Trump’s December 2017 tax cuts promised many things: rises in wages, increased corporate investments, and enough overall growth to pay for the cuts themselves, reports the Los Angeles Times.
The nonpartisan organization Congressional Research Service has just published an economic analysis of the cuts in their first year.
The CRS has found that the cuts had virtually zero effect on wages, did not contribute to a rise in investment, have not paid for themselves in the slightest, and have not resulted in a tax cut to the average taxpayer.
The minimal economic impact of the cuts is to be expected, according to analysts who wrote the CRS report.
“Much of the tax cut was directed at businesses and higher-income individuals who are less likely to spend. Fiscal stimulus is limited in an economy that is at or near full employment.”
The CRS findings are supported by other data sets as well. The Bureau of Labor Statistics also shows the continued stagnation of rank-and-file wages.
Specifically, the CRS notes that the cuts produced an increase of at most 0.3% in gross domestic product in 2018. In order for the cuts to pay for themselves, an increase of more than 6.7% was necessary. The cuts did not even one-twentieth of the economic gain required to pay for themselves.
The report also said this about wage growth: “There is no indication of a surge in wages in 2018 either compared to history or relative to GDP growth. Ordinary workers had very little growth in wage rates.”
The biggest benefitters of the tax cuts have been corporate shareholders. The earnings have mostly been used for “a record-breaking amount of stock buybacks, with $1 trillion announced by the end of 2018.”
To summarize, the tax cuts gave virtually no benefits to ordinary Americans, as any apparent gains in their income were negligible and short-lived. Wealthy Americans benefited the most from lower taxes and higher dividends. Overall, the cuts failed to stimulate U.S. economic growth, while depriving the government of revenue.