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President Donald Trump has said his $1.5 trillion in tax cuts would be “rocket fuel” that would juice the economy and provide a windfall for taxpayers.
But according to a new report from the independent Congressional Research Service, they did no such thing.
Trump said the economy would grow at 4% to 4.5% after the tax cuts. It’s grown at 2.9%, which is still pretty good, but nothing new, according to Joel Slemrod, an economics professor at the University of Michigan.
The economy “has been doing well since the tax cut. It was doing well for several years before the tax cut,” he said.
Most of us are paying a little bit less in taxes, but Howard Gleckman at the Tax Policy Center said the real winners are corporations; they saw their tax rate cut almost in half. He said companies were all of a sudden sitting on piles of cash.
“They looked around to see what they could do with it, whether they could make productive investments in workers or productive investments in new capital, new equipment, and they decided that they couldn’t,” he said. “So what did they do with the money? They just gave it to the shareholders.”
Not to their workers. The president said wages would grow substantially and quickly as a result of the tax cuts. But we’re not seeing that.
What we are seeing is companies buying their stock back from shareholders. So if you have stock in your portfolio, you’re a little bit richer.
“Anyone who has a substantial stock market investment portfolio has seen that portfolio probably having done better than it would have absent the legislation,” said David Gamage, who teaches tax law at Indiana University.
Gleckman at the Tax Policy Center said we also need to keep in mind that the Trump tax cuts didn’t happen in a vacuum.
“It may be that there were some economic benefits of this tax cut, but they were washed out by the economic downturns as a result of, for example, President Trump’s trade policy,” he said.
Gleckman said the tariffs on goods being paid by American consumers are basically equal to the amount of the tax cuts in the 2017 legislation.
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