NPR published an article recently looking at the 2017 tax bill, passed along party lines by the GOP. I predicted back then, as well as most economists, that this tax cut was going to be a boon to already very wealthy people, and do little to nothing for most of the country. The article points out:
“In fact, more than 60% of the tax savings went to people in the top 20% of the income ladder, according to the nonpartisan Tax Policy Center. The measure also slashed the corporate tax rate by 40%.” No surprise there, that seemed pretty evident that this would be the case back in 2017.
Why did we do this? Or should I say, what was the supposed benefit to the vast majority of people who vote republican? Trump, in usual fashion, provided a well supported, data driven reasoning for the tax bill:
“It will be rocket fuel for our economy,”
Treasury secretary Mnuchin also said:”The tax plan will pay for itself with economic growth,”
Let’s see what this rocket fuel has yielded:
We are looking at a landscape of slow, stable growth, hovering around 2%. I don’t actually blame this at all on the tax bill, but the tax cuts certainly didn’t act as jet fuel on the economy. In Q3 and Q4 of 2017 there was an initial bump above 3% and then back to business as usual.
Meanwhile, the deficit continues to grow:
Americans generally don’t care about this however. American confidence in the economy is extremely high. The deficit is complex and doesn’t directly impact voters, or at least in a way that is obvious. So, we are left with a tax bill which provided very short term, fleeting benefit, and left us with a longer term deficit problem.
The frustrating point to this is that any GOP president would have done this. This has been the GOP playbook for decades now: tax breaks for the wealthy, effective PR and superficial benefit for everyone else. The recover was already well under way, and we were already set for the very first “soft landing”. The tax bill benefits a comparatively small cohort of tax-payers, which incidentally, look a lot like Trump. For those who support Trump, and do not own S corps or large commercial property, I would say: you could have had this same tax bill passed by another GOP candidate, without all the hangups with Trump.