Economic policy is a moral issue. The 2017 Tax Cut and Job Act (TCJA) demonstrates a troubling preference for billionaires and large corporations at the expense of everyday Americans. As a Quaker organization, we seek a world of equity and justice, a world where everyone has the same footing to reach their full potential.
A fair tax code would help achieve this world by reducing the influence of money in politics and creating tax codes that take into account the income inequality gap, whether it’s due to race, gender, disability, or just socio-economic status. If we continue down this path, we risk entrenching a system that favors the wealthy, neglects the needs of the majority, and destroys our ability to reach a humane society.
In the Beginning
The TCJA, often referred to as the 2017 tax cuts, was the most significant shift in U.S. tax policy since the Bush administration. While boosters claimed it would stimulate the economy and provide relief to American families, the reality is that the TCJA has exacerbated income inequality, contributed to the national debt, and added Congressional pressure to cut funding for essential public services.
The Congressional Budget Office (CBO) originally estimated that the TCJA will cost the federal government $1.9 trillion between 2018 and 2028. They have also reported that the TCJA has doubled the nation’s debt from $15.5 trillion to $30.2 trillion in FY2025. The Tax Policy Center claims that the Trump tax cuts harmed social services like housing assistance and Supplemental Nutrition Assistance Program by losing revenue, adding to the debt, and putting pressure on Congress to cut social services. Extending the 2017 tax cuts for the next decade would exacerbate these problems, costing another $5 trillion.
To set our nation on a better path, Congress should allow the TCJA tax cuts for the wealthy to expire and implement new revenue measures on wealthy individuals and corporations.
To set our nation on a better path, Congress should allow the TCJA tax cuts for the wealthy to expire and implement new revenue measures on wealthy individuals and corporations. This would help our country can make critical investments, reduce trends towards growing income inequality and growing racial wealth gap, and put the country on a more fiscally sustainable path.
A growing divide
The 2017 tax cuts primarily benefited the wealthy and corporations, with little to no impact on middle- and lower-income families. The Center on Budget and Policy Priorities points out how the TCJA permanently cut corporate tax rates from 35% to 21%, individual tax rate from 39.6% to 37% for couples making over $600,000, and doubled the estate tax exemption from $11 million to $22 million.
According to the Gini coefficient, a measure of income inequality, the United States currently stands at a 0.4 out of 1. Some of the U.S. global competitors have much less concentration of wealth with Russia and China being at .36 and important U.S allies have even less with France and the United Kingdom being at .32. Concentrated income and overall wealth slow economic growth. We need tax reform to reduce this inequality.
A path forward
As we remember the harmful social and economic climate that grew from the 2017 tax cuts, we must also remember the good policy that Congress enacted too. In 2021, Congress expanded the Child Tax Credit (CTC) to be larger, monthly, and fully refundable while expanding the Earned Income Tax Credit (EITC) for adults not raising children. These expansions led to the largest drop in child poverty on record. Congress allowed the expansions to expire, resulting in the largest increase in child poverty on record, from 5.2% in 2021 to 13.7% in 2023.
The TCJA has not raised revenue effectively. Congress needs to introduce a new system where tax cuts for individuals making over $400,000 expire and additional revenues are raised, for example, by implementing a billionaire’s income tax and raising the corporate tax rate.
To remedy these issues, Congress must allow the TCJA tax cuts for the wealthy to expire and implement new revenue measures targeting affluent individuals and corporations
To remedy these issues, Congress must allow the TCJA tax cuts for the wealthy to expire and implement new revenue measures targeting affluent individuals and corporations. By doing so, we can finance vital social investment programs that empower low-come families, improve educational opportunities, and stimulate job growth.
Now is the time for us to advocate for policies that promote equity and sustainability. To care about a just and fair democracy is to care about the country’s tax codes.
