The benefits to the 60th to 80th percentiles would be minimal, a $350 net benefit on average or 0.3% lower effective tax rate. [243][244] A group of nine economists (largely from the Reagan and Bush administrations) wrote a letter which estimated 3 percent growth from the reduction in the corporate tax rate within a decade; the letter was challenged by Harvard economists Larry Summers and Jason Furman (both of whom served in the Obama administration), and the nine economists appeared to back off from their original claims.
[113], An Institute on Taxation and Economic Policy analysis indicated the Act has more of a tax increase impact on "upper-middle-class families in major metropolitan areas, particularly in Democratic-leaning states where taxes, and usually property values, are higher. Sizable corporate tax cuts would flow mostly to wealthy executives and shareholders; In 2019, a person in the bottom 10% would average a $50 tax cut, while a person in the top 1% gets a $34,000 tax cut; The top 1% receives approximately 70% of the pass-through income, which will be subject to much lower taxes; Rolling back the estate tax, which only impacted the top 0.2% of estates in 2016, is a $150.
[175][176] If Congress had not passed the waiver, it would have been the first time that statutory PAYGO sequestration would have occurred.
The number of income tax brackets remain at seven, but the income ranges in several brackets have been changed and each new bracket has lower rates. Gross domestic product would be 0.4% higher on average each year during the 2018-2027 period relative to the CBO baseline forecast, a cumulative total of $961, The Act would increase the total budget deficits (debt) by $1,412. [174], Under the Statutory Pay-as-You-Go Act of 2010 (PAYGO), laws that increase the federal deficit will trigger automatic spending cuts unless Congress votes to waive them. The Fed also raises interest rates to help offset the risk of inflation in a growing economy near full employment. 6757), and the American Innovation Act of 2018 (H.R. [24][25] A different inflation measure (Chained CPI or C-CPI) will be applied to the brackets instead of the Consumer Price Index (CPI), so the brackets increase more slowly. (The Byrd Rule allows Senators to block legislation if it would increase the deficit significantly beyond a ten-year period. [98], CBO forecast in January 2017 (just prior to Trump's inauguration) that revenues in fiscal year 2018 would be $3.60 trillion if laws in place as of January 2017 continued. [54], Unrelated business income is now increased by the amount a church or other tax-exempt organization pays or incurs for qualifying parking or qualifying transportation benefits for its employees. The very limited effect estimated is due to the expectation of higher interest rates and trade deficits.
One year after enactment of the tax cut, a National Association for Business Economics survey of corporate economists found that 84% reported their firms had not changed their investment or hiring plans due to the tax cut. [32], No changes are made to major education deductions and credits, or to the teacher deduction for unreimbursed classroom expenses, which remains at $250.