Summers Warns "1000s Will Die" But Who Are The Real Winners & Losers From Trump's Tax Reform?

While many in the 'resistance' have vociferously denounced the Senate tax reform bill in the last 48 hours, former Treasury Secretary Larry Summers took the proverbial biscuit by warning that "thousands will die as a consequence of this new tax bill."

The Congressional Budget Office estimated that the tax bill could reduce insurance coverage by 13m people, which to be conservative we can round down to 10m people.


Recognising all the uncertainties - for example, the fact that the group becoming uninsured as a result of the individual mandate repeal is likely to be healthier than the group Sommers et al (2014) study in Massachusetts - if we treat the 176-830 range as implying that it is safe to assume that 1,000 more uninsured means one death, the conclusion would follow that the tax bill will result in 10,000 extra deaths per year.

After serious backlash from his over the top comments, Summers took to CNBC to defend it:

"I think this bill is very dangerous," he said on CNBC's "Squawk Box" program.  


"When people lose health insurance, they're less likely to get preventive care, they're more likely to defer health care they need, and ultimately they're more likely to die."

But was met with some skepticism. Summers debated the issue on air with Ken Langone, the Home Depot founder and benefactor of the NYU Langone Medical Center. Langone said he doubts that Summer's fears will come to fruition, citing quality of care and increased life expectancy.

"Frankly, this argument that people are going to die is a little bit more emotional than I think the issue calls for," Langone said.

So Summers' (and Steyer's) are convinced this is bill means armageddon for America, but Bloomberg's Jonathan Levin , Andrew Pollack , and Drew Armstrong take a slightly less emotional and more analytic approach at who the real winners and losers may be from the GOP tax reform bill.

The tax bill passed by Republicans in the U.S. Senate over the weekend may boost profits for industries from banking to retail to fossil fuels. It also could put the squeeze on hospitals and renewable energy firms.

While the plan is still subject to revision, the centerpiece of the existing legislation is a reduction in the corporate income tax rate to 20 percent from the current 35 percent, along with a provision that allows some companies to bring back hundreds of billions of dollars in foreign profits at a lower rate than they otherwise would’ve paid.

The Senate bill preserves the alternative minimum tax for corporations after originally proposing to eliminate it. With the regular corporate rate now set to drop to 20 percent -- the same as the corporate AMT -- it’s unclear if companies would be able to use research and development credits to lower their tax bills.

The bill, which underwent a raft of last-minute changes late Friday and early Saturday before passage, may still see more alterations as Senate and House leaders begin work to reconcile their two versions. President Donald Trump also weighed in Saturday, unexpectedly saying the corporate tax rate in the package could reach 22 percent.

Here’s how sectors may fare under the legislation as it stands:

Asset Managers

Stocks of U.S.-based asset managers rose to a record last week on optimism about the tax overhaul. Among the top gainers were Federated Investors Inc., Bank of New York Mellon Corp., Franklin Resources Inc., Waddell & Reed Financial Inc. and Eaton Vance Corp.

That’s in part because asset managers typically pay tax rates of 30 percent to 35 percent, according to data compiled by Bloomberg. It’s higher than many other industries because the firms generally qualify for few deductions, Gabelli & Co.’s Macrae Sykes said last week.

Assets managers also benefit from rising equity markets, as higher prices increase the value of the holdings they manage and improve the performance of their funds.

Asset managers with foreign earnings could see particular benefits from the Senate bill, according to Rory Callagy, a senior vice president with Moody’s Investors Service.

As a group, they’d also gain from the bill’s tax cuts for individuals -- as well as changes to the alternative minimum tax and restrictions on the estate tax. Those provisions would give individual investors “more of their income and inherited wealth” to put into mutual funds and exchange-traded funds, “helping managers grow assets and related fees,” Callagy wrote.


Lenders including JPMorgan Chase & Co. and Citigroup Inc. have rallied on news of the bills’ progress in Congress. “Banks would be one of the clearest beneficiaries of this tax reform bill," Isaac Boltansky, an analyst at Compass Point Research & Trading in Washington, said in an email early Saturday after the Senate amended the bill.

If Republican promises of faster economic growth are realized, banks will benefit with corresponding loan portfolio expansion, Boltansky said. Moreover, as corporations that pay relatively high effective tax rates themselves -- with fewer available deductions -- banks also stand to benefit a great deal from the reduced overall rate.

Banks would pay slightly higher rates than other types of companies under a new tax on certain payments to overseas affiliates. However, they’d benefit from a last minute change to another aspect of the so-called base erosion anti-abuse tax, or BEAT, which stipulated that payments involving derivatives wouldn’t count toward triggering the levy.

