President Trump’s signature tax law, the 2017 Tax Cuts and Jobs Act, left wages growing less quickly than the overall economy, which itself got only a minimal boost, according to a Congressional Research Service (CRS) report released Tuesday.
“On the whole, the growth effects tend to show a relatively small (if any) first-year effect on the economy,” the report found.
{mosads}The report said the tax law’s effects on the economy were smaller than those predicted by a slew of forecasters and added that the economy’s growth was not consistent “with the direction and size of the supply-side incentive effects one would expect from the tax changes.”
The CRS, which functions as a think tank of sorts for Congress, also found wages were not growing as quickly as the economy writ large.
Adjusted for inflation, wages grew 2 percent in 2018, less than the 2.9 percent gross domestic product growth rate. For workers in production and nonsupervisory roles, wages grew only 1.2 percent.
The report’s findings fly in the face of many arguments Republicans made in support of the bill, including claims that it would pay for itself by producing a spurt of economic growth that would cover the revenue losses.
As proof, the GOP had pointed to big companies, such as AT&T, which announced large worker bonuses following the law’s passage. The CRS found the combined bonuses accounted for only 2 to 3 percent of the overall tax cut.
Instead, companies used large portions of the tax cut to buy back stocks, a move Democrats have criticized because it helps enrich stock owners, not workers.