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Yahoo
16-05-2025
- Business
- Yahoo
GOP tax bill would shrink incomes for low earners: Analysis
Many different think tanks and legislative analysts in Washington have been sounding the alarm that the GOP bill to cut taxes and spending has greater advantages for wealthier taxpayers than it does for working Americans. But one group is projecting lower earners will not only receive smaller benefits from the bill but will actually be financially worse off when the individual rate cuts and benefit reductions are taken together. The analysis from Penn Wharton Budget Model found that people in the second income quintile, making between $17,000 and $51,000 per year, will see a net reduction in their incomes of $705 as a result of the GOP tax package. The effects for that income group get worse over time. The average 1.5 percent income reduction in 2026 expands to a 2 percent reduction by 2033 for a net income reduction of $1,200. That's compared to an $845 gain in 2026 for people making midrange incomes of between $51,000 and $93,000 per year. For people in the top quintile of the income spectrum, the total gains in 2026 are more than $468,000. While more comprehensive than the distributional breakdown of the GOP tax package from the Joint Committee on Taxation (JCT), the Penn Wharton analysis is in keeping with the JCT's official score, which is limited to the tax effects of the package and excludes the monetary benefits of federal social programs. People in the second income quintile in the JCT analysis will see a $24 billion reduction in their taxes while middle-quintile earners will get a $50 billion reduction, fourth quintile earners will get a $106 billion reduction, and the top fifth of earners will get a $385 billion reduction. Since people at the lower end of the income spectrum make greater use of social programs like food stamps and federal health care, which are on the GOP chopping block, than those at the upper end, the result is a net decrease in income for lower earners as opposed to simply a smaller share of benefits, the Penn Wharton analysis appears to show. Other analytical groups in Washington have been making similar points about the benefits of the package being skewed to the rich. 'House Republicans' budget and tax proposals would lead to nearly 14 million people losing health care coverage by 2034 and would raise costs for millions of working families,' the Center for American Progress wrote Tuesday. Economist Dean Baker of the Center for Economic and Policy Research noted to The Hill the legislation's continuation of the so-called carried interest loophole, which benefits hedge fund and private equity managers. 'They left the carried interest deduction in place, an absolutely unjustifiable tax break to some of the richest people in the country, that even Trump wanted changed,' he said. Millions are set to lose public health insurance as a result of the GOP bill, with 7.1 million people projected to lose Medicaid and Children's Health Insurance Program access in 2028 alone. Millions more are expected to lose coverage as a result of codified changes to the Affordable Care Act (ACA) and the failure to extend ACA subsidies. Americans will also lose access to food stamps as a result of the legislation, which seeks to put work requirements on some people who are enrolled in the program. Previous estimates for the effect of work requirement proposals — which critics often describe as paperwork requirements more than actual work requirements — showed reductions of between 3 million and 3.5 million people from food stamps, according to the Congressional Budget Office. The Republican bill is far from a done deal. Deficit hawks on the Budget Committee voted down their portion of the bill Friday, demanding steeper cuts and incurring the ire of President Trump. 'We don't need 'GRANDSTANDERS' in the Republican Party. STOP TALKING, AND GET IT DONE!' Trump wrote online. Five Republicans voted no on the measure: Josh Brecheen (Okla.), Chip Roy (Texas), Ralph Norman (S.C.), Andrew Clyde (Ga.) and Lloyd Smucker (Pa.). Smucker said he hoped to resolve the disagreement quickly and have another vote Monday. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
The Hill
16-05-2025
- Business
- The Hill
GOP tax bill would shrink incomes for low earners: Analysis
Many different think tanks and legislative analysts in Washington have been sounding an alarm that the GOP tax-and-spending cut bill has greater advantages for wealthier taxpayers than it does for working Americans. But one group is projecting that lower earners will not only receive smaller benefits from the bill but will actually be financially worse off when the individual rate cuts and benefit reductions are taken together. The analysis from Penn Wharton found that people in the second income quintile, making between $17,000 and $51,000 per year, will see a net reduction in their incomes of $705 as a result of the GOP tax package. The effects for that income group get worse over time. The average 1.5 percent income reduction in 2016 expands to a 2 percent reduction by 2033 for a net income reduction of $1,200. That's compared to an $845 gain in 2026 for people making midrange incomes of between $51,000 and $93,000 per year. For people in the top quintile of the income spectrum, the total gains in 2026 are more than $468,000. While more comprehensive than the distributional breakdown of the GOP tax package from the Joint Committee on Taxation (JCT), the Penn Wharton analysis is in keeping with the JCT's official score, which is limited to the tax effects of the package and excludes the monetary benefits of federal social programs. People in the second income quintile in the JCT analysis will see a $24 billion reduction in their taxes while middle-quintile earners will get a $50 billion reduction, fourth quintile earners will get a $106 billion reduction, and the top fifth of earners will get a $385 billion reduction. Since people at the lower end of the income spectrum make greater use of social programs like food stamps and federal health care, which are on the GOP chopping block, than those at the upper end, the result is a net decrease in income for lower earners as opposed to simply a smaller share of benefits, the Penn Wharton analysis appears to show. Other analytical groups in Washington have been making similar points about the benefits of the package being skewed to the rich. 