It was dubbed the "GOP Tax Scam," and apparently for good reason.
A joint report published Tuesday by the Economic Policy Institute and the Center for Popular Democracy details how Republicans' 2017 tax legislation "delivered big benefits to the rich and corporations but nearly none for working families" in the almost two years since President Donald Trump signed the bill into law.
"With the 2017 passage of the Tax Cuts and Jobs Act (TCJA), President Trump claimed the tax overhaul would provide sizable tax cuts for working people, increase their wages, and boost business investment," says the report, Still Terrible at Two (pdf). "This paper provides new data on the impact of the bill that refutes those claims."
Connie Razza, chief of campaigns and policy at CPD, said in a statement that "we have to call Trump's tax plan for what it is, a scam. He sold this as a benefit to working people, but the report shows clearly that it only caters to the super-wealthy, historically white, corporate class."
When Trump signed the legislation on Dec. 22, 2017, he claimed that it was "a bill for the middle class" but also said that "corporations are literally going wild over this, I think even beyond my expectations."
The TCJA slashed the federal corporate income tax rate from 35% to 21%, enabled companies to write off certain capital investments for five years, increased the exemption amount for estate tax from $5 million to $10 million, and made it easier for U.S. corporations to avoid paying taxes on income earned abroad.
"Overall, the paper finds that the TCJA—one of the largest overhauls of the tax system in the last 50 years—enacted sweeping changes to benefit corporations and wealthy individuals," the new report says, "while the interests and priorities of working families were ignored."
Key findings highlighted in Still Terrible at Two include:
- Working people have seen no discernible wage increase as a result of the TCJA;
- TCJA has decisively failed to spur business investment;
- Corporate tax revenues have plummeted; and
- Stock buybacks have surged in its wake.
Specifically, Still Terrible at Two explains that while wage growth accelerated in 2018, there were other factors pushing it up—and in 2019 it "decisively decelerated." In terms of business investment, there was "no discernible uptick" last year and this year it "absolutely cratered."
The report notes that the Congressional Budget Office initially estimated that the TCJA would cause corporate tax revenues to fall by about $96 billion in 2019, but a recent CBO update "indicates that the erosion of corporate tax revenue has been substantially worse."
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The TCJA also ushered in a wave of stock buybacks, which soared from an average of $368 billion pre-tax scam to $560 billion in 2018. "Buybacks in 2019 look on-pace to hit $500 billion again," according to the report.
Summarizing the impacts of the legislation, EPI's director of research Josh Bivens said, "What the plan has done is dramatically increase stock buybacks and exacerbate decades of rising income inequality."
Considering that "Trump's tax plan has failed to deliver meaningful benefits to workers and produce the investment boom once promised," Bivens suggested "there's no reason to believe that will change."
After the Tax Cuts & Jobs Act became law, corporate buybacks rose & billionaires got richer, without granting any meaningful benefits for working families.
— United for Respect (@forrespect) December 17, 2019
Referencing an estimate that the TCJA will give rich individuals and companies $150 billion in tax breaks each year over the next decade, the final section of the report provides examples of ways in which that money could be used to benefit the public.
With an estimated $50 billion annually, the government could expand Social Security or provide universal, high-quality pre-K nationally, the report says. With $80 billion per year, a child allowance could effectively halve child poverty in the United States. Alternatively, "the nation's crumbling infrastructure could be revived" with all of the money that the wealthiest Americans save because of the GOP's tax overhaul.
"The trade-off data is clear," the report says. "With comparatively modest investments in the social safety net, we could eradicate child poverty, support vulnerable senior citizens, and build the nation's climate resilience through critical infrastructure investments."
CPD's Razza explained that "our goal is to create a tax structure that encourages greater equity and ensures that we are able to fund vital public resources together for an economy in which we can all thrive—not just the super-rich."
Still Terrible at Two was published just a day after the Institute on Taxation and Economic Policy released a new report which found that more than 90 U.S. corporations on the Fortune 500 list effectively did not pay any federal income taxes last year. As Common Dreams reported Monday, Matthew Gardner, a senior fellow at ITEP and the report's lead author, concluded that "the 2017 tax law was a clear giveaway to corporations and their shareholders."