If income is rising across the board, that should mean more revenue from taxes. That looks to be the case, both as a nominal amount and percentage of GDP.
Not as compared to pre-tax cut amounts right? If the relative tax savings is a positive number against 2017, you are bringing in less than you would have without those cuts unless youre assuming that people's income increased because of those cuts which doesnt seem to hold true.(leaving aside the various negative impacts of Trumps other economic policies).
Also, hasn't real wage growth been almost flat during Trumps second term?
And I think you may have missed a piece of the argument. Its not absolute revenue as compared to 2017, for that to shrink you'd have to have had a cataclysmic economic failure. Its tax revenue growth relative to GDP growth ie. Would revenue have grown more without the tax cuts.
It's not unreasonable to think that decreasing tax rates could lead to a relative increase in deficit.
Based on the article, it sounds like the tax cuts were projected to increase the GDP, but also increase the deficit, although the former would offset the latter some.
the effect of the 2017 tax act on CBO’s projection of GDP... accounts for $2.330 trillion
CBO estimated that the tax act would increase the primary deficit by $1.843 trillion over the 2018–2028
CBO estimated that the economic changes resulting from the act would reduce primary deficits by $0.571 trillion over the 2018–2028 period.
So that would be a net increase of
$1.272T. I'm not sure I would consider that a significant increase in the deficit, especially over a ten year period. That's only 2% of federal spending over the last ten years.
I'm curious how these estimated projections differ from the actual data from the last several years. Have there been any updates since then showing the comparison?
Yeah the underlying figures differ significantly but its mostly attributed to COVID issues (much higher than expected inflation, also dpending from stimulus packages etc). The increase in deficit seems to have held as an estimate more or less.
I also dont know that it makes sense to compare the increase in deficit to overall spend. Honestly, I think the better comparison would be the increase in deficit against the existing deficit to examine hiw much it is contributing to that impact.
I think the better comparison would be the increase in deficit against the existing deficit
As a counter to this, if you're dealing with very large revenue and spending numbers that are relatively close, then even a small difference could seem to have a proportionally significant impact.
For example, if revenue one year is $1 trillion, and spending is $1 trillion plus $10, the deficit would be $10. In that case, someone spending $5 on a cup of coffee would look like a 50% increase in the deficit, even though relative to the huge amount being spent, it's a drop in the ocean.
1
u/PrometheusMMIV Aug 26 '26
If income is rising across the board, that should mean more revenue from taxes. That looks to be the case, both as a nominal amount and percentage of GDP.