Will tax cuts mean more automation?

Donald Trump is pushing a plan to cut corporate income taxes.

At least some hedge fund managers believe corporate tax cuts will boost automation.

With President Donald Trump and Republican leaders in Congress looking to slash corporate taxes as part of a broad tax code overhaul, investors are placing bets that corporations will spend some of their windfalls on automation, Reuters reports. David Randall of the news agency writes:

Fund managers from Columbia Threadneedle Investments, Hodges Capital and Hood Capital say that they expect that companies will use part of their tax savings to invest in high-cost machines that will allow them to reduce labor costs over time.

Taxes aren’t the only reason hedge fund managers like automation companies. As wages rise and unemployment drops, automation provides corporations tools to maintain margins and productivity.

And it may be a good thing not to count on those tax cuts just yet.

The Trump administration is sending mixed signals about how its tax plan will affect the deficit. At least some of the Republicans who said they were concerned about rising deficits during the Obama Administration may balk at a tax plan that doesn’t impose offsetting cuts.

Sen. Bob Corker of Tennessee, who recently announced his retirement, has expressed such concerns. As reported by NPR:

At committee hearings, to party leaders, at private Senate lunch meetings and to the media this week, Corker has laid bare his concerns about a tax bill that threatens to add to the federal budget deficit.

“Unless it reduces deficits — let me say that one more time — unless it reduces deficits and does not add to deficits with reasonable and responsible growth models, and unless we can make it permanent, I don’t have any interest in it,” Corker said at the Budget Committee hearing.

So far, the details of the tax plan are unclear.

However the tax debate turns out, you can count on Sterling Accounting for your tax preparation needs.

Leave a Reply

Your email address will not be published. Required fields are marked *