Presentation Title

How the Tax Cuts and Jobs Act of 2017 Impacted the American Economy

Faculty Mentor

Solomon Namala

Start Date

23-11-2019 10:15 AM

End Date

23-11-2019 10:30 AM

Location

Markstein 301

Session

oral 2

Type of Presentation

Oral Talk

Subject Area

behavioral_social_sciences

Abstract

President Trump and Congress passed the Tax Cuts and Job Acts (TCJA) in 2017 which lowered individual tax rates, limited or minimized deductions, and cut the corporate tax rate by about 13%, among others. Given the magnitude of this tax cut, economists compare this tax reform legislation to Reagan’s tax cuts of 1980, which failed to draw government revenue, decrease unemployment rates, and decrease inequality in the ensuing years. However, classical economists argued that this will result in long-term and short-term economic growth, incentivize Americans to invest in the economy, and consequently lower the national deficit and debt. Keynesian economists have,on the other hand, speculated that this tax cut would widen the existing economic inequality, increase the budget deficit, and hinder economic growth. This research argues that the TCJA benefitted wealthier taxpayers and large corporations who disproportionately benefited from the tax cuts. Preliminary results demonstrate that corporations paid less taxes this year compared to years prior, while investment in capital goods from prior years as anticipated. Additionally, most Americans did not see a significant cut in their taxes; 48.3% of those earning over $1 million saw a tax decrease, while only 0.7% of those earning less than $10,000 saw a tax decrease. Because of this, tax revenue did not increase and our national deficit increased. Combined with the consequences of the recent tariff policies, the GDP will decrease by 0.12 percent and lose approximately 94,000 jobs (Tax Foundation 2018). Through a survey of economic data from 2018, as well as studies from think tanks across the ideological spectrum, the project places the current tax cut in a historical framework by comparing it with Reagan’s tax cut in terms of its effect on economic growth, employment, and its distributional effects on income.

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Nov 23rd, 10:15 AM Nov 23rd, 10:30 AM

How the Tax Cuts and Jobs Act of 2017 Impacted the American Economy

Markstein 301

President Trump and Congress passed the Tax Cuts and Job Acts (TCJA) in 2017 which lowered individual tax rates, limited or minimized deductions, and cut the corporate tax rate by about 13%, among others. Given the magnitude of this tax cut, economists compare this tax reform legislation to Reagan’s tax cuts of 1980, which failed to draw government revenue, decrease unemployment rates, and decrease inequality in the ensuing years. However, classical economists argued that this will result in long-term and short-term economic growth, incentivize Americans to invest in the economy, and consequently lower the national deficit and debt. Keynesian economists have,on the other hand, speculated that this tax cut would widen the existing economic inequality, increase the budget deficit, and hinder economic growth. This research argues that the TCJA benefitted wealthier taxpayers and large corporations who disproportionately benefited from the tax cuts. Preliminary results demonstrate that corporations paid less taxes this year compared to years prior, while investment in capital goods from prior years as anticipated. Additionally, most Americans did not see a significant cut in their taxes; 48.3% of those earning over $1 million saw a tax decrease, while only 0.7% of those earning less than $10,000 saw a tax decrease. Because of this, tax revenue did not increase and our national deficit increased. Combined with the consequences of the recent tariff policies, the GDP will decrease by 0.12 percent and lose approximately 94,000 jobs (Tax Foundation 2018). Through a survey of economic data from 2018, as well as studies from think tanks across the ideological spectrum, the project places the current tax cut in a historical framework by comparing it with Reagan’s tax cut in terms of its effect on economic growth, employment, and its distributional effects on income.