Advertisement

US tax cuts: Are they the biggest in American history?

US tax cuts: Are they the biggest in American history?
From BBC - April 17, 2018

Claim: President Donald Trump has said that the recently passed Republican tax reform legislation is the "biggest tax cut in US history".

Verdict: It is not the biggest tax cut in US history, measured as either a percentage of US GDP or in absolute terms. It is however, the biggest corporate tax cut in US history.

It's tax day in America - something most Americans dread.

But this year, the filing of both personal and corporate taxes has become even more complicated due to the recently passed tax reform bill in the United States.

President Donald Trump touted the legislation in a speech on 16 April in Hialeah, Florida, saying: "We have the biggest tax cut in history, bigger than the Reagan tax cut.Bigger than any tax cut."

But while most Americans are filing for 2017 and so wo not feel the biggest impact until next year - is the claim true?

Big, but not biggest

Various think tanks and websites have attempted to calculate the total reduction in taxes for both US citizens and corporations this year.

The Committee for a Responsible Budget crunched the numbers and said President Trump's tax cuts would be the eighth-largest in US history, measured as a percentage of GDP (to do so, they used a study from the US Treasury that looked at the impact of tax reform bills passed in the US between 1940 and 2012).

If you adjust the analysis for rising prices, President Trump's tax cuts rank fourth overall.

By either measurement, they are certainly not the biggest in American history.

But what about corporations?

Interestingly, President Trump might be half right: it seems that corporations will have plenty to cheer this tax day (that is, if anyone is ever happy after reading through the US tax code).

He said in that same speech: "Our taxes were the highestor among the highestbut just about, I would say... they were the highest in the world from a business standpoint. That's why businesses were leaving.Now, they are not the lowest, but they are on the low side."

According to an analysis from the Congressional Budget Office looking at corporate tax rates around the globe in 2012, this is essentially true.

So how much will corporations save?

Advertisement

Continue reading at BBC »