An Economic History of the Tax Cuts and Jobs Act: Higher Wages, More Jobs, New Investment
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This Backgrounder separates the positive effect of the 2017 Tax Cuts and Jobs Act (TCJA) from the underlying economic trends and negative effects of trade uncertainty and tariffs. In 2018, business investment increased more than was predicted, the labor market improved, resulting in annual wages of about $1,400 above trend, and overall measures of the economy outpaced government forecasts. Congress needs to preserve the economic gains from the TCJA. Beginning in 2023, the most pro-growth reform—full expensing—begins to phase out, and three years later the lower tax rates for small businesses and individuals expire. Reversing the tax cuts would cost jobs, slow down wage growth, and shrink domestic investment.
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