COMMON SENSE SAYS: When the biggest effect of the Trump tax cuts was that people who own businesses and other sources of concentrated wealth have a lot more money, and the federal budget will have less it was a total failure.
Supporters of the Trump tax cuts insisted not only that they would promote growth, but that they would promote so much growth the measure would pay for itself. … So far, the growth feedback from the tax cuts has made up about 5 percent of the plan’s revenue loss, a mere 95 percent shy of the predictions.
When assessing these arguments, keep a close eye on the number of Republican officials or conservative policy-makers who revise their position on the Trump tax cuts in light of the data. If their true primary goal was to increase business investment, then the complete failure of a highly expensive program to achieve its stated goal would lead them to question their support. Why not cancel the Trump tax cuts and use the couple trillion dollars in lost revenue to fund a more effective growth-promoting policy?
What this suggests is that the alleged growth-incentivizing secondary effects of the plan were rationales, and the primary effect — giving business owners more money — was the hidden main goal all along.
It has left taxpayers with more debt at a time when Republicans have the nerve to resist Biden’s infrastructure plan because of the cost. You can’t make this stuff up.
Tax cuts for the wealthy have long drawn support from conservative lawmakers and economists who argue that such measures will “trickle-down” and eventually boost jobs and incomes for everyone else. But a new study from the London School of Economics says 50 years of such tax cuts have only helped one group — the rich.
A paper by David Hope of the London School of Economics and Julian Limberg of King’s College London, examines 18 developed countries — from Australia to the United States — over a 50-year period from 1965 to 2015. The study compared countries that passed tax cuts in a specific year, such as the U.S. in 1982 when President Ronald Reagan slashed taxes on the wealthy, with those that didn’t, and then examined their economic outcomes.
Per capita gross domestic product and unemployment rates were nearly identical after five years in countries that slashed taxes on the rich and in those that didn’t, the study found.
Republican tax cuts are usually concentrated on high-income individuals and are justified with the claim that cutting marginal tax rates will lead to an explosion in individual effort, entrepreneurship, and so on. A 2019 analysis by the International Monetary Fund found, the Tax Cuts and Jobs Act ended up having no visible effect at all on business investment, which rose no more than you would have expected given the growth in demand.