With Tax Day just behind us, it's a good time to reflect on our first full year under the Tax Cut and Jobs Act (TCJA), which President Trump signed in December 2017. In many ways, 2018 was a banner year. The economy grew by 2.9 percent, unemployment fell to 3.7 percent and wages grew by 3.4 percent. Some of the good economic news seems to be associated with the TCJA, and particularly the law's reduction of the corporate income tax rate and changes to depreciation allowances.
Up to this point, the evidence on the impact of the TCJA on investment, labor productivity, employment and economic growth is only suggestive. Each had been rising due to the economic recovery. But there are good reasons, based on economic theory, to suggest that part of the growth during 2018 is related.
Read Full Article »