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Chicago Booth Review Podcast

Trumponomics: Do more tax cuts make sense?

Feb 19, 2025
Eric Zwick, a Chicago Booth professor specializing in tax policy, discusses the potential expiration of the 2017 Tax Cuts and Jobs Act. He delves into whether tax cuts truly yield the promised economic benefits and the uneven effects on different income groups. Zwick analyzes the balance between government spending and the national debt, the historical performance of recent tax reforms, and the ideological clash over tax policy. He also explores future proposals for tax cuts and their implications on inflation and government revenue.
30:11

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Podcast summary created with Snipd AI

Quick takeaways

  • The 2017 Tax Cuts and Jobs Act led to modest investment growth, ultimately resulting in a significant revenue loss that was not offset.
  • The tax cuts disproportionately benefited wealthy individuals and corporations, highlighting the need for a more equitable approach to tax reform.

Deep dives

Impact of the 2017 Tax Cuts

The 2017 Tax Cuts and Jobs Act (TCJA) introduced significant changes to the U.S. tax system, most notably reducing the corporate tax rate from 35% to 21%, which marked the largest rate reduction in history. While proponents argued that these cuts would stimulate economic growth and ultimately pay for themselves, research indicates that the actual growth effects were modest, yielding only a 10% to 15% increase in investments in the preceding years. However, after accounting for other economic factors, data suggests that these tax cuts only offset about 15% of the expected revenue loss over a ten-year period, revealing that the cuts did not come close to fulfilling their promise. The findings illustrate that while the tax cuts provided short-term benefits to many, particularly high-income earners, their long-run economic impact was less favorable than anticipated.

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