Checking In on Corporate Tax Rates
Bubba
10 Dec
American business leaders are expressing optimism for a new Trump administration, driven in part by the president-elect’s commitment to slashing corporate taxes. (Bloomberg)
Business Roundtable CEO Josh Bolten on what Trump told executives at a BRT headquarters meeting:
When President Trump was asked, will you defend the 21% rate? He said no, and there was a kind of a gasp from the crowd. And he said, “I like round numbers, and 20 is a round number, not 21.” He said maybe even 15.
The impact: Trump’s 2017 Tax Cuts and Jobs Act lowered the corporate tax rate from 35% to 21%.
According to a study published by the University of Chicago’s Becker Friedman Institute for Economics, the TCJA led to a 40% decline in corporate tax revenue.
On the other hand, corporate investment surged by 11%.
The tax rates had a positive — but modest — effect on GDP, which grew by less than 1%.
Chart: University of Chicago
The vibes: In the aftermath of Trump’s presidential victory, the share of executives who say they’re hopeful about the U.S. economy has spiked, surveys show.
Chart: Bloomberg
Bubba’s Two Cents
Trump often gets hyped as an “economic populist,” but his inclination toward deregulation and corporate tax cuts shows he’s still a pretty business friendly Republican. Sure, the tariffs are one area where he breaks from traditional GOP orthodoxy, but “MAGA” socialist he is not.