Another provision would eliminate the deduction for Federal Deposit Insurance Corp. premiums by banks with consolidated assets above $10 billion.


Drug and biotechnology companies would be among those benefiting from paying a reduced tax rate on repatriated earnings.

The money isn’t likely to go to workers, though. Senior executives from Pfizer Inc. and Amgen Inc. have said they’ll use a lower tax rate and cash inflow to return money to shareholders through buybacks and dividends. The new tax regime could also set off a mergers-and-acquisitions boom, as flush war chests give large drugmakers the means to snap up assets they’ve had their eyes on.


The Senate bill’s repeal of Obamacare’s individual mandate won’t help health insurers and hospitals, which are already working to cope with the Trump administration’s efforts to undermine the law. Ending the individual mandate -- a requirement that all Americans carry health insurance coverage or pay a fine -- is likely to raise the number of uninsured.

For health insurers, that means the only people who will buy coverage are those that need it most -- typically sicker, more costly patients. In response, many have already started to raise the premiums they charge, or to pull back from some of the law’s markets.

Hospitals have less flexibility. Any increase in the uninsured means a decrease in the number of paying customers. Sick people still show up at the emergency room for care, though, and hospitals often have to write off their unpaid bills.

Private Equity

Because of their use of leverage to juice returns, private equity firms are primarily watching proposals to limit the amount of interest expense they can deduct from portfolio companies’ taxable income.

House Republicans’ bill would cap the deduction at 30 percent of a company’s earnings before interest, taxes, depreciation and amortization. The cap in the Senate bill is stingier at 30 percent of earnings before interest and taxes -- a much lower measure than Ebitda. The firms can currently saddle their companies with debt and deduct the full interest cost.

Dealmakers are also watching a potential change in how their personal earnings are taxed. Currently, their cut of profits on private equity investments made using client capital is treated as a long-term capital gain -- and taxed at a lower rate than ordinary income -- if the investment is held for at least a year. Both the House and Senate bills would lengthen the one-year standard applied to such earnings, known as carried interest, to three years.

Real Estate

For commercial real estate developers and owners, the Senate version brings few significant changes. The biggest revision would create a new tax break for many -- a 23 percent deduction on business income, subject to certain restrictions.

The deduction would be available to businesses organized as so-called pass-throughs -- including partnerships, limited liability companies and S corporations. Pass-throughs don’t pay taxes themselves but pass income to their owners, who -- under current law -- pay taxes at their individual income-tax rates.

Many commercial real estate developers and owners have their businesses set up as such. The House would provide a pass-through tax rate via a different mechanism -- the disparity will be one of the key differences that lawmakers will have to work out.


The technology industry also stands to benefit from the provision allowing cash stockpiled overseas to be returned home at a lower tax rate.

U.S. companies have $3.1 trillion in overseas earnings, according to a Goldman Sachs & Co. estimate. The largest stockpile belongs to Apple Inc. at $252.3 billion -- 94 percent of its total cash. Microsoft Corp., Cisco Systems Inc., Alphabet Inc. and Oracle Corp. round out the top five, data compiled by Bloomberg show.

Dean Garfield, chief executive officer of the Information Technology Industry Council, which represents almost every major tech company, applauded Senate passage of the bill, saying it “moves us closer” to “a more competitive economy.’


Telecommunications companies, which need to regularly upgrade their networks, will be winners if provisions that increase the deductibility of capital investments stay in the final versions of the bill. AT&T Inc. Chief Executive Officer Randall Stephenson said his company will invest $1 billion more in U.S. infrastructure in 2018 if Trump signs off on tax reform.

The reduction in corporate income tax combined with enhanced deductions for capital expenditures over the next five years will allow AT&T to invest more in fiber optic cable to U.S. homes and businesses, he said.


Industrial firms are likely to see the overall package as a positive because of what it would mean for overseas earnings that they’ve left stockpiled offshore.

Both the Senate and House bills have provisions that encourage companies to repatriate past international profits at attractive tax rates. They would then be able to invest more in U.S. operations and pursue growth opportunities and acquisitions. Critics point out that when companies have been given incentives to repatriate earnings in the past, they used the bulk of them on returning cash to shareholders.

Fossil Fuels

Lowering the corporate tax rate and changes to cost-recovery provisions will help spur investment and create jobs, according to the American Petroleum Institute, the industry’s main lobbying group.

