09 April, 2021

Wait—Who Was President Then?

US Incomes Increased More in 2018 Than in the Previous 20 Years—Combined - Foundation for Economic Education (fee.org)

The question, of course, is why did US incomes suddenly explode after decades of tepid growth? The answer is not difficult to find.

The year 2017 saw massive deregulation and passage of the Tax Cuts and Jobs Act (TCJA). Estimates placed the deregulation savings at $2 trillion. But what was likely even a bigger factor was the cut businesses saw in corporate taxes.

Prior to 2017, the US had the highest corporate tax in the developed world (if not the whole world). With a top bracket of 35 percent, its corporate tax rate was higher than Communist China and socialist Venezuela.

Huh. We lowered corporate taxes. I think I’ve mentioned before that’s a good idea.

[S]tudies show that workers bear between 50 and 100 percent of the brunt of corporate income taxes.

I think that I’ve mentioned that before too.

So in 2017, when the Tax Cuts and Jobs Act was signed into law, companies saw their tax rate fall from 35 percent to 21 percent. Just that fast, businesses suddenly had more capital to spend to grow their business, improve productivity, and hire more workers—and few things attract workers more than higher wages.

This gets a “duh” from me, but apparently it was too much for our media to grasp.

Media scoffed at the possibility that corporate tax cuts would actually result in wage increases for US workers. But the data speaks for itself: Families saw incomes increase faster than at any time in generations.

Trump was right. I expect to say that quite often over the next four years.

Our current President wants to raise the rates again. Apparently, we need to stop this economic growth before people stop being dependent on government.

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