Tax Policy Analyst
The 2017 tax law likely has had little effect on economic growth, investment, and wages in 2018, the non-partisan Congressional Research Service (CRS) says in a new report.
The tax law provided large, immediate tax cuts for profitable corporations and wealthy households while largely leaving out millions of low- and moderate-income working families. Proponents promised that the increased investment that the law would spur would raise the wages of low- and moderate-income workers, and that the increased economic growth it would generate would ensure that budget deficits didn’t grow. In fact, many proponents claim that the evidence indicates that the law is already paying for itself and significantly boosting wages. CRS’ analysis of the available data for 2018, however, shows that those claims are off base:
The CRS report makes clear that nothing occurred in the 2017 tax law’s first year in place that should make us question the analysis by reputable organizations such as CBO and JCT about its economic and fiscal impact. Proponents may argue that 2018 is too soon for the law to generate the economic boom that they predicted. There is, however, no reason to expect that boom to ever arrive, as decades of evidence show that tax cuts for the wealthy are an ineffective way to spur economic growth.