Will the GOP tax plan be good for you? Graphs tell the story.

The GOP is promising their massive tax cuts will spur economic growth and increase wages. This is the “trickle-down economics” theory, based on the idea that when wealthy people have more money, they invest in companies that can now expand, hire more people and increase sales and wages.

It’s an interesting theory. But does trickle-down economics actually work in practice? Fortunately we have nearly 100 years of data on what happens to the economy and wages as tax rates change.

// Does the economy grow?

Since 1929, the top marginal tax rate has gone from a high of 94% under Roosevelt down to a low of 31% under George Bush Sr. And there is evidence that as you drop the marginal rate to 70% from 91%, indeed GDP does increase (1963-1981). But when Reagan cut the top marginal tax rate to 50% in 1981, we saw no change in economic growth. When he cut it again to 33% in 1988, the economy actually contracted.

Since Reagan’s tax cuts, we have seen three other changes to the top marginal tax rate. And a clear pattern emerges.

  • When Clinton raised the top rate to 39.6%, GDP increased.
  • When Bush Jr. dropped it again to 35%, GDP decreased.
  • When Obama raised it back to its current 39.6%, GDP increased.

Based on this brief analysis, it appears the optimal top marginal tax rate is about 50%. When you drop below 50%, you hurt economic growth. When you increase it, you improve economic growth. So it’s likely that a drop to 37% top marginal tax rate will lead to slower economic growth, not faster.

// Will it increases wages?

The theory is that when wealthier people have more money, they expand their business investments creating jobs and demand for workers, which raises wages. But when we look at how wages have grown since 1967, we see a different patterns. When the top tax rate was 70%, the top 20% of families had wage growth about the same as everyone else.

But look at 1982, when the top tax bracket fell to 50%. You can see how the blue line (wealthiest 20%) suddenly rockets away from the crowd. Wages for everyone are still increasing modestly, but the clear winner is the top 20%. Then in 1988, when the top bracket drops to 33%, we see the top 20% pull away even more, and especially the top 5% (black dotted line). In 2003, when the top tax rate drops to 35%, we now see the top 21%-40% of families (brown line) also start to pull away from the pack.

What you don’t see is the bottom 60% enjoying any of these gains. Why is the wealth not trickling down to everyone? Because when employers have more money, they don’t hand it out as pay raises out of the goodness of their hearts. They pay what the market will bear and keep the rest for their stockholders and owners.

// So what does trickle-down economics do?

So lower taxes don’t create jobs and don’t increase wages. What do they do?

The main thing lower tax rates do is make the wealthy more wealthy. Fortunately it doesn’t really hurt the bottom 60%. Their wages continue to increase modestly. And it does appear to help the middle class too, likely educated business professionals who now have more money to spend. But the truly wealthy, the top 20%, just accumulate more wealth.

We can see in this graph how much of the pre-tax income goes to the top 0.1% (that’s the top 1 in 1,000 families). The spikes are because so much of their income comes from the stock market, so when things are bad (2002, 2009) their pre-tax income suffers. But it recovers quickly when the stock market improves.

As the top marginal tax rate declines, the extra money gets trapped in the hands of the wealthy. They, in turn, invest in the stock market. We should expect to see the stock market explode if the GOP tax plan is approved. Again, anything below a 50% top marginal tax rate appears to be a magic number.

// Conclusion

There’s no evidence lowering taxes increases the economy or wages. There is a lot of evidence that it makes the wealthy wealthier while doing very little for the poor. Trickle-down economics is a fairy tale.

So will the new tax rate be good for you? If you’re in the top 40% of income earners, you will probably see your wages increase especially if you invest in the stock market which should have a bullish couple of years ahead.

But if you’re in the lower 60%, it will have virtually no effect. It won’t create jobs but it likely won’t kill many jobs either. And it won’t raise wages either.

The main benefits fall to the wealthy. The data is clear.