'House Republicans' budget and tax proposals would lead to nearly 14 million people losing health care coverage by 2034 and would raise costs for millions of working families,' the Center for American Progress wrote on Tuesday. Economist Dean Baker of the Center for Economic Policy Research noted to The Hill the legislation's continuation of the so-called carried interest loophole, which benefits hedge fund and private equity managers. 'They left the carried interest deduction in place, an absolutely unjustifiable tax break to some of the richest people in the country, that even Trump wanted changed,' he said. Millions are set to lose public health insurance as a result of the GOP bill, with 7.1 million people projected to lose Medicaid/CHIP access in 2028 alone. Millions more are expected to lose coverage as a result of codified changes to the Affordable Care Act (ACA) and the failure to extend ACA subsidies. Americans will also lose access to food stamps as a result of the legislation, which seeks to put work requirements on some people who are enrolled in the program. Previous estimates for the effect of work requirement proposals — which critics often describe as paperwork requirements more than actual work requirements — showed reductions of between 3 million and 3.5 million people from food stamps, according to the Congressional Budget Office. The Republican bill is far from a done deal. Deficit hawks on the Budget Committee voted down their portion of the bill on Friday, demanding steeper cuts and incurring the ire of President Trump. 'We don't need 'GRANDSTANDERS' in the Republican Party. STOP TALKING, AND GET IT DONE!' Trump wrote online. Five Republicans voted no on the measure. They were Josh Brecheen (R-Okla.), Chip Roy (R-Texas), Ralph Norman (R-S.C.), Andrew Clyde (R-Ga.) and Lloyd Smucker (R-Pa.). Smucker said he hoped to resolve the disagreement quickly and have another vote Monday.
Irish Examiner
04-05-2025
- Business
- Irish Examiner
John Whelan: Airlines feeling the pain of Trump policies
The airline industry is feeling the pain of the Trump administration's policies and erratic pronouncements, which have produced negative sentiments toward the US among international travellers. American Airlines, Delta, Southwest, and JetBlue all reported falling foreign visitor numbers, as well as domestic travel declining in the first three months of the year. In regulatory filings, they are forecasting further declines across the rest of the year. Their projections for the full year come despite the airlines dropping their airfare prices by 5.3% compared to the same time in 2024. That is after declining 4% in February. Tourism Economics, a firm that tracks the hospitality industry, recently changed its forecast for foreign visitors to the US to a 9.4% decline for 2025, after projecting a 9% increase back in December, reflecting tariffs, inflation, and shaky consumer demand, which has forced their re-evaluation of expectations in 2025. Falling visitor numbers reflect an increase in hostility by many foreigners to the US, especially among students planning to study there, as well as the fear of harassment by immigration officers, according to US Centre for Economic and Policy Research senior economist Dean Baker. The travel and tourism industry, which accounts for about 3% of the US GDP, has long been one of the economy's most robust trade sectors, posting a trade surplus in travel every year this century, except this year, with the drop in foreign visitors to the US pushing the value of travel services down by a 7.8% annual rate in the first quarter. Ryanair, which does not rely on travel to the US, said its passenger numbers for April rose by 6% in the month, bringing the airline's annual traffic growth to 9%, reaching 201.3m passengers. Picture: Peter Byrne/PA Clearly, some of the backlash has come from Canada, where citizens have recoiled from Trump's talk of making it the 51st state. In March, the number of Canadians taking road trips across the US border was 32% lower than March 2024, and there was a 13.5% decline in air travellers from Canada, according to Statistics Canada. Advance bookings for flights from the US to Canada for the April to September period were off more than 70% from the prior year. Some of Europe's largest carriers, Air France-KLM and Lufthansa, have both warned of a dip in transatlantic bookings from Europe, particularly for the early summer period. As carriers release their first-quarter earnings and outlooks, signs of slowdown are prompting questions about whether this marks a short-term hesitation or a longer-term shift in travel patterns. Tourism International, which attributed much of its lowered forecast for foreign travel to the US and the global fallout from Trump's 'America First' rhetoric, noted that the March data reflect foreign visitor patterns before the April 2 'Liberation Day' tariff announcement, which may draw further backlash. US routes account for around 50% of profits for Lufthansa, Air France-KLM, and IAG — the parent company of Aer Lingus and British Airways. A prolonged slowdown in demand could tighten margins across the year, but some relief may come from the falling price of jet fuel, which is now at its lowest in three years, according to IATA. Hence, both Air France-KLM and Lufthansa have maintained a positive outlook for the broader summer travel season, reflecting the advantage of falling jet fuel, which accounts for one-third of airline operating costs. Ryanair, which does not rely on travel to the US, said its passenger numbers for April rose by 6% in the month, bringing the airline's annual traffic growth to 9%, reaching 201.3m passengers. Ryanair chief executive Michael O'Leary, in a recent interview, stated that Ryanair has taken advantage of the fall in oil prices to hedge a 'significant' amount of its future fuel requirements and is yet to see any impact on bookings from US tariff turmoil. With the price of jet fuel falling by a further 10% in April, O'Leary said the low-cost airline had this month 'very significantly extended' its fuel hedges for its next two financial years at 'dramatically lower oil prices.'' He added that the airline had not seen a change to booking patterns, even as the spectre of tariffs sparked fears of a global economic slowdown. 'We don't see anything this summer in Europe,' he said. Despite the uncertainty across much of the industry, IATA director general Willie Walsh downplayed the long-term impact, emphasising that the trade tensions have created uncertainty but not a major crisis for the industry. He also noted that the new US administration will likely encourage consolidation, which he thinks would be a 'net positive' for airlines.
