The Overlooked Economics of Trump's Tax Law
The ink on the U.S. tax bill wasn’t even dry before Democrats said the measure was a failure. Republicans waited just minutes after Wal-Mart announced a $1 wage increase to crow that President Donald Trump's overhaul was already beginning to benefit workers and the economy.
These are examples of politics, not economics. And in both cases the truth is more complicated. The reduction in tax rates for corporations and households is a significant benefit to the economy and growth prospects because it enhances incentives to invest and work. The fiscal stimulus provisions are the worst characteristics of the legislation, because they would widen the budget deficit and would be applied when the economy does not need a stimulus. A better bill would have provided more tax restructuring and less red ink.