Donald Trump took a victory lap Friday on an “economic miracle,” marking the six-month anniversary of tax cuts by celebrating “new jobs, bigger paychecks, and keeping more of your hard-earned money where it belongs.”
The president signed the Tax Cuts and Jobs Act in December 2017, and the new system began taking effect Jan. 1, 2018.
“Six months ago, we unleashed an economic miracle by signing the biggest tax cuts and reforms — I have to add the word “reform,” very important word — but the tax cuts are what got us there, and that’s what’s really doing it,” he said.
The law slashed the top corporate tax rate from 35 percent to 21 percent, reduced individual income taxes in all brackets, and cut taxes for small businesses that file under the individual tax code. It also included a host of favorable changes to businesses in rules governing things such as schedules for writing off the costs of investments in plants and equipment.
And it eliminated the tax penalty for not having health insurance, a key feature of the Affordable Care Act.
Later, in an interview on Fox Business Channel, Trump called for even more tax cuts.
“This will be even more aimed at the middle class,” he told host Maria Bartiromo. “One of the things I’m thinking about is bringing the 21 percent [corporate tax rate] down to 20, and for the most part, the rest of it will go right to the middle class. It’s a great stimulus.”
Trump’s celebration took place amid an unemployment rate that is lower than it has been in more than a generation. The White House credited the impact of the tax legislation that undoubtedly is the most significant action Congress has taken during Trump’s presidency:
- Fifty-four percent of Americans rate the economy good or excellent, according to CNBC.
- More than $300 billion in corporate assets held abroad came back to the United States in the first three months of this year, according to the Bureau of Economic Analysis (BEA).
- The National Association of Manufacturers survey indicates the highest optimism among the manufacturers in the 20-year history of the survey. And small-business optimism is at the highest level in 45 years, according to the National Federation of Independent Business.
- More than 6 million workers got a bonus as a result of the tax cuts.
- Hourly compensation for workers grew at the fastest rate in a decade during the first three months of the year.
- Job openings hit a record high of 6.7 million in April, the first time job openings exceeded the number of people looking for jobs.
- In addition to having more money in their pockets from a lower tax burden, some 30 million Americans in 30 states have seen cuts to their utility bills as power companies pass along savings from the tax cuts.
The Tax Foundation, a think tank that advocates pro-growth policies, released an analysis of the tax cuts this week projecting that the benefits evident in the past six months will continue to accrue over the next decade. The report forecasts that the economy will be 2 percent larger in 2027 than it would have been without changes to the system.
“In addition, the larger economy will also mean higher incomes for taxpayers,” Tax Foundation economists Huaquin Li and Kyle Pomerleau wrote. “However, the economic effects of the tax law will take time to materialize. As a result, individuals’ after-tax incomes due to higher wages and capital income will not occur immediately. Rather, they will gradually increase over the next decade.”
One of the most persistent criticisms of the tax plan — and a concern shared by some conservatives — is that tax cuts would blow a hole in the national debt if not combined with spending cuts.
The Tax Foundation estimates that the federal government will take in $1.8 trillion less over the next 10 years.
Related: Waters Unfazed by Facts on Tax Cut’s Sparking Economic Growth
Still, dire predictions of Democrats — who still regularly refer to the legislation as a “tax scam” — have not come to pass.
The White House noted that House Minority Leader Nancy Pelosi (D-Calif.) called the bill “Armageddon,” while New York Times columnist and Nobel Prize economics laureate Paul Krugman predicted a “global recession, with no end in sight.”
Senate Minority Leader Chuck Schumer (D-N.Y.) was equally pessimistic. “What has been sold as a job creator and wage booster will, of course, do little of either,” he said.
PoliZette senior writer Brendan Kirby can be reached at [email protected]. Follow him on Twitter.
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