Sweeping Changes and an Uncertain Legacy: The Tax Cuts and Jobs Act of 2017

48 Pages Posted: 1 Jun 2024

See all articles by William G. Gale

William G. Gale

Brookings Institution

Jeffrey L. Hoopes

University of North Carolina (UNC) at Chapel Hill - Accounting Area

Kyle Pomerleau

American Enterprise Institute

Date Written: May 28, 2024

Abstract

The Tax Cuts and Jobs Act (TCJA) of 2017 introduced sweeping changes to individual and corporate taxation. We summarize the major provisions, trace the origins of the Act, and compare it to previous tax changes. We also examine the effects on the government budget, economic activity, and distribution of resources. Based on evidence through 2019, we find that the TCJA clearly raised federal debt and increased after-tax incomes, disproportionately increasing incomes for the most affluent. Its effects on GDP and median wages seem modest at best, although clear counterfactuals are difficult to identify. The impact on investment is less certain, and research is only recently emerging that addresses this question. Empirical analysis of longerterm effects may prove difficult due to the disruptions created by the COVID-19 pandemic starting in 2020.

Keywords: Tax Cuts and Jobs Act

Suggested Citation

Gale, William G. and Hoopes, Jeffrey L. and Pomerleau, Kyle, Sweeping Changes and an Uncertain Legacy: The Tax Cuts and Jobs Act of 2017 (May 28, 2024). Available at SSRN: https://ssrn.com/abstract=4846721 or http://dx.doi.org/10.2139/ssrn.4846721

William G. Gale

Brookings Institution ( email )

1775 Massachusetts Avenue, NW
Washington, DC 20036
United States
202-797-6148 (Phone)
202-797-6181 (Fax)

Jeffrey L. Hoopes (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Accounting Area ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

Kyle Pomerleau

American Enterprise Institute ( email )

1789 Massachusetts Ave, NW
Washington, DC 20036
United States

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