Saturday, February 23, 2019

Why President Trump's Tax Cut Is Being Called a Failure

A tweet accompanying an article by Bloomberg columnist  Stephen Gandel says it all:
Thanks to President Trump's tax cut, companies in the S&P 500 are set to save a total of $2 trillion in taxes over 10 years.

Too bad his promised economic boost isn’t materializing for everyone else.
As I have pointed out from the start, Trump's tax cut was not accompanied by a cut in government spending. The source of funds for the spending just changed.

There was no move in the structure of the economy toward the private sector, which would have boosted the economy. Government spending under Trump has continued to climb pretty much as it always has.

Federal Government Expenditures Since Trump Entered White House

A cut in corporate taxes, without an accompanying cut in government spending, means one thing, government funding by deficit spending. Thus, what Trump gave corporations in terms of tax cuts, he has taken away from them by crowding out private sector borrowing and equity investment via the higher deficits.




  1. My middle class parents were thrilled with the tax cuts. They saved thousands. I haven’t done mine yet. Hopefully the state takes claim to less of my income this year than last year

    1. No one disputes that every policy has winners, but what RW is pointing out is that it also has losers. Per Bastiat, the difference is that the winners are "seen," but the losers are mostly "unseen." Moreover, it's inequitable that who wins and loses is decided arbitrarily through the use of coercion, as opposed to through voluntary decisions.