The Tax Cuts and Jobs Act was signed into law by President Trump less than a little less than year ago, on December 22, 2017. What are the likely benefits and costs associated with the legislation? The Fall 2018 issue of the Journal of Economic Perspectives (where I work as Managing Editor) includes a two-paper symposium on the subject. Joel Slemrod provides an overview of the main elements of the legislation and its effects in ” “Is This Tax Reform, or Just Confusion?” (32:4, pp. 73-96). Alan J. Auerbach focuses on one primary aspect of the law, its shifts in the US corporate income tax, in “Measuring the Effects of Corporate Tax Cuts,” (32:4, pp. 97-120).

Here’s a flavor of Slemrod’s argument:

“The Tax Cuts and Jobs Act is not tax reform, at least not in the traditional sense of broadening the tax base and using the revenue so obtained to lower the rates applied to the new base. Nor, based on its unofficial title, did it aspire to this approach as a main objective. It does, though, contain several base-broadening features long favored by tax reform advocates. 

“or is the Tax Cuts and Jobs Act just confusion. There are coherent arguments buttressing the centerpiece cut in the corporation tax rate. To the extent that the new legislation reduces the cost of capital (which is not obvious), business investment will be higher than otherwise. 

“Its serious downsides are the contribution to deficits and to inequality. The former is less of a concern to the extent that the Tax Cuts and Jobs Act turns out to stimulate growth; the latter is less of an issue the more its centerpiece cuts in business taxation will be shifted to the benefit of workers, especially low-income workers. In both cases, the Tax Cuts and Jobs Act represents a huge gamble on the magnitude of these effects, about which the evidence is not at all clear. My own view is that the stimulus to growth will be modest, far short of many supporters’ claims, and so the Tax Cuts and Jobs Act will increase federal deficits by nearly $2 trillion over the next decade, a nontrivial stride in the wrong direction that promises to shift the tax burden to future generations. How it will affect the within-generation distribution of welfare is the most controversial question of all. Although according to conventional wisdom, the Tax Cuts and Jobs Act delivers the bulk of the tax cuts to the richest Americans, whose relative well-being has been rising continuously in recent decades, other plausible models of the economy, supported by some new empirical evidence, raise the possibility that the gains will be more widely shared. This is the most important question about which we know too little.”