Politics is banned on METAR. That includes discussion of legislation which is still being debated and not yet signed into law. The reason is that debates are endless and much (if not most) of the topics never get signed into law anyway.
The claim that a large tax cut will spur more than enough economic growth to pay for it has been made four times over the past 50 years. The results have been analyzed by Co-Equal, a non-partisan nonprofit.
Tax Cuts: Comparing Rhetoric with Reality
Over the last 50 years, Congress has passed four major bills that cut taxes: the 1981 Reagan tax cuts; the 2001 and 2003 George W. Bush tax cuts; and the 2017 Trump tax cuts. Each time, President Reagan, President Bush, President Trump, and their congressional allies made the same three main arguments in favor of the tax cuts:
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The tax cuts would pay for themselves.
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The tax cuts would supercharge economic growth, create millions of jobs, and dramatically raise wages.
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The tax cuts would benefit everyone.
This legislative retrospective examines these three claims, none of which have proven to be accurate.
Rather than paying for themselves, the Reagan, Bush, and Trump tax cuts each significantly increased the federal deficit. In total, tax cuts have added over $10.4 trillion to the federal deficit since 1981 compared to the Congressional Budget Office’s baseline projections…
And rather than benefiting everyone, the savings from the Reagan, Bush, and Trump tax cuts flowed predominantly to the richest Americans. … As a result, the tax cuts helped fuel the growing income and wealth inequality America has experienced over the last 50 years. [end quote]
Here is the link to the full report. The report presents data which refutes the three claims above. This record reveals a consistent pattern. The tax cuts did not deliver on the promises of their advocates. In fact, they often achieved exactly the opposite, worsening the debt and exacerbating income inequality.
As investors, we should be aware that the 2025 tax law under consideration now will increase the income of the richest Americans, who will invest a lot of it in the asset markets. That will tend to support and inflate asset prices.
The middle class won’t benefit as much.
The poor don’t pay federal income taxes. But cuts to government benefits to the poor will negatively impact the economy since the fiscal stimulus of government transfer payments will be removed.
Wendy