Can you pin the line on the chart?

Republicans have been touting the economic gains of the Trump tax cuts, but it’s impossible to find them

Published: April 15, 2024

As they gear up to fight for an extension of the Trump tax cuts skewed toward the wealthiest few, House Republicans are claiming credit for a host of positive economic trends which they attribute to the 2017 law. In repeated hearings, Republican committee members and witnesses have touted the impact of the Trump tax cuts on reducing poverty, raising median household income, increasing GNP, and reducing Black and Latino unemployment. As Republican Chairman Jason Smith himself said, “facts are clearly facts.” So I took a look at his.

I had high expectations. After all, former GOP Senator Phil Gramm testified before the committee that “No tax change or spending increase in over 50 years delivered so great an impact on median income and poverty.” That sounds like a pretty big deal indeed.

In reality, NONE of those claims are borne out by looking at the data.

In fact, without knowing the year of enactment for the Trump tax cuts, it would be nearly impossible to tell from the charts alone when they took effect.

It’s like the tax wonk version of pin the tail on the donkey, but instead of a blindfold, the party host hides the labels on the x-axis and the guests have to guess from the trend line alone when they think the Trump tax cuts were enacted. (Yes, the Christophersons throw some WILD parties.)

Here’s what the charts really show. The poverty rate started falling fast in early 2014, during President Obama’s second term, around the same time that median household income started rising. The Trump tax cuts were enacted three years after the turnaround started. As for GNP, it’s hard to see any impact from the Trump tax cuts at all, but it is possible to see the boost from Democrats’ American Rescue Plan.

What if… what if all of the gains that Republicans are taking credit for were just part of longer-term economic trends, many fueled by Obama-era post-Great Recession economic recovery policies? What if the only real impact of the Trump tax cuts was to help the already very wealthy get even wealthier? That would be crazy, right?

Estimated Percent of People of All Ages in Poverty for United States via St Louis Fed

Real Median Household Income in the United States via St Louis Fed

If the Trump tax cuts fueled a one-year jump in median household income (and it’s possible thanks to increases in the CTC and the barrage of one-time bonuses in late 2017 as companies rushed to take advantage of Obama-era tax rules before they changed), it was short-lived. By late 2018, that much-touted flood of bonuses had trickled to nothing and median household income was already declining by 2019, before the start of the pandemic.

Gross National Product (GNP) via St Louis Fed