If you like these graphs, you’ll love my new book “Storytelling with Graphs” which I hope to publish soon. Subscribe to this blog to be alerted when it’s available.

5 Tips for Building Slides to Impress Any Executive

exec meeting

An executive sponsor can make or break your project — and often your career. Impressing an exec starts with understanding how they are different: smarter, more impatient, more demanding than regular audiences.

It’s easy to drive an exec crazy with poor PowerPoint slides. But it’s equally easy to impress an exec with PowerPoint slides that respect their need for speed.

get to point fast

Here are five tips to help you make an impressive slide deck for your next executive presentation.

1. Go in with 3 points. You should be able to do your entire presentation on slide 1. What three points will you cover in today’s meeting? Expect that the executive will hijack the meeting, talk and ask questions for most of it. It doesn’t matter. You could do your entire presentation on slide 1. If the executive wants more details and evidence, move into the rest of the deck.

2. Short decks. Execs are impatient, want to get to the point quickly and are more interested in the key issues than the details. So aim to keep the deck super-short. 2-3 slides is not too short for an exec. Keep the “thunk factor” in mind: thick decks are the bane of a busy exec’s existence. Be prepared to answer any of the exec’s follow up questions with appendix material.

3. Concise text. Execs think fast, process fast, hate having their time wasted, so write text to enable speed-reading. Use short phrases and elaborate on them verbally. Don’t put full sentences on slides — it slows the exec down.

4. Diagrams. In the same way, diagrams also help execs to speed-read. Diagrams, flow charts, timelines, maps are great ways to give the exec context on the entire situation quickly. And they like that. Look for ways to convert text into diagrams that show how all the parts fit together.

5. Pay attention to slide hygiene. Executives have high standards — for themselves and others — and these things drive them absolutely crazy: spelling errors, grammatical errors, inconsistent punctuation (periods at the end of sentences or not? Pick ONE), Inconsistent capitalization in Slide titles, different bullets points on different slides, random fonts. Pay attention to these little details because the exec is.

The regular rules for building slides go out the window when you’re presenting to execs. Keep in mind their unique need for speed and build slides that will impress them. It will pay off in turning an executive into a sponsor who can have a significant impact on the success of your project — and your career.

About the author: Bruce Gabrielle is author of Speaking PowerPoint: the New Language of Business, showing a 12-step method for creating clearer and more persuasive PowerPoint slides for boardroom presentations. Subscribe to this blog or join my LinkedIn group to get new posts sent to your inbox.

Trump or Cruz: Who Will Win the GOP Nomination? Graphs Tell the Story.

After Super Tuesday 2.0, Trump looks like the runaway leader with 673 delegates – 260 more than his closest rival Cruz. Does this mean Trump is the most likely nominee? Or does Rubio’s exit from the race now make Cruz the most likely nominee?

Interestingly enough, there’s a higher chance Cruz will end up with more delegates than Trump at this point. But it all hinges on what happens in Arizona and Utah on March 22.

Utah: Cruz May Take it All
Utah will be a closed caucus, where Trump tends to lose. February polls show Trump with only 18% support behind Cruz (22%) and Rubio (24%). If the caucus winner gets more than 50% they will win all of Utah’s delegates. Utah also has a large Mormon population and is a big Romney supporter, and Utah is where Romney announced his anti-Trump campaign.

The polls were taken way back in Feb 10-15, when Carson, Bush and Fiorina were still in the race, and a lot has changed since then, but the writing is clearly on the wall: Utah is no fan of Trump. All indications are Cruz will win Utah, and may even pass the 50% hurdle and take home all 40 delegates.

Arizona: Could Go Either Way
In Arizona, Trump leads the polls with 31% vs 19% for Cruz, 10% for Rubio, 10% for Kasich and 30% undecided. Looks like a sure Trump route, right? But 10% of voters supported Rubio. Where will they vote now? Two studies found that about 50% of Rubio’s supporters would vote for Cruz and 13% would vote for Trump. If we re-allocate Rubio’s supporters, the polls are more like 32% Trump, 24% Cruz and 13% Kasich. So Rubio dropping out will help Cruz more than Trump.