The Senate plan would also open a portion of Alaska’s Arctic National Wildlife Refuge to oil and natural gas drilling -- a move that lawmakers estimate could yield $1 billion in revenue over the next decade. A final tax plan may also increase sales from the Strategic Petroleum Reserve to help boost short-term revenues.

Environmental groups have questioned the revenue figures and industry interest in drilling in ANWR. Moreover, not every fossil-fuel producer is pleased with the legislation. Robert Murray, CEO of coal company Murray Energy Corp. and a staunch supporter of the president, attacked the bill as a “mockery of tax reform” because it fails to repeal the corporate alternative minimum tax.

“This legislation is much worse than the status quo,” Murray said in a statement Saturday. “Our company will see a significant tax increase resulting primarily from the loss of the business interest expense deduction.”


The proposed tax bill threatens a critical but esoteric source of wind and solar finance: tax equity. In tax-equity deals, renewable-energy developers sell portions of their projects’ tax credits to corporations -- often banks and some insurance companies -- that can apply the credits to their own tax bills. That market is expected to total $12 billion this year, according to Bloomberg New Energy Finance.

Most tax-equity investors are multinational companies and the issue now is that the Senate version includes a provision that imposes a minimum tax on these companies’ foreign transactions. If they have to pay a minimum tax, they may no longer have any need for the credits acquired through tax-equity deals.

“It literally will grind our industry to a halt,” said John Marciano, co-head of project finance at Akin Gump Strauss Hauer & Feld LLP. “Developers would be fighting for the few remaining investors.”


Retailers expect the tax overhaul to boost demand for their goods and services. Most chains rely on middle- and low-income shoppers for the bulk of their sales, and they say aspects of the legislation on the personal side -- like doubling the standard deduction -- will give such individuals more discretionary income.

The advantage would be temporary under the Senate bill; its individual tax cuts would expire in 2026.

After successfully lobbying to kill a House plan for a border-adjusted tax that would apply to imports, retailers have fully supported the overhaul. They tend to pay effective tax rates that are higher than industries with significant overseas operations, such as energy and pharmaceuticals, so almost any reduction in the corporate rate is seen by retailers as a boon.


Agricultural groups have been split about the legislation, with the National Farmers Union, the second-biggest such group in the U.S., opposing the Senate bill. While it includes provisions that farmers support, such as depreciation of equipment, some are worried it will eventually result in cuts to insurance and food programs that support the sector.

Deficit-boosting tax legislation may mean less money for other programs. A Congressional Budget Office report released last month concluded that tax legislation would trigger automatic spending cuts of as much as $136 billion in the current fiscal year.


DownWithYogaPants sodbuster Mon, 12/04/2017 - 14:55 Permalink

YouTube > Remy: People Will Die! People need kidneys, it's sad but decreedyet this Senator's hoarding one more than she needsI offer this bill and I hope you'll vote "aye"Unless, of course, you just want PEOPLE TO DIE!Traffic deaths have many crying with fearOver 30,000 people are dying each yearthis modest change I propose must be appliedUnless, of course, you just want PEOPLE TO DIE!Alcohol deaths are exceeding comparisonsBlack people, white people, Native AmericansWe need to ban alcohol, it can't be deniedUnless, of course, you just want PEOPLE TO DIE!Murders are bad. They have no defendersyet many are committed by repeat offendersI say lifetime in prison, whatever the crimeunless, of course, you want PEOPLE TO DIE!So I don't have a bill, or a groan to detailI just need a short clip for my donor emailTim THERE'S BLOOD ON YOUR HANDS! YOU WANT PEOPLE TO DIE!That good? Cool. Tim, dinner at five? Yeah.These car deaths I mentioned are terrible stuffIt just doesn't seem that one seatbelt's enoughEither vote for my act so that fewer will cryUnless, of course, you just want PEOPLE TO DIE!The carbs. The container. We cannot ignoreWhipped cream's killing more people than ever beforeThis bill would be passed and be ratifiedif those people there didn't want PEOPLE TO DIE!Why not weigh all the costs, the effects, the resultsEmpathize with each other as if we were adultsUse our brains to craft arguments--not vilifySee that freedom's a trade-off--YOU WANT PEOPLE TO DIE!

