Terri4Trump
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Two Years On, Tax Cuts Continue Boosting the United States Economy
Dec 20, 2019
December 22 marks 2 years since President Donald J. Trump signed the Tax Cuts and Jobs Act (TCJA). TCJA’s pro-growth reforms of individual and corporate taxes were the largest tax cut in United States history. Additionally, since TCJA’s passage, United States multinational enterprises have repatriated $1 trillion in past overseas earnings that were previously invested abroad.
Prior to TCJA’s passage, CEA made a number of predictions about the legislation’s long-term effects on economic growth, business investment, wages, and the labor market. Though TCJA’s full economic benefits will require additional time to materialize, CEA’s projections have been largely borne out.
A major TCJA provision allows businesses to immediately and fully deduct the cost of new capital investments, enabling them to invest more in their operations. CEA predicted an initial increase in the investment growth rate during the transition to an elevated steady state.
Investment levels have been notably higher in the post-TCJA period than Blue Chip’s pre-TCJA projections from October 2016. In 2018, investment was 4.5 percent higher than the projections. In 2019, investment was 3.3 percent higher than the projections and the capital stock is on track to expand across each major asset class (equipment, structures, and intellectual property products).
Additionally, TCJA provided much needed tax relief for America’s small businesses by letting certain pass-through entities deduct 20 percent of their qualified business income. As a result, over 80 percent of small firms believe that TCJA had a significant impact on the economy and over 50 percent believe it had a positive effect on their business, according to the National Federation of Independent Business.
CEA estimated that a drop in the corporate tax rate would increase average United States household income by $4,000 over 5 or so years. The individual tax cuts, which were not included in CEA’s $4,000 forecast, also boosted disposable income for most households. For example, this year, TCJA’s doubling of the child tax credit will benefit 40 million American families, each receiving an average of over $2,200 dollars.
Altogether, real disposable personal income per household has risen by about $6,000 since TCJA was signed into law. Of that, our best estimate is that $1,500 to $2,900 (in real 2019 dollars) is due to the combination of TCJA’s individual and corporate tax reforms, meaning that a substantial portion of our estimated five-year income gains of $4,000 have already been realized.
ME: Jobs, Economy, and now the Space Force. Trump is the greatest POTUS in decades.
Dec 20, 2019
December 22 marks 2 years since President Donald J. Trump signed the Tax Cuts and Jobs Act (TCJA). TCJA’s pro-growth reforms of individual and corporate taxes were the largest tax cut in United States history. Additionally, since TCJA’s passage, United States multinational enterprises have repatriated $1 trillion in past overseas earnings that were previously invested abroad.
Prior to TCJA’s passage, CEA made a number of predictions about the legislation’s long-term effects on economic growth, business investment, wages, and the labor market. Though TCJA’s full economic benefits will require additional time to materialize, CEA’s projections have been largely borne out.
A major TCJA provision allows businesses to immediately and fully deduct the cost of new capital investments, enabling them to invest more in their operations. CEA predicted an initial increase in the investment growth rate during the transition to an elevated steady state.
Investment levels have been notably higher in the post-TCJA period than Blue Chip’s pre-TCJA projections from October 2016. In 2018, investment was 4.5 percent higher than the projections. In 2019, investment was 3.3 percent higher than the projections and the capital stock is on track to expand across each major asset class (equipment, structures, and intellectual property products).
Additionally, TCJA provided much needed tax relief for America’s small businesses by letting certain pass-through entities deduct 20 percent of their qualified business income. As a result, over 80 percent of small firms believe that TCJA had a significant impact on the economy and over 50 percent believe it had a positive effect on their business, according to the National Federation of Independent Business.
CEA estimated that a drop in the corporate tax rate would increase average United States household income by $4,000 over 5 or so years. The individual tax cuts, which were not included in CEA’s $4,000 forecast, also boosted disposable income for most households. For example, this year, TCJA’s doubling of the child tax credit will benefit 40 million American families, each receiving an average of over $2,200 dollars.
Altogether, real disposable personal income per household has risen by about $6,000 since TCJA was signed into law. Of that, our best estimate is that $1,500 to $2,900 (in real 2019 dollars) is due to the combination of TCJA’s individual and corporate tax reforms, meaning that a substantial portion of our estimated five-year income gains of $4,000 have already been realized.
ME: Jobs, Economy, and now the Space Force. Trump is the greatest POTUS in decades.
