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1 Huaqun Li & Kyle Pomerleau, The Distributional Impact of the Tax Cuts and Jobs Act over the Next Decade 1 (2018)

handle is hein.taxfoundation/dtrbitx0001 and id is 1 raw text is: The Distributional Impact of the Tax Cuts and Jobs Act over the Next Decade FISCAL FACT No. 596 June 2018 Huaqun Li Economist Kyle Pomerleau Economist and Director, Center for Quantitative Analysis The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and local levels. We are a 501(c)(3) nonprofit organization. @2018 Tax Foundation Distributed under Creative Commons CC-BY NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org Key Findings * The Tax Cuts and Jobs Act (TCJA) made changes to both the individual income and corporate income tax, while scaling back the estate and gift tax. * Over the next decade, we estimate that the TCJA will reduce federal revenues by about $1.8 trillion on a conventional basis. In addition, we estimate that the economy would be about 2 percent larger on average than it otherwise would have been between 2018 and 2027. * Lower tax liabilities and higher output will boost taxpayer after-tax income, but the impact will differ over time due to many provisions phasing in or expiring over the next decade. * Using the Tax Foundation model, we estimate the distributional impact of the TCJA for each year over the next decade (2018-2027) on both a conventional and dynamic basis. * On a conventional basis, the TCJA would result in an increase in after-tax income for taxpayers in all income groups from 2018 to 2025. * In 2026 and 2027, the expiration of the individual income tax cuts will result in a reduction of after-tax income for taxpayers in all income groups relative to prior law on a conventional basis. * On a dynamic basis, the larger economy will result in higher after-tax incomes. However, the economic impact of the TCJA will be modest in the first few years but increase as the economic effects phase in over time.

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