In 2017, Congress approved the first major tax reform legislation in almost two decades. Along with his judicial appointments, it was a signature achievement of Donald Trump’s presidency.
Democrats didn’t see it that way, of course. For many progressives, the financial spoils of private-sector production belong to the state first, and individuals and corporations should be grateful that they are allowed to keep anything at all. They greeted the GOP-Trump tax bill with the same sober and reasoned analysis they’ve offered to warn about the “dangers” of Elon Musk’s support for free speech.
One critic in Forbes called the tax measure — which lowered corporate and individual rates — “the biggest wealth grab in modern history.” Others insisted that only the “1 percent” would benefit. The left-leaning Institute for Policy Studies fretted in 2020 that “many big corporations pocketed Trump’s tax break and then shipped thousands of jobs overseas.”
Suffice it to say that Nostradamus has nothing to fear.
Since the pandemic receded and businesses ramped back up following lockdowns, corporate tax collections have rolled into the Treasury at record rates. The Tax Foundation reports that the government took in $370 billion from corporations in fiscal 2021, about 25 percent higher than in fiscal 2017, prior to reform.
The trend has continued. The Wall Street Journal reported last week that the first six months of fiscal 2022 have seen corporate tax revenues rise by 22 percent and remain on pace to set a new record.
A similar scenario played out when it comes to individual income tax collections, which hit a record high of $2.052 trillion for fiscal 2021, the Tax Foundation notes. The vast majority of that money was paid by the top 5 percent of wage earners. So far in fiscal 2022, the Journal reports, individual income tax collections are running 36 percent higher than the previous year.
“In total,” the Tax Foundation concludes, “federal tax collections reached $4.047 trillion in fiscal 2021, an all-time high in nominal terms.”
Factors other than the 2017 tax bill are also at work, particularly inflation, but the doomsday revenue predictions offered by progressive critics of the Trump legislation have not come to pass. Perhaps they will eventually, if President Joe Biden and his economic team continue to drive the nation closer to a recession. But at this point, the Beltway administrative state has profited quite handsomely by the implementation of a tax policy that encouraged business investment and made it worthwhile for companies to repatriate capital without facing confiscatory penalties.
Truth is, Washington is awash in both corporate and individual tax revenue — something to remember as Mr. Biden and congressional Democrats clang their tin cups and propose dozens of tax increases.