For @AEI’s #TCJANowWhat: A regressive, deficit-financed tax cut is not what the United States needed 1/ aei.org/economics/a-re…
Tax economists will spend lots of time in the coming years studying TCJA’s impacts, but its policy merits depend far less on the precise results of these studies than on the basic fact that it was a regressive, trillion-dollar tax cut 2/
Was delivering tax cuts to the relatively well-off the best use of the $1–$2 trillion legislators devoted to the TCJA, or were there other more pressing needs? 3/
Analyses produced before the legislation was enacted assumed answers to the relevant economic questions: what is the labor incidence of a deficit-financed corporate rate cut? How does profit shifting respond? How might the legislation affect labor supply? 4/
Ultimately, CBO concluded that the legislation would increase deficits by between $1 trillion and $2 trillion. TPC concluded that the legislation would disproportionately benefit the well-off. 
Future studies of the TCJA will certainly nuance — and potentially change — economists’ understanding of taxation. Yet over a wide range of possible assumptions, the same conclusion would result: The legislation was a regressive, deficit-increasing tax cut. 6/
Rather than discuss the impact on revenues and burden, discussions of whether the TCJA is working often focus on proponents’ claims about economic growth 7/
As other authors writing in #TCJANowWhat have already observed, there is little evidence to suggest the legislation has already substantially affected economic growth 8/ aei.org/economics/not-…
However, this focus on growth misses the point. An analysis of the macroeconomic impacts of legislation is useful only insofar as it feeds into analysis of the effects of the legislation on revenues and on the tax burden. 9/
It is only by studying the impacts of the law on revenues and burden that we can have a coherent debate about the economic effects of tax legislation 10/ equitablegrowth.org/assessing-the-…
Finally, we must compare the TCJA to other potential uses of the funds if we are to determine whether it was worth it, whether a tax cut that focused on struggling families rather than the wealthy, investments to address climate change, public health, or opportunity 11/
The TCJA cut taxes for most families but judged relative to other potential uses of public funds, it will leave most low- and middle-income families worse off and higher-income families better off 12/
Finally, thanks to @aparnamath and @erinmelly2 for organizing this series and inviting me to participate 13/13
