As investment continues to decline, the Trump tax cuts remain nothing but a handout to the rich

President Trump is likely to tout the benefits of the 2017 Tax Cuts and Jobs Act (TCJA) during his annual State of the Union Address. The centerpiece of the TCJA was a corporate rate cut that proponents claimed would eventually trickle down to workers’ wages—boosting the average American household’s wages by $4,000. We pointed out at the time that there was a lot wrong about this economic theory in practice. Even so, key to the theory is that investment would surge after the tax cuts were enacted. And without a substantial uptick in investment, the typical worker has no chance of benefiting from the TCJA’s corporate rate cuts. Instead, investment has cratered since the TCJA passed. In fact, last week’s GDP data showed that for the first time since the Great Recession, investment has declined for three straight quarters. Given that boosting business investment was the primary stated goal of the TCJA, this seems like an unambiguous policy failure for working people, benefiting only the rich and corporations.

Figure A

No evidence the TCJA is working as advertised: Year-over-year change in real, nonresidential fixed investment, 2003Q1–2019Q4

Quarter Real, nonresidential fixed investment
2003Q1 -2.3%
2003Q2 1.6%
2003Q3 4.0%
2003Q4 6.8%
2004Q1 5.2%
2004Q2 4.9%
2004Q3 5.7%
2004Q4 6.5%
2005Q1 9.2%
2005Q2 8.2%
2005Q3 7.4%
2005Q4 6.1%
2006Q1 8.0%
2006Q2 8.2%
2006Q3 7.8%
2006Q4 8.1%
2007Q1 6.5%
2007Q2 7.0%
2007Q3 6.8%
2007Q4 7.3%
2008Q1 5.8%
2008Q2 3.8%
2008Q3 0.2%
2008Q4 -7.0%
2009Q1 -14.4%
2009Q2 -17.1%
2009Q3 -16.1%
2009Q4 -10.3%
2010Q1 -2.3%
2010Q2 4.1%
2010Q3 7.5%
2010Q4 8.9%
2011Q1 8.0%
2011Q2 7.3%
2011Q3 9.3%
2011Q4 10.0%
2012Q1 12.9%
2012Q2 12.6%
2012Q3 7.2%
2012Q4 5.6%
2013Q1 4.3%
2013Q2 2.3%
2013Q3 4.4%
2013Q4 5.4%
2014Q1 5.5%
2014Q2  8.1%
2014Q3 8.4%
2014Q4 6.9%
2015Q1 5.0%
2015Q2 2.5%
2015Q3 0.8%
2015Q4 -0.9%
2016Q1 -0.7%
2016Q2 0.0%
2016Q3 1.1%
2016Q4 2.4%
2017Q1 4.2%
2017Q2 4.3%
2017Q3 3.5%
2017Q4  5.4%
2018Q1 6.0%
2018Q2 6.9%
2018Q3 6.8%
2018Q4 5.9%
2019Q1 4.8%
2019Q2 2.6%
2019Q3 1.4%
2019Q4 -0.1%
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Source: EPI analysis of data from table 1.1.6 from the National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA).

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