help growth,” the Invemed Associates founder bluntly explained on CNBC when confronted with the argument by New York Times columnist Paul Krugman that the Trump tax cut is “mainly a giveaway” to corporations.
“The numbers we have so far show that the much-hyped bonuses are trivial – less than $6 billion, or 0.03% of GDP – while stock buybacks have been more than $170 billion. And many of those bonuses would probably have happened anyway, whereas stock buybacks are running far above historical levels,” Krugman recently wrote for the Times.
“Furthermore, the surge in stock buybacks suggests that the long run effect of the tax cut on wages will be small. If companies use the cuts to buy back stocks, not add to plant and equipment, the wage-growth story doesn’t even get started,” Krugman wrote.
Langone disputed Krugman’s allegations, saying that Home Depot for the last decade has bought back billions of its stock each year.
Earlier this year, the world’s largest home-improvement chain will pay hourly workers a one-time cash bonus of as much as $1,000 in the latest quarter, Bloomberg reported.
The move follows Trump’s legislation last year that lowered the corporate taxes by 14 percentage points -- to 21 percent from 35 percent.
Langone isn't alone in touting the economic benefits of the tax cuts.
Former Federal Reserve Chairman Alan Greenspan claims Trump's corporate tax cut is driving the stock market and a host of economic benefits, and that “we’re underestimating the impact of that.”
Greenspan notes that when the tax rate is moved several percentage points, “a whole cascade of projects will fall on a ‘let’s-do-it’ type relationship, and I think that’s what’s happening at the moment.”
“Remember that the stock market is being driven to a large extent by the one thing that I think the Trump administration did right: got the 35 percent marginal corporate tax rate and brought it down to 21 percent,” Greenspan said during a recent discussion at the American Enterprise Institute titled, “The Bubble Economy – Is This Time Different?”
“I think that what is happening here in the United States is we’re underestimating the impact of that,” Greenspan said.
For his part, Trump has taken to Twitter to tout the economy, saying mainstream media outlets only distort the facts and report "fake news."
"The U.S. economy is looking very good, in my opinion, even better than anticipated. Companies are pouring back into our country, reversing the long term trend of leaving. The unemployment numbers are looking great, and Regulations & Taxes have been massively Cut! JOBS, JOBS, JOBS," Trump recently tweeted.
(Newsmax wire services contributed to this report).
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