Did the GOP Tax Cuts Really Boost the Economy?

Did the GOP Tax Cuts Really Boost the Economy?


The Republican tax cuts have been cited as an important factor in the jump in economic growth in 2018, but a new analysis by Bloomberg Economics suggests they played a much smaller role than their supporters say they did.

Here are some highlights of the analysis by Bloomberg’s Tim Mahedy:

  • “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 analysis finds that, while investment spending rose in 2018, the tax cuts didn’t play much of a role: “[W]ithout the corporate side of the TCJA, growth last year would have been 3 percent instead of 3.1 percent. That’s a much smaller boost than what White House officials had promised.”
  • On the other hand, the tax cuts definitely did play a large role in raising the federal deficit, as corporate tax receipts dropped almost 31 percent for the calendar year. “While the TCJA hasn’t quite lived up to the supply-side sales pitch from a growth perspective,” Mahedy says, “its effects on government finances have been broadly in line with what its detractors anticipated.”