Trump’s Big Tax Cuts Did Little to Boost Economic Growth

The Tax Cuts and Jobs Act of 2017 was as close as the real world gets to a laboratory experiment on whether supply-side theory works in practice. More than one year on, we have an answer. It’s “meh.”

The White House and congressional Republicans argued that easing the corporate tax burden would lift business investment out of the doldrums and reinvigorate the U.S. expansion. An analysis by Bloomberg Economics shows that while investment spending did pick up in 2018, the amount attributable to a lighter corporate tax burden is small. It’s not that tax cuts don’t matter. It’s that they don’t matter much. That view is informed by looking at a longer sweep of history, which makes clear that despite its size, the TCJA was always destined to fall short of the hype.