> 1. Let’s start with the personal income tax reforms. There is some simplification, as many more taxpayers will be able to use the standard deduction. On the other hand, there’s some added complexity in the new deduction for “pass through” businesses. On net I am slightly encouraged by the bill, as I see it as a first step toward eliminating deductions from the tax code. But we still have a long way to go.
> The distributional consequences of the tax cut are not very important. The top rate comes down a bit, but that’s offset by the fact that state and local taxes can no longer be deducted. Some of the tax cuts benefiting lower income people are scheduled to expire, but almost no one thinks that will happen.
> 2. The estate tax exemption was doubled, but this threshold has been rising very rapidly for many decades. It’s a change, but hardly revolutionary. Recall that the House bill called for its elimination.
> 3. The big corporate income tax cut is the single most significant provision. But even President Obama favored a rate cut to 28%. This excellent WSJ article shows that even after the federal corporate tax rate is reduced to 21%, the total corporate tax rate (including state taxes) is in the middle of the pack for developed countries. It was inevitable that the US would eventually move the rate down to meet global competition—hardly a revolutionary change.
There was a lot in that package. See https://www.econlib.org/archives/2017/12/much_ado_about.html for an assessment (by a Trump hater..) that does not agree with the 'trickle down economics' accusation.
> 1. Let’s start with the personal income tax reforms. There is some simplification, as many more taxpayers will be able to use the standard deduction. On the other hand, there’s some added complexity in the new deduction for “pass through” businesses. On net I am slightly encouraged by the bill, as I see it as a first step toward eliminating deductions from the tax code. But we still have a long way to go.
> The distributional consequences of the tax cut are not very important. The top rate comes down a bit, but that’s offset by the fact that state and local taxes can no longer be deducted. Some of the tax cuts benefiting lower income people are scheduled to expire, but almost no one thinks that will happen.
> 2. The estate tax exemption was doubled, but this threshold has been rising very rapidly for many decades. It’s a change, but hardly revolutionary. Recall that the House bill called for its elimination.
> 3. The big corporate income tax cut is the single most significant provision. But even President Obama favored a rate cut to 28%. This excellent WSJ article shows that even after the federal corporate tax rate is reduced to 21%, the total corporate tax rate (including state taxes) is in the middle of the pack for developed countries. It was inevitable that the US would eventually move the rate down to meet global competition—hardly a revolutionary change.