October 27, 2018 - Douglas Myser

Trump's tax cuts not paying for themselves. At least not yet. Since the economy has been kick started by the tax cut, it looks like the economic expansion may grow the economy, and only time will tell if that will be enough to offset the increase in the deficit, with additional tax revenues. The Treasury Department released figures showing the federal budget deficit widened by 17 percent in the 2018 fiscal year, to $779 billion. That's an unusual jump for a year in which unemployment hit a five decade low and the economy experienced a significant economic expansion. But the increase demonstrates that the tax cuts President Trump signed at the same answer, "No". into law late last year have reduced federal revenues considerably, even against the backdrop of a booming economy. Trump's tax cuts not paying for themselves.

Some conservatives don't see the rising deficits numbers that way. They note that the IRS and Treasury reported that federal revenues rose by 0.4 percent from the 2017 fiscal year to the 2018 fiscal year, and view that as a sign that the tax cuts are "paying for themselves", as Republicans and Mr. Trump promised. That's not the case. There are several ways to ask the question, "Are tax cuts paying for themselves ?" Based on the data we have right now, they all arrive at the same answer: No." The issue here is not whether the government spends too much money, or whether tax cuts have buttressed economic growth, or even whether it's advisable to run such high deficits in flush economic times.

The issue instead is: Have the corporate and individual tax cuts that went into effect in January generated so much additional growth that tax revenues are as high, or higher, today that they would have been if the tax cuts never passed ?  That's how all scorekeepers--be they independent congressional staff members or researchers from think tanks that lean liberal or conservative--assess the "pay for themselves" question. The tax cuts went predominately to the wealthiest Americans, and those with debt, including tax debts, are left to pay the bill. If you have a tax debt and need Tax Resolution Services, you will find Tax Relief options available, including the IRS Fresh Start Program, which will head off a potential IRS Wage Garnishment and give you a new start on your financial life.