The Personal Impact of 2017 Corporate Tax Cuts: Empirical Evidence and Analysis

Recent political discourse often focuses on the impact of tax policies on various industries and populations. While the debate is heated, personal experiences can offer a clearer picture of the effects. In 2017, significant changes to corporate tax laws were implemented in the United States. This article examines the personal impact of these tax cuts through an analysis of the author's 2020 tax return data and empirical evidence.

Introduction to 2017 Tax Cuts and Controversies

The debate around 2017 corporate tax cuts is often polarized. Critics argue that improving corporate tax rates will disproportionately affect American consumers, while supporters claim it benefits American businesses and ultimately leads to job growth and increased wages. One interesting observation is how the liberal or progressive voters, often identified as Democrats, respond to increased tariffs on imported goods but become silent when their own constituents face higher taxes on corporations.

Personal Experience and Impact on Tax Returns

The author, who was recently engaged in their 2020 tax return, has empirical evidence to share regarding personal impacts. Utilizing the TurboTax year-to-year comparison feature, it was revealed that the new standard deduction, although helpful, led to a significant increase in federal income tax. In 2019, the author's family had a federal income tax payment of around $1,580, which increased to $3,400 in 2020. This 116% increase in tax is a stark contrast to a stable financial picture, causing the state return to cover the federal amount due for the first time in nearly twenty years.

Breaking Down the Tax Changes

The 2017 Tax Cuts and Jobs Act included numerous changes, but the standard deduction increase was particularly noteworthy. This change effectively reduced the incentive to itemize, which often helps higher-income individuals save money. For the author, the new standard deduction meant that the meticulous effort to itemize was redundant. However, it also meant a significant increase in taxes, as the new rates were applied to their income without the benefit of deductions.

Positive Outcomes and Job Creation

Despite the increase in personal tax burden, the author reports several positive outcomes resulting from the tax cuts. Firstly, the author is retired, so personal tax impacts are minimal. Secondly, their neighbors and family members have benefited from job creation. The author's children and wife encountered employment opportunities, with the wife securing a raise and a bonus. These positive outcomes indicate that while the changes may have a direct impact on personal finances, they can also drive broader economic benefits such as job creation and wage growth.

Conclusion

The experiences shared by the author illustrate the complexities of tax policy and its various impacts. While the increase in corporate tax rates initially led to higher personal tax burdens, the subsequent economic benefits, such as job creation and wage growth, highlight a broader positive impact. This analysis underscores the importance of empirical evidence in understanding the effects of tax policies beyond mere theoretical debates.