TCJA Side Effects
The Tax Cuts and Jobs Act of 2017 added an estimated $2.289 trillion to the national debt over ten years,
It also led to greater income inequality, higher healthcare costs, and a higher trade deficit.
The TCJA was supposed to increase US investment and repatriate corporate cash held overseas but it had the opposite impact according to Brad Setser at Follow the Money.
The U.S. trade deficit in pharmaceuticals is one track to go from just over $50 billion dollars at the end of 2016 to close to $100 billion by the end this year.
This reality has fairly obvious implications for U.S. tax policy—the Tax Cuts and Jobs Act created a clear incentive to shift profits offshore, and the related provisions of the tax code clearly need to evolve. There is the formal incentive created by the tax treatment of intangible assets, but even more important is the opportunity, with enough tax engineering and actual production abroad, to shift the profit on U.S. sales of pharmaceuticals out of the 21 percent tax bracket.
The problem is bad tax policy that encourages capital flight and tax gains.
No Debt Concerns Until November
It's safe to say the Tax Cuts and Jobs Act lead to the creation of very few jobs while swelling the deficit and national debt.
Republicans will not be concerned about deficits or the debt until. they no longer hold the White House.
That's coming right up.
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