Lessons from the Biggest Business Tax Cut in US History
Bibliographic Data
| ID | 14855666 |
|---|---|
| Authors | Gabriel Chodorow-Reich (Gabriel Chodorow-Reich is Professor of Economics, Harvard University, Cambridge, Massachusetts.), Owen Zidar (Owen Zidar is Professor of Economics and Public Affairs, Princeton University, Princeton, New Jersey.), Eric Zwick (0009-0008-3060-707X, Eric Zwick is Associate Professor of Finance and Fama Faculty Fellow, University of Chicago Booth School of Business, Chicago, Illinois.) |
| Year | 2024 |
| Volume | 38 |
| Issue | 3 |
| Pages | 61-88 |
| Publication date | 2024-08-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Journal of Economic Perspectives (JOURNAL) |
| Journal identifiers | ISSN: 0895-3309 • E-ISSN: 1944-7965 |
| Publisher | American Economic Association (PUBLISHER • US) |
| DOI | 10.1257/jep.38.3.61 |
| OpenAlex | W4401254730 |
| Language | EN |
| References cited | 5 |
We assess the business provisions of the 2017 Tax Cuts and Jobs Act, the biggest corporate tax cut in US history. We draw five lessons. First, corporate tax revenue fell by 40 percent due to the lower rate and more generous expensing. Second, firms with larger declines in their effective tax wedge increased investment relatively more. In aggregate, we suggest a loose consensus from the literature that total tangible corporate investment increased by 11 percent. Third, the business tax provisions increased economic growth and wages by less than advertised by the Act’s proponents, with long-run GDP higher by less than 1 percent and labor income by less than $1,000 per employee. Fourth, provisions that increase foreign investment by US-based multinationals also boost their domestic operations. Fifth, some of the expired and expiring provisions, such as accelerated depreciation, generate more investment per dollar of tax revenue than others
Business · Economics · Corporate Taxation and Avoidance · Fiscal Policy and Economic Growth
| Highly cited | No |
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