A devastating analysis of the tax cut shows it’s done virtually no economic good

From the The Los Angeles Times

By Michael Hiltzik May 29, 2019 | 10:00 AM

You may remember all the glowing predictions made for the December 2017 tax cuts by congressional Republicans and the Trump administration: Wages would soar for the rank-and-file, corporate investments would surge, and the cuts would pay for themselves.

A devastating analysis of the tax cut shows it’s done virtually no economic good
President Trump signals his happiness with the GOP tax cut when signing the measure in December 2017. (Brendan Smialowski / AFP/Getty Images)

The nonpartisan Congressional Research Service has just published a deep dive into the economic impact of the cuts in their first year, and emerges from the water with a different picture. The CRS finds that the cuts have had virtually no effect on wages, haven’t contributed to a surge in investment, and haven’t come close to paying for themselves. Nor have they delivered a cut to the average taxpayer.

The negligible (at best) economic impact of the cuts shouldn’t surprise anyone, the CRS says. “Much of the tax cut was directed at businesses and higher-income individuals who are less likely to spend,” its analysts write. “Fiscal stimulus is limited in an economy that is at or near full employment.”

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. Congressional Research Service


The CRS findings aren’t all that novel. The service, which is an arm of the Library of Congress, reports that the tax cuts contributed to a record-breaking surge in corporate stock buybacks, which has been documented by many other analyses. The continued stagnation of rank-and-file wages is visible in monthly data computed by the Bureau of Labor Statistics.

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