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Trump’s tax cut impact: $1 of benefit for every $20 of revenue loss

Writing for New York magazine, Jonathan Chait calls attention to a review by the nonpartisan Congressional Research Service of the measurable impact so far of the tax cuts for the wealthy that were President Donald Trump’s major legislative accomplishment so far.

Big surprise. Rather than stimulating so much economic growth that they would pay for themselves as some of its architects claimed (as they always claim in order to justify tax cuts for the wealthy), the amount of new revenue attributable to the stimulus effect was roughly 5 percent as large as the amount of revenue lost by the cuts themselves. That’s $1 of benefit for every $20 of revenue loss. The other $19 just gets added to the deficit/debt picture (and to the wealth of those corporations and individuals who would otherwise have paid the tax).


From Chait’s analysis, according to CRS:

Growth has not increased above the pre-tax-cut trend. Neither have wages. After a brief and much smaller than expected bump, repatriated corporate cash from abroad has leveled off.

In other words, tax cuts for the rich and corporations are great, for the rich and corporations. The national debt is growing at rates not seen since World War II.

Chait’s full piece is here.

Comments (21)

  1. Submitted by Henry Johnson on 06/03/2019 - 01:13 pm.

    I’m old enough to remember when this same “trickle down economics” was proposed by Regan in the 80’s.

    Supposedly helping out the rich would “trickle down” to helping the middle class and the poor.

    I think just as the study referenced by Eric Black found, it’s more accurate to call that so-called economic policy “piss on the poor”, as someone coined an alternate name for “trickle down” way back then – and that’s what it still is today.

    The truly interesting thing – many of Trump’s most ardent supporters are in lower income brackets.

    He put mostly millionaires and billionaires in his cabinet, and then with his only legislation passed being this tax cut, mostly for the rich, I hope that more and more of his supporters will start to realize that despite his promises of representing the working class, he’s really representing his OWN kind – the one-percenters, the rich.

    All the rest is mostly symbolism and talk, the thing the party really, really considered important was getting that tax cut for the rich,

    In fact I heard that it was demanded from the folks who REALLY matter, the well-heeled GOP donors, or they would not be giving any more large donations.

    THAT got attention, and way more in the GOP than anything else that was officially in the Trump agenda when he was campaigning.

    Sure the border wall generated a lot of drama, other issues same thing, but the only thing Trump and the party considered important enough to actually get DONE when they had the presidency, the senate and the house under their control, was a big, fat, tax cut for the rich, with some crumbs thrown in for the middle class to pretend they counted too.

    • Submitted by Gerald Abrahamson on 06/03/2019 - 01:58 pm.

      Supply side economics has been tried by the right since at least the 1890s. It has never worked. So why would it be different this time?

  2. Submitted by Ray Schoch on 06/03/2019 - 02:30 pm.

    I’d say there are two possibilities:

    First, the grasp of economics on a large scale – national and international – of Mr. Trump and his economic advisors approximates my own expertise in the field of Quantum Mechanics, which is to say, none at all;

    or

    Mr. Trump and his economic advisors know full well that they’re bankrupting the country while driving the lower 50% of income-holders into receivership – and thus more vulnerable to a neofascist and / or authoritarian takeover of the government, thus negating the noble experiment of having the public rule itself.

    At the moment, I’m ambivalent about which to choose…

    • Submitted by Paul Udstrand on 06/04/2019 - 12:46 pm.

      I think Trump is moral and economic imbecile, his instincts are Fascists but he doesn’t really know what he’s doing. Some of his “advisers” on the other may well understand the “real” effect of their tax policy, or at the very least they don’t care. I think however that a substantial number of Republican’s and Libertarians have simply drunk too much of the cool-aid. and are practicing ignorance and magical thinking. It can be difficult to discern between who’s being just plain stupid and who’s trying to take advantage of that stupidity.

  3. Submitted by William Hunter Duncan on 06/03/2019 - 02:42 pm.

    All part of the plan to reduce taxes on the wealthy and corporations and banks until such time as you can privatize medicare and social security (and water) and eventually the national parks and forests. After which we will all be subject to some kind of feudal arrangement in the former home of the free and the brave.

    All hail Making America Great Again, in the grand tradition of neo-liberals Reagan, Bush the Elder, Clinton, Bush the Lesser, Obama and now Trump.

    • Submitted by William Hunter Duncan on 06/03/2019 - 03:08 pm.

