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  • The Big Winners of the 2017 Tax Cuts.

    The 2017 Tax Cuts and Jobs Act: Who Truly Benefited?

    The Tax Cuts and Jobs Act (TCJA) of 2017, championed by former President Donald Trump, was billed as a historic overhaul of the U.S. tax code. It promised economic growth, job creation, and financial relief for middle-class Americans. However, its outcomes have sparked heated debate over who truly benefited—was it working families, corporations, or the wealthiest Americans? This article delves into the details, analyzing the structure of the TCJA and its real-world impacts.

    Overview of the Tax Cuts and Jobs Act

    The TCJA, signed into law in December 2017, was the most significant change to the U.S. tax code in over three decades. Key provisions included:

    1. Corporate Tax Cuts: The corporate tax rate was slashed from 35% to 21%.
    2. Individual Tax Rate Changes: Adjustments to tax brackets lowered rates across the board, with the top individual rate dropping from 39.6% to 37%.
    3. Increased Standard Deduction: The standard deduction nearly doubled to $12,000 for individuals and $24,000 for married couples filing jointly.
    4. Limits on Deductions: The state and local tax (SALT) deduction was capped at $10,000, and the mortgage interest deduction was limited.
    5. Child Tax Credit: The child tax credit doubled from $1,000 to $2,000 per qualifying child.
    6. Corporate Global Tax Reform: Introduced mechanisms like the Global Intangible Low-Taxed Income (GILTI) tax and a move toward a territorial tax system for multinational corporations.

    Most of the changes to individual tax rates were set to expire after 2025, while the corporate tax cuts were made permanent.

    Immediate Beneficiaries of the TCJA

    Corporations

    The largest and most immediate beneficiaries were corporations, thanks to the permanent reduction of the corporate tax rate from 35% to 21%. This resulted in:

    • Record Corporate Profits: Companies saw a significant boost to their bottom lines, as less revenue was paid in taxes. For example, Apple saved billions, while companies like Amazon, Google, and ExxonMobil also reported substantial tax savings.
    • Stock Buybacks: Instead of reinvesting their windfalls into jobs or infrastructure, many corporations used the savings to buy back shares, driving up stock prices. In 2018 alone, U.S. companies repurchased a record $806 billion worth of their own shares.
    • Multinational Firms: The move to a territorial tax system allowed U.S. corporations to repatriate overseas profits at a reduced tax rate. However, much of this money was not reinvested into the U.S. economy but went toward shareholder payouts.

    High-Income Individuals

    • The TCJA reduced the top marginal tax rate for the wealthiest Americans, providing significant savings for high-income earners.
    • The law also nearly doubled the estate tax exemption, allowing wealthy families to pass on up to $11.2 million ($22.4 million for couples) tax-free.
    • Business owners, particularly those with pass-through entities like LLCs and S-Corps, gained from a 20% deduction on qualified business income, disproportionately benefiting high-income taxpayers.

    Middle-Class Americans

    While the middle class did see some benefits, the impact was less pronounced:

    • Tax rates were reduced for all income brackets, and the doubled standard deduction provided modest relief for many families.
    • However, the cap on SALT deductions disproportionately hurt taxpayers in high-tax states like New York, California, and New Jersey, offsetting some of the benefits for middle- and upper-middle-class households in those regions.

    Who Didn’t Benefit as Much

    Low-Income Americans

    While the doubling of the standard deduction and child tax credit provided modest gains, these benefits were not as impactful for those with very low or no taxable income. Additionally:

    • The Earned Income Tax Credit (EITC), a critical tool for reducing poverty, was not expanded.
    • Many low-income workers saw minimal gains compared to wealthier taxpayers who benefited more from reduced marginal rates and business tax breaks.

    State and Local Governments

    The $10,000 cap on SALT deductions had ripple effects on state and local governments. Many high-tax states faced pressure to cut taxes or rethink their fiscal strategies as residents in higher income brackets saw their overall tax burdens increase.

