The Trump Tax Cuts Led to Record-Low, Not High, Revenues Outside of a Recession

The tax legislation that President Donald Trump signed in December 2017 significantly reduced federal revenues, with the largest tax cuts going to the richest Americans .

The Joint Committee on Taxation ( JCT ) and Congressional Budget Office ( CBO ) projected would occur at the time the law passed.

Revenues are also significantly below pre-Trump tax cuts projections when adjusted for inflation and growth in the adult population.

Since the tax code was fundamentally rewritten in 1986 , there were three years where the annual unemployment rate was below 5 percent .

Revenues today are even lower than that analysis would indicate.

The only reason revenues as a percentage of GDP have hovered around their 50-year average is that Congress keeps enacting expensive tax cuts.

Since the enactment of the Trump tax cuts, the U.S. has experienced more inflation than was expected in June 2017 .

This is, therefore, a misleading time period over which to assess the cuts’ permanent cost.

Inflation pushes up nominal revenues, but about 90 percent of those positive budget effects disappear due to higher nominal spending through increases to Social Security’s cost-of-living adjustment.