Trump Tax Cuts Results: Full Review

October 8, 2020 — Blog   

The Tax Cuts and Jobs Act, championed by President Trump and congressional Republicans, spurred a boom in economic growth that took Americans off the sidelines and got them back to work. Thanks to these reforms, our economy doesn’t have to strain under a tax code from 1986, but will recover with a modern, dynamic tax code that promotes growth.

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MORE JOBS AND INVESTMENT

What TCJA Did: 

  • Created a historic tax cut for Main Street businesses.
  • Lowered tax rates for job creators of all sizes.
  • Made it easier for companies to bring jobs and investments back to the U.S.

How the Economy Responded: 

  • Main Street Optimism Reached An All-Time High. In the third quarter of 2018, small businesses recorded their highest level of optimism to date.
  • Opportunities For All Americans Flourished. The unemployment rate reached a generational low, with record low unemployment for women, people of color, and workers without high school degrees.
  • Jobs Added to the Economy. Since the enactment of TCJA, the economy gained nearly 5 million jobs before the pandemic.
  • TCJA Brought a Record Amount of Job Openings. Under TCJA, job openings were at a record high of 7.5 million jobs.
  • Businesses Started to Reinvest Again. Core investments in equipment and other business necessities reversed its Obama-era five-year downward trend and shot back up to near historic highs making businesses and workers more productive, while boosting workers’ wages.
  • Business Applications At Record Levels. TCJA encouraged business creation as the amount of business applications reached its highest level ever of over 880,000.

FAIRER TAXES

What TCJA Did: 

  • Simplified that tax filing process for millions of workers.
  • Eliminated the Alternative Minimum Tax for most taxpayers.
  • Expanded popular savings tools, like 529 accounts.

How the Economy Responded: 

  • Millions of Hours Saved. Nearly nine out of 10 Americans took the standard deduction in 2019, no longer needing to go through the complicated process of itemizing.
  • Revenues Soared. Breaking dire predictions from experts, federal revenues reached an all-time high, due to more Americans working, bigger paychecks, and businesses expanding.

BIGGER PAYCHECKS

What TCJA Did: 

  • Cut income tax rates across the board.
  • Nearly doubled the standard deduction.
  • Doubled the Child Tax Credit.

How the Economy Responded:  

  • Workers’ networth soared. Low- and middle-class families saw the largest gains in wealth growth in 2018 and 2019, according to the Federal Reserve. Low-income families saw their net worth increase 37%. Middle-class families saw their net worth increase 40%.
  • Household Income Reached New Highs. Real median U.S. household income in 2019 rose nearly 50% more than during the eight years of Barack Obama’s Presidency. Median household incomes increased 7.1% for Hispanics, 7.9% for Blacks,10.6% for Asian Americans and 8.5% for foreign-born workers.
  • Wages for Minorities Grew at a Faster Pace. Compared to Obama’s second term, wage growth, as a measure of median usual weekly earnings, grew 24% faster for Hispanics, 79% faster for Blacks, and 95% faster for Asian Americans.
  • Wages for Women Grew at a Faster Pace. Compared to Obama’s second term, wage growth, as a measure of median usual weekly earnings, grew 60% faster for women.
  • Wages for Youths (Ages 16-24) Grew at a Faster Pace. Compared to Obama’s second term, wage growth, as a measure of median usual weekly earnings, grew 70% faster for women.
  • Wages for All Levels of Educational Attainment Grew at a Faster Pace. Compared to Obama’s second term, wage growth, as a measure of median usual weekly earnings, more than doubled for those with less than a high school diploma and those with either some college or have an associate degree.

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SUBCOMMITTEE: Select Revenue Measures