Tax Cuts and Jobs Act Signed — Massive Corporate Tax Cuts

The Legislation

On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (TCJA), the most sweeping rewrite of the U.S. tax code since 1986. The legislation’s centerpiece was a permanent reduction of the corporate tax rate from 35 percent to 21 percent — a cut of 40 percent that represented one of the largest corporate tax reductions in American history. The bill also provided temporary individual tax cuts set to expire in 2025, reduced the top individual tax rate, and nearly doubled the estate tax exemption.

The bill was passed along party lines without a single Democratic vote. Republicans used the budget reconciliation process to avoid a Senate filibuster, and the legislation was rushed through Congress with minimal hearings and limited public input. In the Senate, handwritten amendments were scrawled in the margins of the bill in the hours before the final vote.

Who Benefited

Independent analyses consistently found that the law’s benefits were heavily tilted toward corporations and the wealthy. The nonpartisan Tax Policy Center estimated that by 2027, the top 1 percent of earners would receive 83 percent of the tax cut benefits, while many middle-class taxpayers would actually see their taxes increase once the individual provisions expired. The Congressional Budget Office projected the law would add approximately $1.9 trillion to the national debt over a decade.

Corporate America was the law’s clearest winner. Companies used much of their windfall for stock buybacks rather than the wage increases and new hiring that Republicans had promised. In the first year after the law’s passage, corporations announced over $1 trillion in stock buybacks — a record at the time — while worker wages showed minimal gains.

The Promise vs. Reality

Republicans argued the tax cuts would “pay for themselves” through increased economic growth. Trump and his advisors claimed the cuts would generate so much new economic activity that federal revenues would actually increase. This did not happen. Federal tax revenues fell by $275 billion in the first year after the law took effect, and the annual budget deficit ballooned past $1 trillion for the first time since the aftermath of the 2008 financial crisis.

The administration also promised that the corporate cuts would lead to an average $4,000 raise for American families. Independent economists were deeply skeptical at the time, and the promised raises never materialized for most workers.

Personal Stakes

Trump and his family stood to benefit significantly from the legislation. Though Trump never released his tax returns, analyses suggested the law’s provisions — including the reduced corporate rate, the pass-through business income deduction, and the expanded estate tax exemption — could save the Trump family tens of millions of dollars. After signing the bill at the White House, Trump told friends at Mar-a-Lago, “You all just got a lot richer.”