Trump's Tax Returns: Lawful Or Lawless?

In 2022, the House Ways and Means Committee released six years of former President Donald Trump's federal income tax returns, from 2015 to 2020. The documents revealed that Trump had actively pursued creative accounting strategies to minimise his federal tax contributions. While he paid $641,931 in federal income tax in 2015, he paid just $750 in 2016 and 2017, and nothing in 2020. Trump's complex business empire includes foreign bank accounts in China, the UK, Ireland, and St Maarten, and he paid more tax abroad than in the US in 2017.

The House Committee report accompanying the release points to potentially questionable claims that warrant further investigation, such as professional expenses and charitable deductions made without supporting evidence, possible disguised gifts to his adult children, and the use of real estate write-offs.

Trump's tax returns have been a subject of controversy since he first announced his candidacy in 2015, as he initially promised to release them but later reneged. The issue gained momentum after the Democrats regained control of the House in 2018, leading to a series of court battles that ended with the Supreme Court approving the release of the returns in November 2022. While there is no evidence of wrongdoing, the returns highlight Trump's use of legal but aggressive tax strategies.

Did Trump's tax cuts disproportionately benefit the rich?

The 2017 Tax Cuts and Jobs Act (TCJA) was the biggest reform of the U.S. tax code since 1986. The act was signed into law by President Donald Trump on January 1, 2018, and it disproportionately benefited the rich.

The TCJA cut taxes for both shareholders and individual taxpayers, but the cuts for individuals expire in 2025. The act removed the mandate requiring individuals to purchase health insurance and lowered the top income tax rate from 39.6% to 37%. It also nearly doubled the standard deduction for single filers from $6,350 in 2017 to $12,000 in 2018.

However, the act disproportionately benefited the rich. According to the Tax Policy Center (TPC), households in the top 1% will receive an average tax cut of more than $60,000 in 2025, compared to an average tax cut of less than $500 for households in the bottom 60%. As a share of after-tax income, tax cuts for the top 1% are more than triple the total value of tax cuts received by those in the bottom 60%.

The act also included significant tax cuts for corporations, but research by the Congressional Research Service and the nonpartisan Brookings Institute has found little evidence that these gains trickled down to workers' wages.

The TCJA also cut the corporate tax rate to 21%, benefiting businesses. Between 2017 and 2018, corporations paid 22.4% less income tax, and the total value of refunds issued to businesses by the IRS increased by 33.8% nationally.

Overall, the TCJA disproportionately benefited the rich, with high-income individuals and businesses receiving the largest tax cuts.

Did Trump's tax cuts worsen the national debt?

The Tax Cuts and Jobs Act (TCJA) was a major tax code overhaul signed into law by President Trump in 2018. The Act cut taxes for shareholders and individual taxpayers, but the cuts for individuals were only temporary and are set to expire in 2025.

The Congressional Budget Office estimates that extending the expiring provisions would add $4.6 trillion in deficits over 10 years. The TCJA has been described as having "worsened America's fiscal trajectory". The Act has been criticised for disproportionately benefiting the most affluent, with the top 1% of households by wealth owning 40% of stocks, while the bottom 80% own just 7%.

The TCJA increased the federal debt, with the Committee for a Responsible Federal Budget estimating that the laws and executive orders signed by Trump added a combined $8.4 trillion to the debt over a ten-year period. Of this, $2.5 trillion came from tax cut laws.

The TCJA's impact on economic growth and median wages was smaller than expected. A 2024 study found that the corporate tax cut in the TCJA reduced corporate tax revenue by 40% and increased corporate investment by 11%. The study also found that the corporate tax cut "increased economic growth and wages by less than advertised by the Act's proponents".

Did Trump's tax cuts increase economic growth?

The Tax Cuts and Jobs Act (TCJA) was a major tax code overhaul signed into law by President Trump in 2018. The reform impacted taxpayers and business owners, particularly through tax cuts.

The TCJA's projected economic growth was disputed. Treasury Secretary Steven Mnuchin claimed that the Republican tax plan would spur sufficient economic growth to pay for itself and more. The Federal Reserve projected growth of 2.5% in 2018, 2.1% in 2019, 2.0% in 2020, and 1.8% over the longer run.

The TCJA's impact on economic growth was also analysed by the Congressional Budget Office (CBO) and the Tax Policy Center (TPC). The CBO estimated that the 2017 Trump tax cut would cost $1.9 trillion over ten years, with revenues expected to rise to an annual average of 16.9% of GDP in 2018-2026 (excluding pandemic years). The TPC estimated that the majority of taxpayers (53.4%) would face a tax increase after individual tax cuts expire in 2025.

