The Trump tax law is not doing what Trump said it would. Trump and his White House said it would increase business investment and spending, but new data shows that’s not the case. They also said it would raise wages, but most Americans have not seen an increase in take-home pay. The only ones benefiting are the rich and big corporations.
WHITE HOUSE: The White House cited business investment and spending on factories as evidence their tax cut was working.
Kudlow: “Business investment is booming.”
Hassett: “Because what’s happened is that the capital spending boom that we promised would happen if we passed the tax cuts is underway.”
REALITY: Business investment and spending on factories was extremely weak in the third quarter of 2018.
Wall Street Journal: “Investment by companies was weak. Nonresidential fixed investment-reflecting spending on commercial construction, equipment and intellectual property products such as software-rose only 0.8% in the third quarter after rising at a 8.7% rate in the second quarter and 11.5% in the first. The third-quarter rate of business investment was the weakest since the fourth quarter of 2016. Spending on structures fell at a 7.9% rate in the third quarter.”
WHITE HOUSE: The White House said their tax cuts would raise wages for workers by driving business investment in machinery.
Kudlow: “Business investment spending really booming. That’s a productivity creator. That’s a job creator. That’s a wage creator for ordinary Main Street folks, terribly important.”
Hassett: “Hassett argued the tax cut has unleashed a business investment boom. That spending, he said, is already boosting worker productivity, leading to higher wages ‘because people have better machines to work with. … That means the recovery can last longer, and that’s really, really good for workers.”
REALITY: Business spending on machinery and equipment has declined over the last two months.
Wall Street Journal: “Moreover, there has been a substantial weakening in capital goods demand (machinery, equipment, etc.), which is down for the second month in a row. This metric is important because it’s a measure of capital expenditures (business investment).”
WHITE HOUSE: Trump and his White House said their tax cuts would increase people’s paychecks.
Trump: “My council of economic advisers estimates this change alone will likely give the typical American household a $4,000 pay raise.”
Hassett: “I would expect to see an immediate jump in wage growth.”
REALITY: Two-thirds of Americans say they have not seen an increase in their take-home pay from the Trump tax law.
Gallup: “Yet, nearly two-thirds of Americans, 64%, say they have not seen an increase in their take-home pay as a result of lower federal income taxes.”