In reply to by sodbuster

swmnguy True Blue Mon, 12/04/2017 - 14:18 Permalink

What?!?!  The Pentagon budget is about $650 Billion per year.  Counting all departments, and the secret spy agency budgets, and the fact that the wars themselves are off the books, the MIC consumes about $1 Trillion per year.By "FSA" I assume you refer to "The Free Shit Army," a quaint reference to welfare recipients.Not Social Security and Medicare, which are self-funded; welfare.The entire cost of the food stamp program is about $70 Billion per year.  There is no way the "Free Shit Army" is consuming an additional $3,930 Billion per year.Or, at least, I'd like to see your figures.

In reply to by True Blue

True Blue swmnguy Mon, 12/04/2017 - 16:01 Permalink

Fine, we'll exclude Soc. Sec. and the FSA still gets 37% of Fed spending vs. the MIC at 16%… you want to consider Medicare (for retirees and the disabled) as not part of the FSA, then we are talking about 21% of Fed spending on the FSA vs. 16% on the MIC. This excludes State specific spending on the Free Shit Army, and only tallies Federal spending. (Given the level of disability fraud, the exclusions of Medicare and Social Security Disability are dubious, but I'll give them to you. A good example of this is Jesse Jackson Jr. having the 'disability' of being a crook and cashing in at $7,500 a month courtesy of the taxpayer via Soc Sec disability and his pension from the Illinois gov't.)Point still stands -how much more unearned privilege does the FSA 'deserve' from your wallet and mine? How much more do you and I have to be enslaved to people unwilling to work for themselves?I'm not arguing that we don't overspend on the military et. al. but pointing to one bloated budget as an excuse to further bloat another is asinine; and I'm not willing to pay for it.(This excludes all sorts of things like Obama Phones and free internet for the FSA by the way; which are covered by you via your telecomm provider. Look at your bill, that 'Universal Access Fee' is so the FSA can get for free what you pay twice for, and does not appear on the Fed budget.)

In reply to by swmnguy

chestergimli True Blue Mon, 12/04/2017 - 19:23 Permalink

I do not want to be giving a free living to people who absolutely don’t want to fend for themselves. But,how many people are able to make ends meet on one paycheck the way they were 40 or 50 years ago. This is due to the destruction of the dollar through the thing called inflation. And I believe this inflation all comes about through all of these Ponzi schemes that are invented by the Wall Street gurus to make profits out of nothing thereby making it impossible for all of us hobbits (little folks) to survive.

In reply to by True Blue

swmnguy Juggernaut x2 Mon, 12/04/2017 - 14:15 Permalink

Screw health insurance.What's absolutely inconceivable and unacceptable is that the richest nation in the history of the world, the USA, can't provide basic health CARE to its citizens.Whether it's to be funded by the government, or through corporate finance arrangements, or by people being able to save an emergency fund out of their wages; the method of payment doesn't matter which is why everyone focuses on that.  Nobody wants to discuss than the basic problem which is that this nation has decided not to have a system by which people can get healthcare when they need it unless they are wealthy or willing to be impoverished.If an office visit cost me $35, say, and standard tests everybody has to get cost say $100 for the set, nobody would need health insurance except for "Major Medical," to use a quaint expression.  But I got a softwood sliver under a fingernail and wasn't able to remove all of it myself with the whiskey and utility blade method, and it cost $1,800 (which was reduced via financial alchemy to $500; had I not had insurance the list price was $1,800).  Since the median wage from a job in America is about $35,000 for 2000 hours work, that' about $17.50 an hour.  A guy has to think long and hard about spending 100 hours' pay to get a god-damn plywood sliver taken out from under a fingernail.Finance has destroyed health care in America, just as it has destroyed public and infrastructure finance, retirement, home mortgage and housing finance, higher education, and everything else it's consumed.America's #1 problem is the fact that our system of finance doesn't work the way it's supposed to and has metastasized and taken over the whole economy.  Insurance being a product of Finance, Insurance is part of the problem, not the path to the solution.

In reply to by Juggernaut x2

Giant Meteor swmnguy Mon, 12/04/2017 - 15:26 Permalink

Ahhh yes, the FIRE e con o me, burnin it down to the waterline ..Excerpt George Carlin education rant .. "They've got you by the balls! They spend billions of dollars every year lobbying – lobbying to get what they want. Well, we know what they want; they want more for themselves and less for everybody else.""But I'll tell you what they don't want. They don't want a population of citizens capable of critical thinking. They don't want well-informed, well-educated people capable of critical thinking.""They're not interested in that! That doesn't help them. That's against their interests. That's right! You know something? They don't want people who are smart enough to sit around the kitchen table and figure out how badly they're getting fucked by a system that threw them overboard 30 fucking years ago. They don't want that!""You know what they want?""They want Obedient Workers – Obedient Workers. People who are just smart enough to run the machines and do the paperwork but just dumb enough to passively accept all these increasingly shittier jobs with the lower pay, the longer hours, the reduced benefits, the end of overtime and the vanishing pension that disappears the minute you go to collect it. And, now, they're coming for your Social Security money. They want your fucking retirement money. They want it back, so they can give it to their criminal friends on Wall Street. And you know something? They'll get it. They'll get it all from you, sooner or later, because they own this fucking place. It's a big club - and you ain't in it! You and I are not in the big club."I would only remind folks, it's a bit more than 30 years ago now, and pensions, save for .gov workers have fairly much disappeared already.The money changers, own this place. All of it .. 

