Trump administration makes dubious claims about new tax law

Pei Chao Zhuo, Opinions Editor

President Donald Trump’s biggest legislative accomplishment in his time in office has been the passage of the GOP tax bill. However, the promises he makes regarding the effects of the law are not rooted in reality.

During his tax speech in Missouri, Trump told the audience, “This is going to cost me a fortune, this thing, believe me. This is not good for me.” This is a claim that he reiterates constantly in speeches to placate to his base of working class voters. However, an analysis of the tax plan reveals that the biggest beneficiaries will be the rich and business owners like Trump.

The headline feature of the bill is a corporate tax cut from 35 percent to 21 percent. The White House has made the argument that corporations will spend this tax cut on expanding their businesses, but according to former Director of the National Economic Council Larry Summers, companies may simply spend the money on higher dividends for shareholders and stock buybacks. At the 10th annual Wall Street Journal CEO Conference, few CEOs raised their hands when asked if they would increase capital investment if the tax plan passed. Therefore, the majority of Americans may not reap the promised benefits from the lower corporate tax rate.

The effects of the tax plan are mixed for middle class taxpayers despite Trump’s promise that the “focus is on helping the folks who work in the mailrooms and the machine shops of America . . . The people that like me best.” The law limits the property, state, and local tax deduction to $10,000. This provision will primarily affect residents in traditionally blue states like Connecticut, New York, New Jersey, and California. Unlike the more permanent corporate tax cuts, the cuts for individuals introduced by this law will sunset by 2025. By that time, some Americans may even face tax increases.

The Trump administration has also made the claim that the tax plan will pay for itself with enormous economic growth. However, according to an analysis by the University of Pennsylvania Wharton School, the plan is estimated to cost between 1.8 trillion and 1.9 trillion dollars over a decade even when economic growth is taken into account. Republican claims that substantial growth will result from the tax plan are made even more dubious by a poll of economists conducted by the Booth School of Business where 98 percent disagreed or were uncertain about the assertion that “U.S. [gross domestic product] will be substantially higher in a decade than under the status quo.”

Trump’s pattern of making false claims means his assertions must be met with skepticism. His statements on the new tax plan is no exception.