As my son pointed out, the simple truth is that this tax bill is a "Red versus Blue" tax bill. What the tax bill accomplishes is just short of cutting a $500 check to every Republican, and sending a $500 tax bill to every Democrat. My son writes, "There are some hand-wavey claims about how it is good for gullible people, but I don't know anyone serious who believes any of that." The provisions of this bill would not survive a change in control of the Government. But how long can the country peaceably survive, lurching from policy to policy with every change of a percentage point in national polls?
The premise that higher after-tax corporate profits lead to higher wages is also false.
Let’s look at the Reagan economy.
The Republican tax plan will probably become law. I expect that it is unlikely to survive the next administration and Congress. But the debts incurred before it is overturned will last for a generation.
A copy of this post is available on my Science and Policy blog.
1) Drops the nominal corporate income tax rate from 35% to 20%. The current Senate bill, perhaps through an oversight, keeps the minimum corporate tax at 20%, eliminating exemptions by default. It is expected that the reconciliation bill will restore those exemptions, dropping the actual corporate rate below 20%.
University of Pennsylvanian/Wharton review – the tax plan will add about $1.3 trillion to the national debt.