Inflation under control ???

The 2017 tax law doesn’t help the middle class

The new tax law—known as the Tax Cuts and Jobs Act (TCJA)—will exacerbate this trend. The benefits of the law tilt toward the well-off both now and in the future, according to the distributional analysis of the Tax Policy Center. By 2027, benefits of the tax law flow entirely to the rich. (The Joint Committee on Taxation finds similar results using a different measure.)

To be fair, Republicans hope to extend the tax law beyond 2027, but that’s highly unlikely. There is also an argument that increased investment will lead to higher wages in the long run. The theory is that the lower corporate rate and temporarily expanded business expensing will spur investment in the United States, leading to more capital, and more productive workers. As worker productivity rises, firms will boost wages. All of this would happen gradually over the long term.

However, the evidence for this story about long-term growth is weak at best. According to two leading economists, one liberal and one conservative, annual GDP growth might rise by 0.02 percentage points over the next decade. So far, corporations are using their added profits primarily to buy back shares and boost dividends, not to invest. In addition, rising productivity in recent decades has not been fully shared with workers, suggesting a less competitive economy than many assume. Finally, deficit-financing means that middle-class households will likely be hit with big tax increases or spending cuts later and interest rates will rise in the interim as government borrowing explodes. While revenue-neutral, pro-growth tax reform (rather than costly tax cuts) is possible and desirable, the TCJA falls far short of this standard.