Summary of The Tax Cuts and Jobs Act

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The Tax Cuts and Jobs Act  summary

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In 2017, the United States enacted the Tax Cuts and Jobs Act, which delivers a number of changes for both corporations and individuals. While some cheered the legislation, others took elected officials to task for potentially unleashing significant deficits and creating an even greater fiscal debt burden. Count tax professionals Benjamin H. Harris and Adam Looney among this camp of dissenters in their precise examination of tax-cut effects on the US economy. getAbstract suggests this detailed, comprehensive report to executives and taxpayers.

In this summary, you will learn

  • How the Tax Cuts and Jobs Act (TCJA) alters the US tax system,
  • Why its provisions could endanger long-term fiscal and economic health, and
  • How officials can upgrade the TCJA in the future.
 

About the Authors

Benjamin H. Harris is a visiting associate professor at the Kellogg School of Management. Adam Looney is a senior fellow at the Brookings Institution.

 

Summary

The US Tax Cuts and Jobs Act (TCJA) of 2017 promised significant reforms. For corporate filers, the top rate fell from 35% to 21%, and changes included immediate expensing of capital expenditures, a territorial international system and a write-off for “pass-through” businesses. For individual taxpayers, the plan made temporary cuts to tax rates through 2025, reduced limits for itemized deductions and tax credits, hiked the exemption for the Alternative Minimum Tax, and removed the health insurance individual mandate. Experts forecast the legislation will increase GDP by less than 1% over a 10-year window. Opponents argue that the revised code will cause deficits of $1.9 trillion by 2028. This scenario could worsen by an additional $1.2 trillion if Congress makes permanent some of the currently temporary provisions. By 2028, the debt burden could constitute 105% of GDP, “its highest level since World War II.” Because parts of the TCJA are provisional, lawmakers will get another chance to create a tax plan that could generate revenue and promote growth. Important elements would include:

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