I have talked to a handful of reporters who send emails, or start phone calls, with some version of “I am working on a story on whether tax reform worked?” They are pleasant calls, and I enjoy having them. I hope there are many more stories that attempt to answer this lofty question. But, I never know exactly what to say. Worked for what? What was the goal of tax reform?
Increase corporate investment? It’s probably too early to tell, too hard to measure, and there are too many confounding factors. For example, after cutting taxes, the White House seemed intent on making physical investment more expensive by placing tariffs on some of the raw components used in things firms invest in.
Increase worker’s wages? Probably not in the short term, especially by the $4,000 promised by the White house. We are still waiting for the long term (hopefully we don’t die before it comes).
Decrease executive compensation? Nope.
Decrease unemployment? We are at record low unemployment rates, but, it is hard to attribute that tax reform.
Make America Great Again©? Maybe a bit, but it also helped out a lot of the rest of the world.
Get politicians reelected, richer, and more powerful, as public choice theory would tell us is the real goal of everything politicians do? The jury is out for another year.
Reduce the use of debt by corporations? Yes!
Reduce international tax planning by companies? Its too early to tell, and a lot of other stuff happened at the same time.
Increase the cost of settlements related to sexual harassment? I would love to see a paper on this!
Punish blue states for having high taxes and rich people with big homes? Some people think yes.
Increase investment in low-income communities? We are still waiting, maybe not, but existing property owners appear to have experienced increased prices.
The questions and, for the most part, lack of clear answers, could go on and on. With more than 68,000 words in the piece of legislation, tax reform likely had a lot of goals. Concluding whether it “worked” or not seems like a lofty goal for a single media article.
Update: A day after I posted this post, this useful article showed up in the Wall Street Journal, “Did the U.S. Tax Overhaul Do What It Promised?“.
