Like Your Taxes Low? Trump and Republicans Want to Keep It That Way.
Sunday is the seven-year anniversary of the Tax Cuts and Jobs Act, a landmark piece of legislation that contributed to historic economic prosperity under the first Trump administration.
In December 2017, a Republican Congress passed and President Donald Trump signed this package of sweeping reforms into the U.S. tax code, both for individual filers and corporations. Next year, Congress and Trump are poised to renew the expiring provisions of the law as well as add additional reforms.
The Tax Cuts and Jobs Act cut income tax rates for workers at every level and nearly doubled the standard deduction, shielding more income from taxation. It expanded the child tax credit and preserved other popular tax benefits like the deductions for mortgage interest and charitable deductions, among others.
Tyler Cowen, an economics professor at George Mason University, reported in July—some 6 1/2 years after the legislation took effect—that as a result of the law, “total tangible corporate investment went up by about 11%” and “there has been a long-run increase in GDP [gross domestic product] of 0.9%—a substantial sum in an economy of more than $27 trillion.”
Before the Tax Cuts and Jobs Act, American corporations faced one of the world’s highest statutory corporate income tax rates at 35%. The tax law lowered this rate to 21%, putting the U.S. rate near the global average. Many small businesses known as “pass-through entities” (because income “passes through” to the owner and is taxed as the owner’s personal income) benefited from tax reform because the law provides them with a 20% deduction on business profits. (Read more from “Like Your Taxes Low? Trump and Republicans Want to Keep It That Way.” HERE)
Photo credit: Gage Skidmore via Flickr