    Economic Growth: A Mixed Bag

    The TCJA was sold on the promise that corporate tax cuts would spur investment, job creation, and wage growth. However, the results were mixed:

    • Wage Growth: While there were slight increases in wages, the growth fell short of expectations. Analysis from the Congressional Research Service in 2019 found that real wages grew modestly, with most benefits accruing to capital owners rather than workers.
    • Economic Growth: The TCJA contributed to a temporary boost in GDP growth in 2018, but this faded in subsequent years. Economists argue that the law’s effects on long-term growth were muted, as much of the corporate tax savings were used for stock buybacks rather than productive investment.
    • National Debt: The TCJA added an estimated $1.5 trillion to the national debt over a decade. Critics argue that this increased borrowing disproportionately benefits wealthier taxpayers who hold government bonds while leaving future generations to bear the burden.

    Broader Implications

    1. Income Inequality The TCJA exacerbated wealth inequality by providing the most significant benefits to corporations and high-income individuals. According to the Tax Policy Center, by 2027, when individual tax cuts are set to expire, nearly 83% of the benefits will flow to the top 1% of earners.
    2. Partisan Divide The TCJA’s benefits were not evenly distributed across states, with high-tax, predominantly Democratic states feeling more negative impacts due to the SALT deduction cap. This created a stark partisan divide over the law’s fairness and effectiveness.
    3. Corporate Accountability The windfall for corporations raised questions about whether the tax cuts delivered on their promises. Critics argue that the lack of mandates for reinvestment into jobs or infrastructure limited the potential broader economic benefits.

    Conclusion: Who Truly Benefited?

    While the TCJA provided tax relief for most Americans, its primary beneficiaries were corporations and high-income individuals. The corporate tax cuts were designed to make U.S. businesses more competitive globally, but much of the windfall was funneled to shareholders through stock buybacks rather than reinvested in workers or infrastructure. For middle-class and low-income families, the benefits were modest and temporary, with many facing offsetting factors like the SALT cap.

    Ultimately, the TCJA highlighted the challenges of designing tax policy that balances economic growth, fairness, and fiscal responsibility. Its long-term legacy will continue to be debated as policymakers grapple with its fiscal and social implications.

    Written by Scott Randy Gerber for The Tipping Point Tamp Bay©2025 All Rights Reserved.

  • The United States Path To Inequality.

    The United States Path To Inequality.

    Backroom image of politicians being paid off for giving away our democracy.

    The Path to Inequality: How Presidential Policies of the Last 60 Years Have Empowered the 1% and Undermined the Average American

    Over the last six decades, policies from various U.S. administrations have systematically concentrated wealth and power among the top 1% of earners. While each president’s intentions may have varied, their tax policies, economic reforms, and deregulation efforts have created a widening gap between the wealthy elite and the average American. This article explores which presidents contributed most significantly to this inequality and what must be done to restore balance and opportunity for all citizens.

    Presidents Who Empowered the 1%

    Ronald Reagan (1981–1989)

    Perhaps the most significant shift toward favoring the wealthy came during Ronald Reagan’s presidency. His administration championed “supply-side economics,” colloquially known as “trickle-down economics.” Key policies included:

    • Economic Recovery Tax Act of 1981: This legislation slashed the top marginal income tax rate from 70% to 50% and reduced capital gains taxes, overwhelmingly benefiting the wealthiest Americans.
    • Tax Reform Act of 1986: This act lowered the top individual tax rate further to 28% while increasing taxes for lower-income Americans in some cases through the elimination of deductions.
    • Union Busting: Reagan’s firing of striking air traffic controllers in 1981 set the tone for decades of declining union power, weakening worker protections and bargaining power.

    While Reagan’s policies were heralded by some for spurring economic growth, the wealth created during this era overwhelmingly flowed to the top, while middle-class wages stagnated.

    George W. Bush (2001–2009)

    The Bush administration further tipped the scales in favor of the wealthy through two major tax cuts:

    • Economic Growth and Tax Relief Reconciliation Act (2001) and the Jobs and Growth Tax Relief Reconciliation Act (2003): These tax cuts reduced the top income tax rate and significantly lowered capital gains and dividend taxes. The top 1% of earners benefited disproportionately, while deficits ballooned, placing strain on public services that benefit the middle and lower classes.