Yahoo
01-05-2025
- Business
- Yahoo
America's travel industry is in sharp decline
The travel and tourism industry, which accounts for about 3% of the U.S. GDP, has long been one of the economy's most robust sectors, particularly when it comes to trade: The U.S. had posted a trade surplus in travel every year this century. Until this year. A drop in foreign visitors to the U.S. caused the real value of exports of travel services to fall at a 7.8% annual rate in the first quarter, according to the GDP report released Wednesday. The U.S. Travel Association says the United States is now running an annual travel trade deficit of $50 billion, compared with a $3.5 billion surplus in 2022. 'This presumably reflects increased hostility by many foreigners to the U.S., as well as fear of harassment by ICE officers,' Dean Baker, senior economist for the Center for Economic and Policy Research, wrote in his note reviewing the first quarter GDP numbers. 'We will likely see further declines in future quarters, especially among students coming to study in the United States.' There has already been an 11% year-over-year decline in enrollment of foreign students between this March and last, according to the Institute of Educational Enrollment. The organization expects the drop to result in a loss of up to $4 billion in spending. Other data bears out the dour outlook for travel. The International Trade Association reported earlier this month that arrivals of non-citizens to the United States by plane declined by more than 11% since March 2024. Tourism Economics, a firm that tracks the hospitality industry, recently changed its forecast for foreign visitors to the U.S. to a 9.4% decline for the year, after projecting a 9% increase back in December. The firm estimates that international visitor spending in the United States will slide 5% as a result, a loss of $9 billion this year. 'Trump's policies and pronouncements have produced a negative sentiment shift toward the U.S. among international travelers,' the firm said. U.S. airlines are feeling the pain. Several recently changed their projections for the full year as tariffs, inflation, and shaky consumer demand forced a re-evaluation of 2025 expectations. The Dow Jones Airlines Index is off 30.17% year to date and the DJ Hotels Index has declined 14.12%, with both hitting 52-week lows on April 8. Not all the travel news is bad. Year-on-year comparisons of airline travel likely suffered this year because Easter fell in April, versus March in 2024, shifting holiday travel. An analysis by the New York Times (NYT) found that international arrivals at U.S. airports are down only 1.5% so far this year, and airlines say bookings to Europe from the U.S. are up. Booking Holdings (BKNG), the parent company of and Priceline, reported robust first quarter earnings on Tuesday, with bookings up 7% and revenue rising 8%. Still, CEO Glenn Fogel acknowledged in the firm's earnings statement that 'there is uncertainty in the market around the near-term geopolitical and macroeconomic environment.' The outlook for international travel does not look poised to improve, given that the first quarter GDP numbers did not take into effect President Donald Trump's April 2 announcement of steep tariffs on virtually every country. Tourism International, which attributed much of its lowered forecast for foreign travel to the U.S. to global fallout from Trump's 'America First' rhetoric, noted that 'the March data reflect foreign visitor patterns before the April 2 'Liberation Day' tariff announcement, which may draw further backlash.' It has clearly drawn backlash from Canada, where citizens have recoiled from Trump's talk of making it the 51st state. In March, the number of Canadians taking road trips across the U.S. border were 32% lower than March 2024, and there was a 13.5% decline in air travelers from Canada, according to Statistics Canada. Advance bookings for flights from the U.S. to Canada for the April to September period were off more than 70% from the prior year. For the latest news, Facebook, Twitter and Instagram.
