Donald Trump has made a series of claims about his massive 2017 tax cut package, which he once called “rocket fuel” for the United States economy, as Business Insider reported. The president has claimed that the tax cuts resulted in large bonuses for employees, relocation of offshore cash back to the U.S., and a wave of investment by big companies into research and development projects.
Trump has also claimed that the cuts under his “Tax Cuts and Jobs Act” — which are projected to add nearly $2 trillion to the federal budget deficit over 10 years, per a report from The Washington Post — would pay for themselves by supercharging economic growth.
But according to the report issued last week by the non-partisan Congressional Research Service, a department of the Library of Congress, some of these claims run contrary to their data.
The average American taxpayer has seen no benefit — either in terms of wage growth or a slimmed-down tax bill — from the 2017 tax cut package, and corporations have not significantly increased the amount of money allotted towards research, development, and other job-creating projects, per a summary of the CRS report by The Los Angeles Times.
There has been one beneficiary of the tax cuts, however, according to the report — big corporations. Corporations under this designation used assets saved by the tax cuts to buy back a trillion dollars worth of their own shares, artificially pumping up their stock prices.
“Much of these funds, the data indicate, has been used for a record-breaking amount of stock buybacks, with $1 trillion announced by the end of 2018,” the CRS report stated, going on to note that — during a 2004 “tax holiday” — corporations did the same thing.
CRS: "There is no indication of a surge in wages in 2018 either compared to history or relative to GDP growth." pic.twitter.com/F2PHyXN1jv— Harry Stein (@HarrySteinDC) May 28, 2019
In addition, the minimal amount of job growth attributable to the Trump tax cuts amounted to only five percent of what would be required to make up the $1.9 trillion in added budget deficit. In other words, the tax cuts are fall drastically short of paying for themselves, according to a summary of the CRS report provided by Salon.
As for the large employee bonuses that Trump has boasted would result from the tax cuts for corporations, according to the report, the bonuses have amounted to about $28 per worker — and may not have been a result of the tax cuts at all in some instances. There is a potential that some bonuses were portrayed as “a public relations move” per the report.
Economic growth in 2018 was approximately 2.9 percent, the report notes, almost exactly what the Congressional Budget Office had projected without the tax cuts. This suggests that the effect of Trump’s tax cut package on economic growth was negligible, per the report.