    Bush’s policies also included deregulation in the financial sector, which contributed to the 2008 financial crisis. The resulting recession wiped out wealth for millions of average Americans, while the wealthiest rebounded quickly due to government bailouts and rising stock markets.

    Bill Clinton (1993–2001)

    While Clinton is often associated with economic prosperity, his policies also contributed to inequality:

    • Financial Deregulation: The repeal of the Glass-Steagall Act in 1999 allowed commercial and investment banks to merge, paving the way for risky financial practices that ultimately benefited Wall Street while destabilizing the broader economy.
    • Trade Policies: NAFTA (North American Free Trade Agreement) and other trade deals led to the offshoring of manufacturing jobs, decimating industries that had been the backbone of the middle class.

    Although Clinton raised taxes on the wealthy early in his presidency, his deregulation and trade policies had long-term consequences that disproportionately harmed working Americans.

    Donald Trump (2017–2021)

    The Trump administration’s tax policies significantly benefited corporations and the wealthy:

    • Tax Cuts and Jobs Act (2017): This act reduced the corporate tax rate from 35% to 21% and lowered individual tax rates, with the largest benefits going to high-income earners. Meanwhile, many of the cuts for middle- and lower-income taxpayers were set to expire, ensuring that the benefits for the wealthy would endure.
    • Deregulation: Trump rolled back regulations in banking, labor, and environmental protections, further consolidating power and wealth among corporations and their executives.

    Trump’s economic policies accelerated the trend of wealth concentration, with billionaires seeing record gains during his presidency while wages for most Americans remained stagnant.

    The Challenges We Face Today

    The cumulative effect of these policies has led to stark economic realities:

    1. Wealth Concentration: The top 1% now controls over 30% of the nation’s wealth, while the bottom 50% holds less than 2%.
    2. Stagnant Wages: Median household incomes have barely kept pace with inflation, while costs for housing, healthcare, and education have skyrocketed.
    3. Erosion of Worker Rights: Declining union membership and the gig economy have left workers with fewer protections and benefits.
    4. Political Influence: Wealthy individuals and corporations wield disproportionate influence through campaign contributions and lobbying, skewing policies in their favor.

    What Needs to Change?

    To restore balance and ensure a fair playing field, significant reforms are necessary:

    1. Progressive Tax Reform

    • Raise Taxes on the Wealthy: Reinstate higher marginal tax rates for top earners and increase taxes on capital gains and dividends to align them with income tax rates.
    • Close Loopholes: End tax avoidance strategies used by corporations and the ultra-rich, such as offshore accounts and pass-through entities.

    2. Strengthen Labor Protections

    • Revitalize Unions: Pass laws to protect union organizing and collective bargaining.
    • Increase the Minimum Wage: Ensure that full-time workers can afford a basic standard of living.

    3. Campaign Finance Reform

    • Overturn Citizens United: Limit the influence of money in politics by capping campaign contributions and requiring full transparency.
    • Publicly Fund Elections: Level the playing field by reducing candidates’ dependence on wealthy donors.

    4. Rein in Corporate Power

    • Break Up Monopolies: Enforce antitrust laws to prevent corporations from dominating industries and suppressing competition.
    • Hold Companies Accountable: Penalize businesses that exploit workers or avoid taxes.

    5. Expand Social Safety Nets

    • Healthcare Reform: Transition to a system that ensures affordable healthcare for all Americans, reducing the financial burden on families.
    • Education and Training: Invest in affordable education and vocational training to prepare workers for the jobs of the future.

    The Path Forward

    The challenges facing the average American are not insurmountable, but they require bold action and collective will. We must demand accountability from our leaders and advocate for policies that prioritize the well-being of the many over the wealth of the few. The future of our democracy and republic depends on it. If we fail to act, the gap between the elite and the rest of us will only widen, threatening the very foundation of the American Dream.

    Change begins with us—at the ballot box, in our communities, and through relentless advocacy for a more equitable and just society. Together, we can reclaim the promise of this nation and ensure that every American has the opportunity to live a comfortable, dignified life.

    Written By Scott Randy Gerber for The Tipping Point Tampa Bay © 2025 All Right Reserved