Yahoo
30-04-2025
- Business
- Yahoo
5 takeaways from a flurry of economic data after Trump's first 100 days
Wall Street and Washington, D.C., are wading through a surge of economic data this week as markets and policymakers attempt to game out the results of President Trump's policies. After 100 days of Trump's first term, U.S. growth took a sharp downward turn as a surge of imports took a chunk out of gross domestic product (GDP). Consumer spending showed signs of slipping, and price pressures seemed to fade slightly in the first quarter. While the new data showed some signs of economic resilience, experts are concerned that the success of the first quarter may be borrowed in part from the rest of the year. Here's a roundup of the latest economic data to show where the economy might be heading. First-quarter U.S. economic growth fell into negative territory Wednesday, mostly due to a surge in imports ahead of major new tariffs announced early in April. Gross domestic product (GDP) declined by 0.3 percent in the first quarter of 2025 after solid growth throughout 2024, including 2.4 percent in the fourth quarter and 3.1 percent in the third quarter. 'Imports surged at a 41.3 percent annual rate in the first quarter, with goods imports rising at a 50.9 percent rate, leading to the first quarter of negative growth in three years,' economist Dean Baker of the Center for Economic Policy and Research wrote in a Wednesday analysis. Exempting the import surge, economists said the broader growth pattern was in line with expectations. 'Core economic growth was generally as anticipated,' Olu Sonola, head of U.S. economic research at Fitch Ratings, wrote in a commentary. 'The frontrunning of purchases by consumers and businesses ahead of expected tariffs will make the data noisy for a few months.' Trump announced tariffs April 2 that brought the overall U.S. tariff rate to about 25 percent. While he paused his differential tariffs on individual countries and scaled back additional auto taxes this week, his 10-percent general tariff and triple-digit import taxes on China have brought the U.S. tariff rate up to the highest level in more than a century. Several economists noted business investment accelerating by almost 10 percent, driven by a 22.5 percent rise in equipment expenditures. Inflation as measured in the March personal consumption expenditures (PCE) price index moderated to an annual increase of 2.3 percent from 2.7 percent in February — a sizable drop. 'Perhaps we should hold off on ringing the stagflation bell just yet,' Scott Helfstein, head of investment strategy at Global X, wrote in a commentary. 'If tariffs ex-China are capped at 10 percent, inflation could be contained.' Despite the dip in inflation, economic actors from consumers to central bankers are expecting Trump's tariffs to increase price pressures in the future. Eighty-nine percent of U.S. adults believe tariffs will increase prices, a Gallup poll published this week found. Eighty-two percent of Republicans and 92 percent of Democrats are predicting higher prices. Federal Reserve Chair Jerome Powell observed earlier this month that shorter term inflation expectations have been moving up. 'Both survey- and market-based measures of near-term inflation expectations have moved up significantly, with survey participants pointing to tariffs,' he said. Consumer spending saw a healthy surge in March, with expenditures increasing by $135 billion, or 0.7 percent. Spending on motor vehicles and parts jumped by a whopping 57 percent ahead of auto tariffs scheduled for May 3, which the White House scaled back Tuesday with a rebate program for automakers. While strong levels of consumer spending generally bode well for economic performance, several economists saw the March surge as the preface for a steep spring fall. 'This artificial front-loading of demand sets the stage for a sharper demand cliff in [the second quarter] — a far more troubling phase of the ongoing economic slowdown,' EY economist Gregory Daco wrote in a commentary. Uncertainty about the business outlook has been skyrocketing in recent months and was reflected in a Wednesday drop in private-sector payrolls as companies press the pause button on hiring. The economy added 62,000 private sector jobs in March, according to ADP Research, about half of what economists were expecting, down from 147,000 in February and the lowest number since July of last year. The slowdown echoes a fall in the number of job opening as recorded in the Labor Department's March Job Openings and Labor Turnover (JOLTS) survey, released earlier this week. Job openings fell to 7.2 million, close to the September number of 7.1 million openings that was the lowest since December 2020. Economists were expecting 7.5 million job openings for March. 'This means there is 1 job open for every unemployed jobseeker, down from 1.1 in previous months. This suggests job search times could be increasingly extended,' Mark Hamrick, economic analyst at Bankrate, observed Tuesday. Economic sentiment among consumers is close to its second-lowest reading ever, as measured by the benchmark University of Michigan survey. Consumer confidence in the Conference Board index dropped by 7.9 points in April to a level of 86.0, the lowest level since May 2020. Consumer expectations in the survey dropped to a 13-year low of 54.4 — a level that made economists' eyes pop. '[This marks] its lowest since October 2011 when the post-Global Financial Crisis recovery was stalling and the Euro Crisis was escalating,' analysts for Deutsche Bank noted Wednesday. 'Consumer confidence at record-low levels,' Apollo Global Management economist Torsten Slok wrote in a recent analysis. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