The TCJA's impact on economic growth was also assessed by the Center on Budget and Policy Priorities (CBPP). The CBPP concluded that the 2017 Trump tax law failed to deliver promised economic benefits. They cited research showing that workers earning less than about $114,000 in 2016 saw "no change in earnings" from the corporate tax rate cut, while top executive salaries increased sharply. The CBPP also noted that the tax law's 20% pass-through deduction, which was skewed towards wealthy business owners, did not trickle down to workers.

The TCJA's impact on economic growth was also a subject of debate among politicians. House Budget Committee Chairman Jodey Arrington (R-TX) and Ways and Means Committee Chairman Jason Smith (R-MO) issued a statement claiming that the CBO's predictions about the budgetary and economic impact of making the 2017 Trump tax cuts permanent were poor. They argued that the Trump tax cuts resulted in economic growth that was a full percentage point above the CBO's forecast and that federal revenues far outpaced the agency's predictions. They highlighted that under the Trump tax policies, tax revenues reached a record high of nearly $5 trillion in 2022, and revenues averaged $205 billion above CBO predictions for the four years following the law's implementation. They also pointed out that the Trump tax cuts provided major benefits to working families, including a decrease in the officially reported poverty level, an increase in real median household income, and a rise in wages.

In conclusion, the impact of the TCJA on economic growth is a highly debated topic. While some argue that the tax cuts spurred economic growth, others claim that they failed to deliver on their promises. The assessment of the TCJA's impact depends on various factors, including income level, filing status, and deductions.

Did Trump's tax cuts increase wages?

The Tax Cuts and Jobs Act (TCJA) was a major tax code overhaul signed into law by President Trump in 2018. The reform impacted both taxpayers and business owners, particularly through tax cuts. The TCJA cut taxes for shareholders and individual taxpayers, but the cuts for individuals were only temporary and are set to expire in 2025.

The impact of the TCJA on wages is difficult to determine, as there are conflicting opinions and a variety of factors to consider. Some sources claim that the TCJA failed to deliver on its promised economic benefits, including an increase in household income. Research suggests that workers earning less than $114,000 in 2016 saw "no change in earnings" from the corporate tax rate cut, while top executive salaries increased sharply. Additionally, the tax law's 20% pass-through deduction, which was intended to benefit business owners, did not significantly trickle down to non-owner workers.

However, other sources argue that the TCJA did have a positive impact on wages. The Tax Foundation's General Equilibrium Model estimated that Trump's tax proposals, including making the TCJA permanent, would increase long-run GDP by 0.8%, wages by 0.8%, and employment by 597,000 full-time equivalent jobs.

It is worth noting that the impact of Trump's tax proposals may vary depending on which combination of policies are pursued and how they are structured. While some of his proposals are well-designed and could promote long-run economic growth, others are poorly designed and may only have a muted impact. Additionally, Trump's reliance on import tariffs to offset the cost of tax cuts has major downsides, including the potential for foreign retaliation, which could offset some of the economic benefits of the tax cuts.

Did Trump's tax cuts benefit corporations more than individuals?

The Tax Cuts and Jobs Act (TCJA), signed into law by former President Donald Trump in 2018, was the largest tax code overhaul in three decades. The law cut taxes for both shareholders and individual taxpayers, but the cuts for individuals will expire in 2025.

The TCJA created a single flat corporate tax rate of 21%, down from 35%. This cut was permanent, and the largest corporations benefitted the most. For example, Trump's plan to cut the corporate tax rate down to 15% would give the largest 100 US companies a total estimated annual tax cut of $48 billion.

The TCJA also cut individual taxes, but only temporarily. The highest earners were expected to benefit the most from the law, while the lowest earners were believed to pay more in taxes after individual tax provisions expire in 2025. The law retained the seven individual income tax brackets but lowered the rates for six of them. The top rate fell from 39.6% to 37%, while the 33% bracket dropped to 32%, the 28% bracket to 24%, the 25% bracket to 22%, and the 15% bracket to 12%. The lowest bracket remained at 10%, and the 35% was unchanged.

The standard deduction was also raised. For the tax year 2024, the standard deduction for single filers is $14,600, increasing to $15,000 in 2025. For married couples filing jointly, it's $29,200 in 2024 and will be $30,000 in 2025. The personal exemption, which was $4,150, was suspended through 2025.

The TCJA also ended the individual mandate, a provision of the Affordable Care Act (ACA) that levied tax penalties for individuals who did not obtain health insurance coverage. This saved taxpayers $3.7 million in taxes.

Overall, the TCJA appears to have benefitted corporations more than individuals, especially considering the corporate tax cuts are permanent while the individual tax cuts are temporary.

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