Annie Lowrey for The Atlantic:
In the inaugural paper using IMPA’s model, the economists Lídia Brun, Ignacio González, and Juan Montecino conclude that the Trump tax bill was “harmful to the economy”—it slowed down growth and amped up inequality. Slashing the corporate-tax rate from 35 percent to 21 percent did not boost workers’ wages by thousands of dollars a year, as Trump appointees had predicted. Nor will it boost GDP in the long term. The IMPA model finds instead that cutting the corporate-tax rate “reduced the funds used for productive investment” by shunting money into investor payouts. What’s more, it suggests that raising taxes on business monopolies might stimulate growth by lowering those firms’ stock-market returns and thus spurring investors to pour money into more dynamic businesses.
Is this a surprise? The huge $2 trillion tax cuts under Trump went directly to the top 1% of wealth holders in the country. Hardly any ‘trickled’ down to the average citizen.
What could those $2 trillion have done? The money could have provided meals to underprivileged children, paid teachers a proper salary, shore up retirement benefits, provided safety nets for the homeless, and funded healthcare for everyone. I would bet that these initiatives would boost the economy in a more substantial way for the average American family.