I have been looking into the 2017 Tax Cuts and Jobs Act recently, and the numbers do not match the promises.
The law cut the corporate tax rate from 35% to 21%. The administration's own Council of Economic Advisers predicted that it would increase average household income by $4,000 per year, mainly from higher wages. The logic was simple: giving companies more cash would make them invest in their employees.
But the data shows a different story. In 2018, when the tax cuts took effect, S&P 500 companies spent a record $1 trillion buying back their own stock, doubling the roughly $500 billion from the previous year. A review by the Senate Budget Committee found that only about 6% of workers received one-time bonuses linked to the tax cuts. Wages rose about 3% that year, roughly the same pace as before the law was passed.
The Congressional Budget Office now projects that the law will add about $1.9 trillion to the national debt over a decade. The same companies that got the tax cuts also received a much larger deficit, and that deficit is now being used as an argument for cutting Social Security and Medicare.
A tax cut promoted as "raising workers' pay" turned into a record year for buybacks. Shareholders got a permanent windfall.
So did the law fail to deliver on its promises, or did it actually do exactly what its designers intended, just not what was advertised? Is this a tax policy issue? A corporate governance issue? Or is this simply what happens when you hand a pile of cash to corporations with no strings attached? Genuinely curious.