Assessing the Impact of the Tax Cuts and Jobs Act (VIDEO)
Excerpt from webinar with Kimberly Clausing (Reed College), Hilary Hoynes (UC Berkeley), and Eduardo Porter (New York Times), October 16, 2018. A collaboration between EconoFact and The Hamilton Project, Brookings.
The Issue:The 2017 Tax Cuts and Jobs Act (TCJA) was among the biggest tax overhauls the U.S. has seen in recent decades. Now, nearly one year on, Kimberly Clausing at Reed College and Eduardo Porter of the New York Times look at the most recent fiscal figures to discuss what we can tell about the impact the tax cuts have had on the fiscal deficit and on investment so far. And, more broadly, what they are likely to mean for U.S. economic performance and for the average American worker over the coming years.
By 2027, 80% of U.S. households look set to receive tax cuts of $100 or less. Many could even see tax increases.
What this Means:
It is still too early to gauge the impact of the TCJA, but the experience of other countries that have lowered corporate tax rates in the hopes of boosting investment and wages isn't encouraging. For the U.S., the tax rate reduction is benefiting companies that already had excess profits, and is unlikely to significantly alter their investment decisions. And for companies looking to finance investment through debt, under the TCJA debt-financed investments are less favorably treated.