

Promises Delivered? The Economic Effects of the 2017 Tax Cuts and Jobs Act
12 snips Sep 5, 2024
Eric Zwick, a Professor of Economics and Finance at the University of Chicago's Booth School of Business, dives into the Tax Cuts and Jobs Act of 2017. He examines whether it lived up to its promises, revealing a significant drop in tax revenues despite some investment uptick. Zwick discusses the act's impact on corporate tax rates and income inequality, as well as future implications as the act nears expiration. He also shares insights on small business growth, and they even mix in some fun with a playful chat about baking pie!
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Tax Cuts and Jobs Act Overview
- The Tax Cuts and Jobs Act of 2017, a major tax overhaul, significantly reduced the top corporate tax rate from 35% to 21%.
- It also included changes to deductions, expenses, and the international tax system.
Did the Tax Cuts Pay for Themselves?
- The Tax Cuts and Jobs Act did not pay for itself, contrary to proponents' claims.
- It reduced tax revenues by 40%, with only about 2% recouped through increased investment and economic activity.
Investment Impact of the TCJA
- The TCJA led to a significant increase in domestic investment, around 20% higher for firms with the average tax cut.
- This resulted in a 7% increase in domestic capital and an 11% increase in total capital over 10 years.