      By the way, Jonathan Chait, when he is not ripping Trump about every last little thing, he is busy smearing Bernie Sanders, or tearing down Matt Taibbi of Rolling Stone, the latter just about the only guy in major media willing to take on the banks and criticize economic and eternal war policy generally.

      I will point out as well, income inequality soared in the time of Obama, but Chait has made it part of his life work to celebrate Obama and never mentions it.

      • Submitted by Curt Carlson on 06/04/2019 - 12:42 pm.

        So because of your dislike of Mr. Chait, the facts aren’t the facts? Sou ads like an ad hominem fallacy to me.

  4. Submitted by Tom Christensen on 06/03/2019 - 02:55 pm.

    The Irrational Trump Supporter

    Trump says his tax cut is designed to help the middle class, it doesn’t – but, I’m still with Trump.

    Trump lies daily and I don’t have a clue what he stands for – but, I’m still with Trump.

    Trump says Trade Wars are easy to win, and he says the Chinese will pay for the tariff, they won’t the US will – But, I’m still with Trump.

    The Mexican’s will pay for the wall, they won’t – But, I’m still with Trump.

    Trump says the Republican Party will be the healthcare party, it isn’t – But, I’m still with Trump.

    Coal mine jobs are coming back according to Trump, they won’t – But, I’m still with Trump.

    Trump says he didn’t obstruct justice, he did – But, I’m still with the criminal Trump.

    Trump says he is working for you, but isn’t – But, I’m still with Trump.
    I didn’t collude with the Russians, but I asked for their help on TV – But, I’m still with the criminal Trump.

    The Russians interfered in the 2018 election, but Trump is not doing anything about it – But, I’m still with the criminal Trump.

    Trump is being had by Putin and Kim Jong Un because the stable genius is not a stable genius – But I’m still with Trump.

    Trump says Mexico will pay for increased tariffs, wrong, it will be me – But, I’m still with Trump.

    I figured Trump out way before he was elected, and I have chosen not to believe a single word that comes out of Trump’s mouth. I’ve learned that when his lips are moving, he is lying. I don’t need that in my life. I will never vote for the man no matter what, if anything, he accomplishes. A person as insecure as Trump is not good for the country as people try to go on with their lives. I have never seen a person as irresponsible and needy as Trump. Trump makes Nixon look like a choir boy. That must remain his problem because I will not be helping him with the adulation he needs. Trump does not have a shred of decency in his DNA. My life has much more value than Trump would ever recognize. Trump is a very very sick man that will never do anything on his own to try and get the “help he needs”. He is not going to foist his problems onto me. I’m very worried about the half of the country that can’t see what he is doing to America here and abroad. Republicans have been anti-government ever since their Svengali, Reagan, proclaimed the government was the problem.

    • Submitted by Dennis Wagner on 06/04/2019 - 08:48 am.

      Well TC seems you as well as a lot of others see that old saying is accurate “None so blind as those that refuse to see” a modified version of another is “You can lead a person to knowledge but you can’t make them think” in short we are pretty much stuck with a large swath of humanity that refuses to exercise that thing between their ears!

      • Submitted by Dennis Wagner on 06/04/2019 - 08:59 am.

        PS: To support this you got an article today on one of the Televangelist money grabbers on how he needs a fleet of private jets, its a “biblical thing” to spread the word and not get surrounded by demons on commercial flights! And of course all that donation revenue is “Tax free” to multi-millionaires! Hey you don’t have to make this stuff up.

  5. Submitted by Neal Rovick on 06/04/2019 - 08:56 am.

    Everything you need to know about economics and this administration….

    Arthur Laffer (Laffer curve) to be given the Presidential Medal of Freedom by Trump later this month.

    What about the promised expansion in business (and jobs and wages) after the record corporate tax cut ?

    Not much effect.

    What say you, Mr. Laffer ?

    • Submitted by RB Holbrook on 06/04/2019 - 09:41 am.

      In all likelihood, he would say his theory wasn’t give enough time to develop, or the tax cuts weren’t deep enough. The man is a zealot, and a little thing like reality isn’t going to phase him.

      Even though the Laffer Curve, born as it was of a sketch on a napkin, has just the right level of complexity for Trump’s absurdly limited attention span, he is more likely getting his medal because he recently co-authored a book lauding Trump.

  6. Submitted by John Evans on 06/04/2019 - 11:48 am.

    Well, you can call it the Trump tax cut, but it has been the most important, longstanding GOP priority for generations. The bill passed with virtual unanimity on the right, and would have been pretty much the the same bill no matter which GOP candidate was nominated; the president himself had little to do with it.

