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The corporate tax cuts included in the 2017 Tax Cuts and Jobs Act helped boost business investment and slightly increased employee pay, according to a new report. analysis Published by the Economic Research Bureau. But the tax cuts have not paid for themselves, as Republicans in Congress and the Trump administration have argued, and instead cost the federal government more than $100 billion a year in lost revenue.
A team of four researchers from Princeton University, the University of Chicago, Harvard University, and the Treasury Department found that the provision providing stronger tax breaks for business investments is the most effective part of the bill, and why it doesn’t come at a significant cost. Although this is not the case, it was concluded that it clearly had a positive effect. .
“There is real evidence that taxes matter for investing,” said Harvard University author Gabriel Chodorow Reich. Jim Tankersley of the New York Times. “There’s also evidence that corporate tax cuts are costly. Both are just features of the data.”
The analysis found that the U.S. economy expanded by about 0.1% annually due to additional business investment spurred by the tax law, which also lowered the top corporate tax rate from 35% to 21%. The increase represents an annual wage increase of about $750 for the average worker, far short of the $4,000 to $9,000 increase cited by Republican lawmakers and conservative policy experts who campaigned for the tax cut package. do not have.
Low, low tax rate: another analysis A study by the liberal-leaning Institute on Taxation and Economic Policy found that some of the nation’s largest companies pay tax rates well below the 21% top rate set by the 2017 tax law. ITEP calculated that it looked at 342 Fortune 500 companies that reported profits every year from 2018 to 2022, and their average income tax rate was just 14.1%.
“This is primarily due to loopholes and special measures left in and in some cases introduced by the 2017 tax law,” ITEP’s team of analysts wrote. “Tax avoidance occurs because Congress chooses to tolerate it by creating special exceptions, departing from normal tax rules, or leaving loopholes that are clearly being exploited. .”
Conclusion: A new analysis of the 2017 Trump tax cuts provides further evidence that tax law changes can help shape companies’ investment decisions and that tax cuts alone are not profitable.
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