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.