    The primary reason for the Republican Party’s existence has been to solve this particular problem; they believe that the rich have been tragically overtaxed.

    Now they can move on to their other priorities.

    • Submitted by Tom Christensen on 06/04/2019 - 02:52 pm.

      Tax cuts for the rich is how the Republicans get their political donations from the rich. It is the Republican money laundering scheme. Republican politicians vote the rich a tax break which equals free money – and the rich take the free money and give it to a Republican politician as a political donation. It didn’t cost the donor a cent.

  7. Submitted by Connie Sullivan on 06/04/2019 - 03:45 pm.

    Our central problem is that Donald J. Trump doesn’t know what’s going on. That can be immigration or tariffs or tax cuts, or relations with the murderous Saudis. That ignorance runs in the family, too.

    He is ignorant of economic principles,in the present instance, and really doesn’t care about anything that goes farther from his own personal interest and that of his children than to a public expense that might glorify him, like a huge and expensive military parade or eliminating all things related to John McCain from our surface reality, because Trump has a vague sense that McCain was a much Bigger Man than Trump is..

    All Trump knows about the Mueller report is the names of a bunch of people who formed the Mueller team and those of witnesses. He has set about punishing as severely as he can those who testified to his wrongdoing (lots of his former White House staff will be fined or go to jail for dissing Congressional subpoenas) and those who worked on the investigation that proved that he committed obstruction of justice and that his campaign worked (informally, without a signed contract) with agents of the Russian government to skew the 2016 election away from Hillary Clinton, whom Putin hates with a passion. Trump is pleased with himself for pleasing his hero Vlad Putin.

    Beyond being vindictive and spiteful, Trump magnifies his ignorance by not having an ounce of curiosity–he really doesn’t care to know or learn much except how to cheat at golf, cheat at his businesses, and oversee and encourage deep corruption in government. He is the saddest sack who has ever pretended to be president of our country.

    He’s making millions personally from being president, and just a small part of that is the annual $32 million that Trump himself is saving in taxes from “his” tax cut for the rich. Trump doesn’t know how the tax cut works–it’s a Republican deal, after all, not a Trump invention–so he glibly lies about it.

  8. Submitted by Kathleen Castrovinci on 06/05/2019 - 09:27 am.

    “Tax cuts pay for themselves.” Where have I heard that line before?? Oh yeah, from Republicans who think that if the rich get more money, they will throw pennies out to the rest of us to grab up. (Jobs, better pay.)

    How is that Tax Cut working out for ya, Trump supporters?

  9. Submitted by Paul Udstrand on 06/06/2019 - 11:27 am.

    I know I keep saying this and I hope it’s not irritating but really, this Republican “model” is all about magical thinking, and it always has been. No matter what the situation is, cut taxes because then the magic can happen. When the magic doesn’t happen, double down and cut taxes some more. The “small govment” model has ALWAYS been fundamentally incoherent but the real problem is that neoliberals drank the cool-aid back in the late 80s and kept drinking in the 90s. Magic markets, magic private sector efficiency, magic magic magic everywhere.

    The fact that these guys always pretend to be the “real” economist in the room deploying common sense is just kind of comical if you ignore the damage they’ve done. But there’s no denying that the magic is very alluring, the promise of all gain with no pain is a powerful draw. Nevertheless all cons depend on a suspension of disbelief at some point so here we are.

    It is amazing though that sooooo many Americans managed to become sooooooo confused about basic facts regarding revenue and spending by a democratic government with in a capitalist economy. Even in university economy classes they were teaching economics that assumed government revenue sucks money out of the economy when in fact it’s just recycling capital in different way compared to the “private” sector. The idea that the private sector somehow “pays” for the public sector always ignored the fundamental reciprocity that defines modern affluent liberal democracies.

    Let’s hope the fog of magical thinking is finally lifting eh? We’ve ridden that pony about as far as it’ll go.

  10. Submitted by Kent Fralish on 06/07/2019 - 08:26 am.

    The magic comes from the Treasury and the Federal Reserve Bank, as it always has, no matter who is POTUS.

  11. Submitted by Dennis Wagner on 06/09/2019 - 09:51 pm.

    You know, I’m kind of with HJ way at the top, an elderly fart that has heard and seen his fair share. The issue is, articles like these are too sophisticated/intellectual to get the attention of the Trumpies, ie. they can’t comprehend the dialogue, and folks commenting on this editorial just can’t push their education down far enough to interface with the Trumpies! Just saying there appears to be a great divide, and it dosen’t look like politics, it looks more like cognitive cerebral capability.

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