The 2017 Trump Tax Law Was Skewed to the Rich, Expensive, and Failed to Deliver on Its Promises
A 2025 Course Correction Is Needed
UPDATED JUNE 13, 2024 | BY CHUCK MARR, SAMANTHA JACOBY AND GEORGE FENTON
A high-stakes tax policy debate will accelerate this year through 2025 over the pending expiration of the individual income and estate tax provisions of the 2017 Trump tax law. Policymakers should use this opportunity to work toward a tax code that raises more revenues, is more progressive and equitable, and supports investments that make the economy work for everyone.
As this debate unfolds, policymakers and the public should understand that the 2017 Trump tax law:
Was skewed to the rich. Households with incomes in the top 1 percent will receive an average tax cut of more than $60,000 in 2025, compared to an average tax cut of less than $500 for households in the bottom 60 percent, according to the Tax Policy Center (TPC).[1] As a share of after-tax income, tax cuts at the top — for both households in the top 1 percent and the top 5 percent — are more than triple the total value of the tax cuts received for people with incomes in the bottom 60 percent.[2]
Was expensive and eroded the U.S. revenue base. The Congressional Budget Office (CBO) estimated in 2018 that the 2017 law would cost $1.9 trillion over ten years,[3] and recent estimates show that making the law’s temporary individual income and estate tax cuts permanent would cost another roughly $400 billion a year beginning in 2027.[4] Together with the 2001 and 2003 tax cuts enacted under President Bush (most of which were made permanent in 2012), the law has severely eroded our country’s revenue base. Revenue as a share of GDP has fallen from about 19.5 percent in the years immediately preceding the Bush tax cuts to just 16.3 percent in the years immediately following the Trump tax cuts, with revenues expected to rise to an annual average of 16.9 percent of GDP in 2018-2026 (excluding pandemic years), according to CBO. This is simply not enough revenue given the nation’s investment needs and our commitments to Social Security and health coverage.
Failed to deliver promised economic benefits. Trump Administration officials claimed their centerpiece corporate tax rate cut would “very conservatively” lead to a $4,000 boost in household income.[5] New research shows that workers who earned less than about $114,000 on average in 2016 saw “no change in earnings” from the corporate tax rate cut, while top executive salaries increased sharply.[6] Similarly, rigorous research concluded that the tax law’s 20 percent pass-through deduction, which was skewed in favor of wealthy business owners, has largely failed to trickle down to workers in those companies who aren’t owners.[7] Like the Bush tax cuts before it,[8] the 2017 Trump tax cut was a trickle-down failure.
https://www.cbpp.org/research/federal-tax/the-2017-trump-tax-law-was-skewed-to-the-rich-expensive-and-failed-to-deliverOnce again Donald Trumps plan will not make ‘Make America Great Again’ but will erode the tax base for all social programs and benefit the richest Americans in the United Clone. Trumps plan as usual is geared to benefit his wealthy friends and himself and leave the rest of the nation in comparative destitution.
A plan that will leave future generations without the tax base to support social programs including, social security.
