When Donald Trump took office, he did so in an election that gave Republicans a four-seat advantage in the Senate and a whopping 47-seat advantage in the House. For two years, Republicans were pretty much free to do whatever they wanted, and all they wanted was massive tax cuts for wealthy Americans and corporations.
Former Speaker of the House Paul Ryan I sold a package Although billed as a “middle class tax cut,” the bill was actually about eliminating health care deductions used by millions of low-income Americans to make room for massive corporate tax cuts. Ryan and other Republicans predicted the tax cuts would pay for themselves and generate $1 trillion in economic growth. erase Called it “rocket fuel” for the economy.
The so-called 'Tax Cuts and Jobs Act' was passed in the House and Senate with only Republican votes, and it was clear almost from the beginning that the bill was legitimate. ~ no What they claimed. more 60% Some of the savings went to people in the upper income brackets. revenue fell even further There are fewer Republicans supporting the bill than the Congressional Budget Office expected before it passed. forced to admit You may never be able to repay, Ryan He boasted about his school secretary who was “pleasantly surprised” by the $1.50 a week increase.
And now, 6 years later, National Bureau of Economic Research We have completed the most detailed and in-depth analysis of the consequences of the Trump tax cuts. And what the nonprofit discovered seemed clear before the bill was passed. This may have boosted the company's growth to some extent, but it also inflated its debt while generating a fraction of its expected profits.
Former Treasury Secretary Steven Mnuchin was among those who predicted the tax plan would work on its own. When the 2017 tax cuts came up for a vote, Mnuchin repeatedly promised to provide an analysis showing that cutting billions of dollars from state revenue would ultimately benefit itself. But like this: new york times Reportedly, analysts in the Treasury Department's Office of Tax Policy were “largely excluded from the process” and did not do detailed analysis.
Instead, Republicans relied on a letter from nine conservative economists. wall street journal. The letter cited very hopeful predictions based on what “many economists believe.” It included a simple set of predictions that would have made Ronald Reagan proud: lower taxes, more equality, more growth, everyone wins. It focused on the idea that tax cuts would be revenue neutral by encouraging companies to invest more in the U.S. and do less business abroad. In other words, a tax cut would generate as much new revenue through investment growth as was lost from the tax rate cut. Because conservative economic theory says so.
But Republicans have done more than promise that massive tax cuts for corporations will come at no cost to the government. They said the average American's pay would increase significantly.
like new york times Reported in November 2017, Ryan argued that corporate tax cuts are not about helping big corporations and billionaires, but “everything that helps families and workers.” Trump's Council of Economic Advisers predicted that this cut would have the following effects: Increase from $4,000 to $9,000 For the average American household, this can happen within 3 to 5 years.
Revenue-neutral tax cuts. The average American would see a raise of $4,000 to $9,000. It seemed like the ultimate win-win. And even if the Republicans' rosy predictions turned out to be correct, a little Well, it didn't seem like such a bad deal.
Now you can check and discover all predictions. What we really got. A new analysis from the NBER finds that, far from being revenue neutral, corporate tax revenues would decline by $100 billion to $150 billion per year. And when it comes to the money trickling down to workers, the long-term result is an average of closer to $750 per worker per year.
As Republicans predicted, cutting the top corporate tax rate by 14 percentage points and giving companies additional deduction options boosted corporate profits. And Republicans were right that this extra cash would lead to additional domestic investment. That did it. According to the report's conclusions, the total effect on corporate cash was roughly equivalent to the additional funding the company received. There was no magic multiplier or huge stimulus effect that would turn this money into something many times larger.
The biggest boost to the economy came from rule changes allowing companies to immediately deduct their investments. Of all the tax cuts, this was the one element that seemed to be the most effective.
But tax rate cuts and rule changes that give businesses more flexibility to deduct expenses have led to a whopping 41% drop in corporate tax collections.
Investments have increased overall, but they have fallen short of the large paychecks for the average American that Republicans had expected. In addition, corporate tax revenue plummeted, leading to a sharp increase in national debt. But corporate did You end up earning much more money. So perhaps the only part of the prediction that Republicans really cared about was the part of the prediction that was true.
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