Factsheet

The Trump-GOP tax plan, formally known as the Tax Cuts and Jobs Act (TCJA), was signed into law on Dec. 22, 2017. The biggest broken promises and other worst features of the law are:   

#1: Trump and the GOP said “the benefits of tax reform (would) go to the middle class, not to the highest earners,” but corporations and the wealthy are getting most of the benefits.

• The TCJA cut the corporate tax rate on domestic profits by 40%—from 35% to 21%. As a result, corporate tax revenue dropped by about one-third, or by $92 billion, from fiscal year 2017—before the TCJA—to FY 2018. [Treasury Department/NYT] The wealthy own the great bulk of corporate stock and therefore benefit most from corporate tax cuts.
• The richest 1% were expected to get 21% of the tax cuts in 2018, an average tax cut of $51,000. The bottom 60% of taxpayers were slated to get about a dollar day. By 2027 when the law is fully implemented, 83% of the tax cuts will go to the top 1%. [TPC]
• The tax law greatly weakens the estate tax, the only curb on the accumulation of dynastic wealth, thereby widening the wealth gap.Even before the TCJA, only the richest 1 in 500 families paid the tax. The TCJA doubled the amount of an estate exempt from the tax from $5.2 million to $11.4 million for a single decedent, resulting in fewer than one in a thousand estates paying a tax, or only 1,900 families a year [CBPP & TPC].

#2: Trump and the GOP promised the tax cuts would pay for themselves through greater economic growth; instead they will balloon the federal debt by nearly $2 trillion.

• The TCJA was initially estimated to cost $1.5 trillion. [JCT] But that has grown to $1.9 trillion, after including increased interest from the debt that will incur. [CBO/The Hill]
• The one-third drop in corporate tax revenue ($92 billion) explains the lion’s share of the $113 billion increase in the federal deficit between FY 2017 and FY2018, when it grew from $666 billion to $779 billion. [Treasury/NYT]

#3: To reduce this growing debt, Republican leaders have announced that they want to cut Social Security, Medicare, Medicaid and other critical services for working families, rather than reverse their tax cuts for the wealthy and corporations. [Washington Post]

• To reduce the $1.9 trillion debt caused by his tax cuts, Trump’s budget in 2018 sought to slash $1.7 trillion from Medicaid, Medicare, the Affordable Care Act, Social Security disability benefits, SNAP (food stamps) and more. [Bloomberg]
• House Republicans proposed slashing more than $5 trillion overall last year, including $2 trillion from Medicare, Medicaid and the Affordable Care Act. [CBPP]

#4: Trump promised that corporations would use their tax cuts to give the typical American household a $4,000 pay raise, lead corporations to “shower their workers with bonuses,”  produce “massive investments” and reverse the outsourcing of jobs, with factories “pouring into this country.” [Washington Post, The Hill, CBS News, NYT] But soaring corporate profits from the tax cuts are being spent on shareholders, not workers.

• As corporate tax revenue has declined sharply, corporate profits have increased dramatically, rising to almost $2.1 trillion in the third quarter of 2018—a 20% increase from the same quarter in 2017. [Federal Reserve Bank of St. Louis]
• Corporations are mostly using their tax cuts and rising profits to buy back their own stock, further enriching wealthy shareholders and corporate executives.
• Corporations have announced almost $930 billion in stock buybacks since the GOP tax plan passed Congress in late 2017. [ATF]
• That’s over 130 times more than the $7.1 billion corporations have given their workers in bonuses or pay hikes tied to the tax law. [ATF]
• Only 4.4% of workers have received a bonus or raise ascribed to the TCJA [ATF].
• Low unemployment is a continuation of an over eight-year trend begun early in the Obama administration rather than a result of the tax cuts. About 200,000 more jobs were created in the last two years of the Obama administration than during the first two years of the Trump era (5.1 million vs. 4.9 million, respectively). [ATF/BLS data]

#5: Trump promised that the tax law would end outsourcing of jobs, and that its steeply discounted tax rates on accumulated offshore profits would cause corporations to quickly bring “over $4 trillion” in untaxed profits back to the U.S. But the law mostly fails in its promise to end profit shifting to tax havens, and even encourages the outsourcing of jobs.

