A new report from the federal government predicts now that the tax cuts created for Americans by President Trump will bring in more money – not less – for the federal government to spend.
The Daily Signal has published a report from Preston Brashers, a senior policy analyst focusing on tax policy at The Heritage Foundation.
And he’s pointing out that the Congressional Budget Office’s May 2022 forecast for income “shows that the government now expects to bring in more tax revenue in the decade following the 2017 ‘Trump tax cuts’ than it had projected prior to the December 2017 passage of tax reform.”
At the time the tax cuts were being developed, “government scorekeepers” claimed they would cost the government $1.5 trillion over 10 years.
In fact, the report explains, that the CBO projected before the Tax Cuts and Jobs Act promoted by President Trump tax revenues for the next 10 years would be $40.7 trillion.
The next year the gloom deepened, with a projection of $39.6 over the same time period.
But now, the newest estimate predicts income of $41.3 trillion.
This was the legislative strategy that, according to the Daily Signal, House Speaker Nancy Pelosi labeled a “GOP tax scam.” And the Joe Biden White House has claimed that “the Trump tax cuts had added $2 trillion to deficits over a decade.”
But, the Daily Signal explained, “the numbers tell a different story. Despite the political rhetoric, tax revenues are up.”
“Instead of reducing revenues by $1.5 trillion, the latest forecasts suggest tax revenues will come in $570 billion higher than expected.”
The report noted taxes don’t exist in a vacuum, and the corporate tax reform propelled “higher income growth and therefore higher income taxes and payroll taxes.”
“Why didn’t the expected drop in tax revenues happen, especially given that the decade included a global shutdown related to the pandemic?” the report asks.
And the reason, the CBO explains, is the “unexplained strength” of tax receipts.
The Daily Signal cited economists Tyler Goodspeed and Kevin Hassett who explained after the 2017 tax cuts, “business investment soared 9.4% compared to the pre-tax cuts trend. For corporations, real investment rose 14.2%. Similarly, a 2021 Heritage Foundation report showed the dramatic growth in investment and wages that occurred after the tax cuts. A key driver in the surge in investment was multinational firms who chose to reinvest in U.S. markets instead of offshoring.”
Also, the report said, real median household incomes grew by more than $5,000 in 2018 and 2019 alone, even though the 30 years prior to 2017 had seen a total growth of $7,600.
Then the economy was “roaring” in 2020 with record high wages, record low unemployment, strong labor force participation and low inflation.
Then came COVID, and a “glut” of federal spending, with the CBO projecting federal check-writing will total more than $9 trillion higher than previously forecast.
Inflation under Biden’s economic policies have reached 8.3% for consumers, up from the 1.9% that the CBO was projecting in 2021.
“Because of the combined effect of increases in interest rates and the debt, by 2032, the forecasts show that the entire economic output of Alaska, Delaware, Idaho, Maine, Montana, New Hampshire, North Dakota, Rhode Island, South Dakota, West Virginia, and Wyoming would be insufficient to pay the annual interest on the national debt. That’s 11 states,” the report warned.
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