Zippyjuan
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Tariff war helped wipe out potential gains. Most reductions went to corporations who did not invest in new productivity but used it to buy shares back or give dividends to share holders. Average worker saw little change in their taxes.
https://www.vox.com/policy-and-politics/2019/5/29/18642928/trump-tax-cuts-and-jobs-act-analysis
More at link.
https://www.vox.com/policy-and-politics/2019/5/29/18642928/trump-tax-cuts-and-jobs-act-analysis
A new Congressional Research Service report shows the 2017 Republican tax law had a very muted impact on overall economic growth. Rather, the main consequence was that real tax rates for corporations fell by nearly half while individual income taxes barely budged.
The law, which was the GOP’s proudest legislative accomplishment during the party’s two years of total control of Washington, has somehow been all but forgotten. Ignored by its squeamish supporters unsure how to sell a gigantic corporate tax cut to normal people and mostly left to rot by Democrats who see more value in hitting the GOP over health care or other issues, it’s remarkably anonymous major legislation from a self-promoter like Donald Trump.
But maybe that shouldn’t surprise us. If there was any remaining doubt that the Republican tax law was a lopsided giveaway to the corporate sector while offering negligible benefits for American workers, these findings should quell it. Here is the key sentence from CRS:
Otherwise, GDP growth was level with pre-tax cut projections. Wage growth was marginal and slower than GDP. And while companies did use their windfall from the tax cut, as Vox’s Emily Stewart has been covering, “relatively little was directed to paying worker bonuses,” according to CRS.
It’s difficult to overstate just how weak the tax law’s influence was. Investments in US businesses did not seem to respond at all to the law’s provisions.
“Although investment grew significantly, the growth patterns for different types of assets do not appear to be consistent with the direction and size of the supply-side incentive effects one would expect from the tax changes,” the CRS researchers said. “This potential outcome may raise questions about how much longer-run growth will result from the tax revision.”
It is more an indictment of the staid nature of the American tax code than a credit to Republicans that the 2017 law still is the most significant rewrite of the tax statute in a generation. It appears the GOP squandered — or exploited — that opportunity to write a plan that primarily put more money in corporate coffers.
Why the GOP tax law will be a disaster for income inequality
The tax law’s most enduring feature is a $1 trillion permanent corporate tax cut. It also slashed tax rates for people making more than $1 million and for pass-through companies disproportionately used by the wealthy, and it rolled back the estate tax on wealthy heirs and heiresses.
While the tax law also nearly doubled the standard deduction and expanded the child tax credit, which should help many lower-income families, independent analyses have consistently found that the bill would cut taxes more for people with higher incomes than for people lower on the economic ladder.
That trendline didn’t improve as Republicans tinkered with their tax plan. Ernie Tedeschi, a former Treasury economist under President Obama, ran the numbers and found that the final tax plan Republicans passed was actually even more tilted toward people making six figures or more than its predecessors.
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