• The law effectively taxes foreign profits of American firms at half the domestic tax rate, giving corporations added incentive to outsource jobs and production. And the more corporations build factories offshore, the less U.S. tax they pay on foreign profits. [NYT]
• Corporations shift $300 billion in profits out of the U.S. each year. The TCJA will only reduce that by $65 billion—80% of existing profit shifting will continue. [CBO, p. 127]
• Corporations have so far brought home only about 12% of the $4 trillion Trump estimated they would repatriate. [Bloomberg]
• The TCJA gave U.S. corporations with accumulated untaxed offshore earnings a tax cut of over $400 billion on those profits. [ITEP] As a result, the ten biggest U.S. drug companies could save $75 billion in taxes on their offshore profits. Yet, no drug company has said it will use its tax cuts to reduce drug prices to help patients. [ATF] 

#6: Republican leaders promised that small businesses would be big winners from the TCJA. But the law’s “small business” tax cut overwhelmingly benefits wealthy business owners.

• The TCJA generally allows most owners of pass-through businesses—sole proprietorships, partnerships and S corporations—to exlude 20% of their business income from taxation.
• Over three-fifths of the value of this tax break will go to the richest 1% by 2024, in part because business income is so concentrated: the richest 1% of business owners receive over half of all pass-through-business income. [CBPP]

Talking Points

The Trump-GOP tax law, formally known as the Tax Cuts and Jobs Act (TCJA), was signed into law in December 2017. Below are suggested talking points about the law that can also be used more generally to talk about taxes and the economy. [This fact sheet provides more details.]

1. Americans want an economy that works for all of us—that means ending the rigged system and creating a tax system where the wealthy and corporations pay their fair share. President Trump and conservatives in Congress handed out tax breaks costing nearly $2 trillion that mostly benefit the wealthy and big corporations, while working families struggle to make ends meet. Congress needs to overhaul the tax system to ensure that corporations and the wealthy start paying their fair share. This is critical to reducing inequality and raising the revenues needed for public services working families rely on and deserve.

2. President Trump and the GOP said their tax cuts would pay for themselves—instead they’re slated to balloon the national debt by nearly $2 trillion. Now, Republicans are calling for deep cuts to Social Security, Medicare, Medicaid, the Affordable Care Act, education and more to pay for their tax cuts.
3. President Trump and the GOP promised that their tax cuts would mostly benefit the middle-class and small businesses. But the vast majority of their tax breaks are going to the wealthy, big corporations and Wall Street—not to working families and Main Street.

4. President Trump promised that corporations would use their tax cuts to give working families a $4,000 wage hike. But workers have gotten very little, proving once again that tax cuts for corporations and the wealthy do not “trickle down.”

• Instead of giving their workers bonuses and raises, corporations have announced they are spending around $1 trillion to buy back shares of their own stock. Stock buybacks mainly enrich wealthy shareholders and CEOs.
• That’s over 130 times more than the $7.1 billion corporations have given their workers in bonuses or pay hikes tied to the tax law.
• Only 4.4% of workers have received a bonus or raise from the tax law.

5. To protect basic services that benefit working families and to make new investments to meet our nation’s growing needs, we need trillions of dollars in new revenues over the next 10 years. If corporations and wealthy special interests continue to rig the rules and not pay their fair share, we won’t have the resources necessary to protect Social Security, Medicare and Medicaid and to invest in education, healthcare, housing, nutrition, infrastructure, renewable energy and other public services vital to America’s working families.

6. Congress must end tax incentives and loopholes that benefit Wall Street and encourage corporations to outsource jobs and shift profits out of America while avoiding their fair share of taxes. This would level the playing field for America’s workers, small businesses and domestic companies and create good-paying jobs and investments here at home.

7. Creating a fair tax system is central to unrigging the economy, investing in good paying jobs and strong public services, and promoting security and opportunity for everyone, not just the wealthy few. An economy that works for all is critical for a fully-functioning democracy, where everyone has the basics, and there are fair rules that ensure we all have an equal opportunity to prosper and thrive.

8. Support among voters for taxing the wealthy is strong, even among Republicans.

• 59% of voters support Rep. Alexandria Ocasio-Cortez’s proposal to tax income above $10 million at a 70% rate. (Hill/HarrisX poll, 12-13, 2018)
• 61% of voters support Sen. Elizabeth Warren’s proposal for a wealth tax, with 46% “strongly” supporting it and 21% opposed. Even Republicans supported it, by a 44% to 37% margin; while Democrats went for it 76% to 6%. You Gov/Data for Progress poll (Jan. 30, 2019). Her plan would place a 2% tax on fortunes over $50 million, and 3% on those over $1 billion.