“Nobody was just going to give people higher wages just because they got a tax cut,” she said.
Those benefits turned out to be relatively small, said Jane Gravelle, a senior specialist for economic policy at the Congressional Research Service. In the weeks after the law passed, Verizon, Disney, Walmart, and dozens of other corporations announced one-time employee bonuses. Trump and his economic advisers claimed the tax law would quickly give the average family an extra $4,000 in wages. And then those timing gimmicks were reversed as part of the Covid legislation.” Promise: Rising Wages “Because the revenue pickups were timing gimmicks. “The TCJA was actually more costly than it appeared,” said Rosenthal. Last March, lawmakers rolled back some of those revenue raisers to soften the pandemic’s economic blow. Provisions that raise revenue by limiting companies’ ability to write off things like losses and debt interest expenses effectively shifted those benefits past that 10-year window by allowing companies to push unused deductions to future years indefinitely, noted Steve Rosenthal, a senior fellow at the Tax Policy Center.
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That 10-year window, plus temporary provisions like the lowered individual rates, effectively hid the real cost of the law, some tax experts contend.
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The tax code overhaul was initially estimated to cost just under $1.5 trillion over a decade. The claim has since been widely derided, as the law paid for about a fifth of itself, according to an estimate from the Congressional Budget Office. “At the time, economists did not think that was true in any sense, and it’s definitely not true now,” said Eric Ohrn, an assistant professor of economics at Grinnell College. “The most prominent claims made were often the least serious claims,” said Matt Gardner, a senior fellow at the Institute on Taxation and Economic Policy.Īfter the law was enacted, Treasury Secretary Steven Mnuchin began to assert that resulting economic growth would generate enough tax revenue for the overhaul of the tax code to pay for itself. In the waning days of the Trump administration, Bloomberg Tax examined the law’s stated goals and explored which of its seven major promises came to fruition. moved toward a territorial tax system.Ĭongressional Republicans have touted the law’s success, while Democrats have attacked it as a giveaway to the wealthy and corporations. Tax rates for individuals and corporations were cut, new incentives were created, the standard deduction and estate tax exemption were increased, and the U.S. The Tax Cuts and Jobs Act of 2017, passed with only Republican votes, became the signature legislative achievement of the Trump administration. The White House and Republican lawmakers made big promises when they passed a sweeping tax law in President Donald Trump’s first year in office, predicting it would boost the economy and make the tax code simpler and fairer.
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