Sweeping Changes and an Uncertain Legacy

This paper summarizes major individual and corporate tax provisions of the 2017 Tax Cuts and Jobs Act (TCJA), traces its origins, and compares its changes to previous tax changes. We examine its effects on the budget, economic activity, and distribution of resources. Based on evidence through 2019, we find the TCJA raised federal debt and increased after-tax incomes, disproportionately benefitting the most affluent. Effects on GDP and median wages seem modest, although counterfactuals are difficult to identify. The impact on investment is less certain. Empirical analysis of longer-term effects may prove difficult due to the disruptions created by the COVID-19 pandemic.