30% are undecided. But from exit polls we know that late-deciders generally don’t go for Trump. On average, 25% go for Trump and about 50% go for Cruz. That means the polls will be 39% Trump, 39% Cruz. It will be a hotly contested contest in Arizona and could go either way.

New Delegate Math
If Cruz wins both Arizona and Utah, the delegate counts will be Trump 673, Cruz 509. With 969 delegates remaining, Trump will need to win 58% and Cruz will need to win 75% to amass 1,237 delegates. Both will be a stretch. Kasich is the wild card, siphoning off the anti-Trump supporters.

Now, there’s still some wiggle room because there will be about 150 delegates from various state conventions and caucuses who are “unbound” and able to vote for any delegate, so Cruz and Trump will be angling for them to help them over the finish line. And even among the delegates each candidate has won, many of those candidates are “unbound” and don’t have to vote for the candidate who won them. We also don’t yet have all the delegates counted from Missouri and Illinois.

But here’s the fun part – Cruz doesn’t have to get 1,237 delegates. He just needs to get more than Trump, or close enough to make the argument. For instance, if Trump finishes with 1,050 delegates and Cruz finishes with 1,010, Trump can’t really argue that he deserves the nomination because he has the most delegates. Both candidates fell short but they were basically tied.

Let’s assume Kasich wins 50 of the remaining 969 delegates (5%). If Trump and Cruz split the remaining delegates, Trump will end with 1,100 delegates and Cruz with 920. If Cruz wins 56% of the remaining delegates, he and Trump will tie at 1,049 delegates.

Anything over 56% and Cruz will have more delegates than Trump. And 56% is not a stretch if you assume Trump’s support is capped at about 40% and Cruz can win most of the remaining winner-take-all and winner-take-most states.

Rubio and Kasich Delegates
If Cruz and Trump enter the convention about 200 delegates short of the majority, now they can start negotiating with the unbound delegates, which may or may not be enough.

Rubio and Kasich delegates are bound to them for the first round, but not the second round. If they still can’t get to a majority in the first round, in the second round they can look for Rubio or Kasich to support their candidacy and encourage their delegates to vote for one of them. Look for Kasich or Rubio to use their delegates as leverage for the vice president nomination.

And if you like my graphs, look for my new book “Storytelling with Graphs” due out later this year.

Storytelling with Graphs cover

About the author: Bruce Gabrielle is author of Speaking PowerPoint: the New Language of Business, showing a 12-step method for creating clearer and more persuasive PowerPoint slides for boardroom presentations. Subscribe to this blog or join my LinkedIn group to get new posts sent to your inbox.

Does the NFL Have a Concussion Problem? Graphs Tell the Story.

Chris Borland made headlines last week when he announced, after one year in the NFL, he was retiring because the risk of concussions was too great. It was especially pertinent given March 2105 is Brain Injury Awareness Month. The NFL responded that “football has never been safer“.

And that got me thinking. How BAD is the concussion problem in the NFL? Is the risk too great, as Borland says? Or is it relatively safe, as the NFL wants us to believe?

But first, let’s appreciate what it means to suffer a concussion.

 

The long-term complications from concussions can include chronic migraines,  fuzzy thinking, forgetfulness, seizures, early-onset Alzheimer’s, and depression, often leading to suicidal thoughts. One of the example is Andre Waters, a safety with the Philadelphia Eagles known for his punishing tackles, who shot himself at the age of 44, a few years after retiring from the NFL. Examiners studied his brain tissue and found it was like that of an 85 year-old dementia patient. Other studies have found that 76 of 79 brains of deceased NFL players also showed signs of the same degeneration. However, the NFL has always denied there is a proven connection between concussions and later brain degeneration.

