With every economic report that fails to show the US economy consistently growing by at least 3 percent or business investment booming, it may seem increasingly obvious that the 2017 Tax Cut and Jobs Act is a bust. At least it’s obvious to partisan pundits and the progressive Twitterverse. They’ve already called the time of death for this key piece of Trumponomics.
Now certainly the Trump tax cuts are looking like failed politics. They’re not popular, polls suggest, and most people don’t think they got a tax cut. This isn’t surprising. Supporters oversold the immediacy and power of the TCJA’s impact, as well as the nature of its pro-growth mechanism. Actually both sides misunderstood (and continue to misunderstand) how the corporate tax reform part of the TCJA was supposed to work. It was never about — at least from a proper economic perspective — companies using their tax savings to make more investments, hire more workers, and pay higher wages. Likewise the case for a corporate tax rate reduction isn’t undercut by the rise in stock buybacks.