Trump/GOP Tax Cuts Did Not Fulfill Its Promises

(Cartoon image is by Mike Keefe in The Denver Post.)

The tax cuts passed by congressional Republicans and signed by Donald Trump was touted by them as a benefit to the middle class. But the biggest cuts benefitted the rich, and the biggest cuts of all went to corporations. Trump told us that those corporations would use the cuts to expand investment and create a massive number of new jobs. That did not happen. Instead, most of the corporations used that money to buy back their own stock (raising stock prices, which only benefitted the company executives and stockholders). Here's what Rueters reports really happened:

The Trump administration's $1.5 trillion tax cut package appeared to have no major impact on businesses' capital investment or hiring plans, according to a survey released a year after the biggest overhaul of the tax code in more than 30 years.

The National Association of Business Economics' quarterly business conditions poll, published on Monday, found that while some companies reported accelerating investments because of lower corporate taxes, 84 percent of respondents said they had not changed plans. That compares to 81 percent in the previous survey published in October.

The White House had predicted that the massive fiscal stimulus package, marked by the reduction in the corporate tax rate to 21 percent from 35 percent, would boost business spending and job growth. The tax cuts came into effect in January 2018.

"A large majority of respondents, 84 percent, indicate that one year after its passage, the corporate tax reform has not caused their firms to change hiring or investment plans," said NABE President Kevin Swift. . . .

The NABE survey also suggested a further slowdown in business spending after moderating sharply in the third quarter of 2018. The survey's measure of capital spending fell in January to its lowest level since July 2017. Expectations for capital spending for the next three months also weakened.

"Fewer firms increased capital spending compared to the October survey responses, but the cutback appeared to be concentrated more in structures than in information and communication technology investments," said Swift, who is also chief economist at the American Chemistry Council.

According to the survey, employment growth improved modestly in the fourth quarter of 2018 compared to the third quarter. Just over one-third of respondents reported rising employment at their firms over the past three months, up from 31 percent in the October survey. The survey's forward-looking measure of employment slipped to 25 in January from 29 in October.