President Trump and top Republican leaders promised Americans that the Tax Cuts and Jobs Act would provide a simpler and cheaper tax bill -- and that it would unleash a capital spending and jobs boom. Some of that has materialized and some of it has not.
President Donald Trump signs the Tax Cut and Reform Bill, a $1.5 trillion tax overhaul package, into law at the White House in on Friday, Dec. 22, 2017. By Heather Long Heather Long Economics correspondent Email Bio Follow April 15 at 10:43 AM Today is Tax Day, the due date for Americans to file their 2018 taxes. It also marks a milestone: the country has made it through a full year of President Trump’s new tax code — and the first filing season under the new rules.
“It’s not simpler. The only real piece that was removed from the 1040 was the personal exemption and that was just one line,” said Bradley Heim, an Indiana University professor and former economist in Treasury’s Office of Tax Analysis. “A lot of what was changed was lines were taken from the 1040 and moved to other schedules.”
3. Promise: Your wages will rise. Trump kept claiming the average American would get $4,000 more a year due to the tax bill. That hasn’t panned out, although there is some good news on pay. Some of the gains from higher wages and lower taxes have been offset by inflation. There are several measures of inflation, but none of them show prices rising fast enough to erase workers’ wage gains right now .
Capital expenditures rose in early 2018 but have since come back down to more normal levels. “I’m not buying the thesis that the tax cuts gave the biggest boost to capex,” said Rajeev Dhawan, director of economic forecasting center at Georgia State University. “If tax cuts cause capex boom, then why did it fizzle in the second half of the year?”
“It’s really too early to tell. Fortune 500 company tax directors are still figuring out the law and how to do their taxes,” said Victor Fleischer, a tax law professor at University of California Irvine. “They haven’t really gotten to the step of changing the way they make investments going forward."
Trump has predicted similar growth every year for the next decade, but almost no one else agrees with that forecast. Most experts say growth this year will be closer to 2 percent. Even a White House report released last month asserted it would take additional tax cuts and a big infrastructure bill to keep growth as high as Trump wants for years to come.
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