In reply to by swmnguy

gaoptimize Juggernaut x2 Mon, 12/04/2017 - 14:32 Permalink

Military spending is about 3.8% of GDP.  In 1960, it was 8% (see World Bank data).  We recently had the aniversary of the Battle of Lepanto.  Arguably half the combat ships of the Holy Roman Empire and some other Christian nations concentrated against Islamic invaders.  Military expenditures might have been above 10% of GDP of the day.My criticism is how defense expenditures are used, rather than the amount.  I'd like air tight missile defense, advanced anti-biotics research, and community-based militia organization (Swiss-like).  I'd like Gorka's long term strategy against radical Islam implemented.But I would be interested in hearing the % of GDP that would constitute an affordable defense from your perspective.

In reply to by Juggernaut x2

Mr. Universe small axe Mon, 12/04/2017 - 13:40 Permalink

They didn't talk about a sector near and dear to my heart, the people who pay taxes and earn more than the average bear, but not rich. Lets say, $100-200KObama mandate, nothing burger as most have health insurance they pay for through their jobs.Standard Deduction raised to $24K along with SALT pretty much wipes out itemized deductions, yet for us it's close. I wonder what the hit on charities/churches will be as most donations will have no tax deduction value.The whammy on top of this is the elimination of the personal exemption which for a family of three is over $12,000 a direct tax increase of $3,000So far the best I can tell we will be paying an additional $500 a month to the corrupt federal government to house, feed and clothe those who are criminaly invading and destroying our country. Sweet.

In reply to by small axe

heavens-door Mr. Universe Mon, 12/04/2017 - 15:05 Permalink

every 'tax reform' since the beginning has been designed to take away from the productive members of the middle class and give most to the wealthy elite and to the poor.  a larger amount to the wealthy elite because we own the govt and military and a smaller amount to the poor so they don't try and overthrow us, the wealthy elite.  you need to consider the rigging of the social order by us, the wealthy elite, to pit natural allies against each other. examples of pitting natural allies against each other: the middle class vs the poor, or whites vs blacks, or blacks vs hispanics, liberals vs conservatives or generally one group of poor/middle class vs another group of poor/middle class. we used your natural prejudices against you, all of you, to pit you against each other for our benefit.  i can say this freely here because you people reading this are too lowly and weak to face yourself and consider these facts I freely give cannot change.just think about it. most here voted for and vigorously support our guy Donald J. Trump.  most here are Christians who voted for and vigorously support a guy who has openly broken all 10 Commandments and the Golden Rule, and will continue to do so.  most here are Veterans or have high regard for the military yet voted for and vigorously support a Draft Dodger whose sons are soybois not suited for military service. most here are against pedos yet voted for and vigorously support a person who for decades has surrounded himself and befriended convicted and well known pedos. i can go on, but you get what I'm saying.most of you here have dug yourselves in a deep deep pit and cannot/will not get out.  instead You will burn in your own pit for all eternity with your closest.

In reply to by Mr. Universe

J. Peasemold G… Arnold Mon, 12/04/2017 - 14:07 Permalink

"I think this bill is very dangerous," "When people lose health insurance, they're less likely to get preventive care, they're more likely to defer health care they need, and ultimately they're more likely to die."The refuge of the scoundrel arguments, yet again.Where to begin with this self serving and know all grandstanding?The sky is falling, we're all going to die, save the women and for the good of the children, the sweet little innocents and the dignified old and infirm.Hypocritical headline grabber of the first order.I suggest that Summers, not the bill, is the greater danger to the health and well being of the general public and the country. J. Peasemold Gruntfuttock 

In reply to by Arnold

LawsofPhysics Mon, 12/04/2017 - 13:11 Permalink

This is the same corrupt fuck that promoted de-regulation of banking and finance prior to the 2001, then the 2008 crashes!!!Stretch this fuckers neck already!