“More Business Investment, More Growth, More Wages”: Trump Was Right on Tax Cuts, According To Top Economists

William FurneyNov 15, 2023

Minute Read

Donald Trump may not have been right about some things, but on taxation and his cuts while in the White House he was spot-on, leading economists agree.

Call for Recognition

Writing in The Wall Street Journal to summarize a report by the economists for the National Bureau of Economic Research, financial author James Freeman said Democrats should be thankful for the former Republican president’s tax reform.

‘Successful’ Tax Reform

The report was compiled by some of the top economists in the United States, including from Harvard and Princeton universities as well as the US Treasury. They say Trump’s tax cuts were a resounding success.

‘Business Investment Surge’

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Freeman wrote: “Donald Trump has a lot of faults, but even his partisan opponents and the academic establishment have to acknowledge that his signature 2017 corporate tax reform really did lead to a surge in business investment.”

‘Improved Economy’

Freeman who co-wrote The Cost: Trump, China and American Revival and Borrowed Time: Two Centuries of Booms, Busts and Bailouts at Citi, continued:

“The results of the Trump corporate tax reform were more business investment, more growth, more wages for workers — and little impact on government revenue as lower corporate tax rates were offset by an expanding economy. Game, set, match.”

Tax Cut Workers’ Benefit

During his time in the White House, Trump slashed corporation tax from 35 percent to 21 percent, with the ultimate aim of increasing people’s wages. It would work, said the Center for American Progress, a nonpartisan policy institute, by trickling “down to workers through a multistep process” based on companies having more money for investment in factories and in research and development to launch new products.

Harvard Professor: ‘Taxes Matter’

Harvard Economics Professor Jason Furman agreed that Trump’s tax cuts had been beneficial for the US economy. Writing on X (previously called Twitter), he said: “Taxes actually do matter … Companies that saw larger reductions in tax rates … also experienced larger increases in investment in the years that followed.”

Not All Good

But the Harvard professor said that while Trump’s tax reform produced positive results, in other areas he harmed the economy.

“Of course many, many, many factors affecting investment. And some things Trump did hurt (e.g., China trade war & larger deficits),” he said. Furman added: “But this study examines 12K firms that each got different tax changes to isolate the role that taxes play — holding the rest constant.”

‘A Trump Win’

Some people agreed with Furman, with one person, Bruno Neves, simply saying on X, and in reference to Trump’s skin tone: “Orange man wins again.”

Trump Era ‘Uncertainty’

Another person, Danny Dayan, offered: “In actuality, the result would’ve been even more investment if Trump didn’t engage in trade wars. Businesses don’t invest during uncertainty.”

Temporary Tax Cuts Benefits?

Someone else, using the name Drord, wondered if the benefits of Trump’s tax cuts were only temporary. “Did that correspond to long-term increases in revenue? Better ability to withstand COVID, post-COVID shocks?”

Trump Eye on White House

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The good tax-cut news for Trump comes at a time when the 77-year-old is aiming to return to the White House. After losing the 2020 presidential election to Joe Biden, Trump is aiming to dethrone the incumbent and become commander in chief again.

Trump the GOP Favorite

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Trump is polling far ahead of Republican Party rivals hoping for the 2024 nomination, in primaries taking place in January. He is around 50 points clear of rivals including former South Carolina governor Nikki Haley and Florida Governor Ron DeSantis, making him the frontrunner for selection. And Trump is ahead of Biden, who is seeking re-election, in most key battleground states.

Trump Headwinds

While Trump will likely tout his tax-reform success and pitch his ability to manage the economy to Republican voters, he faces strong headwinds in other areas — particularly a large number of legal cases against him that could see him jailed and hit with a large fine.

Court Battles

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Trump faces losing control of his prized asset, his Trump Organization real estate empire that includes such prominent buildings as Trump Tower in New York, where he has a multi-storey penthouse. That’s due to the New York attorney general, Letitia James, charging the billionaire in civil court with business fraud; she is seeking a fine of at least $250 million.

Trump Indictments

Trump is also fighting off a total of 91 criminal charges after being indicted four times. He’s charged with trying to overturn the 2020 presidential election result, in Georgia and federally, holding onto classified documents after he left office and paying hush money to prevent an affair from being disclosed. He denies all the charges and says they’re a “witch hunt” by Democrats who want to keep him out of the White House.