Let’s start with the NFL’s position. They say that over the past three years, the number of concussions has been decreasing. And the data show they are right.

NFL Concussions are declining since 2012 But hold on. Whenever you look at timeline data, always be skeptical of the starting date. Because the story can change based on your starting date. If we go back to 2009, the first year PBS Concussion Watch started tracking official injury reports, we see that the concussion problem got progressively worse until 2012, and it is now abating. So, the NFL’s story is true, but only half of the story. (note: NFL reports different numbers than Concussion Watch).

NFL concussions 2009-2014

But are these numbers good? Is 111 concussions in the NFL too high? Or “safe”? There are 32 teams and 53 players per team, for a total of 1,696 players. If 111 get a concussion, that’s 6.5%. That seems pretty low, I guess.

But it turns out that the chances of getting a concussion are different based on your position. In 2014, only 2% of quarterbacks got a concussion. But 14% of cornerbacks. 2% seems pretty low. 14% seems kinda high to me.

In fact, if you look at the trends by position, you see the percentage has decreased for offensive players, especially running backs, tight ends and wide receivers. That’s in part because of the NFL’s new rules protecting ball carriers from vicious tackles, especially helmet-to-helmet. But they have stayed stubbornly high for defensive players, especially cornerbacks, safeties and linebackers.

NFL concussions, by position 2012-2014

This shows the percentage chance of getting a concussion in a single season. But what if you have a 10-year career? Clearly, the chances of getting a concussion sometime during your career will be higher the longer you play.

Chance of NFL concussion, by length of career

Most players don’t last 10 years. According to the NFL, the average NFL career is 6 years. So, assuming you are a rookie starting in the NFL, what is the chance you will get a concussion sometime during your 6-year career? The numbers are more sobering.

Chance of concussion during 6-year NFL career

Now we see the true extent of the NFL’s concussion problem. For the “speed positions” (the fastest players on the field), and especially those involved in the passing game, at least one-in-three will get a concussion during their career. If you are brave enough to be a cornerback or safety, one of every two players will get at least one concussion during their career.

So does the NFL have a concussion problem? That’s a normative question, based on what you think is “normal”.

But put the question this way: imagine there was a paint, and if you were exposed to it long enough there’s a 35% chance that the rest of your life will be complicated by depression, early-onset Alzheimer’s and suicidal thoughts. Would the government allow you to pain the walls of your workplace with this stuff?

Not likely. I’d say the NFL does have a concussion problem.

 

About the author: Bruce Gabrielle is author of Speaking PowerPoint: the New Language of Business, showing a 12-step method for creating clearer and more persuasive PowerPoint slides for boardroom presentations. Subscribe to this blog or join my LinkedIn group to get new posts sent to your inbox.

Great Example of Making a Message “Stick” Using Analogy

Whenever you find your ideas are not landing, the problem is probably because they are not concrete enough. That is, people cannot imagine what your ideas look like.

The answer to this problem: analogy.

Here’s a great example I just discovered recently. What if you’re talking to a group and want them to understand the difference between sympathy and empathy? You could explain it verbally using this description from Dictionary.com:

Sympathy is literally ‘feeling with’ – compassion for or commiseration with another person. Empathy, by contrast, is literally ‘feeling into’ – the ability to project one’s personality into another person and more fully understand that person. You feel empathy when you’ve “been there”, and sympathy when you haven’t.

Not that helpful, actually. But put that idea into visuals, using an analogy, and the idea comes to life. In general, whenever you find your ideas aren’t “sticking”, an analogy is probably the solution.

 

About the author: Bruce Gabrielle is author of Speaking PowerPoint: the New Language of Business, showing a 12-step method for creating clearer and more persuasive PowerPoint slides for boardroom presentations. Subscribe to this blog or join my LinkedIn group to get new posts sent to your inbox.