Academic studies differ on impact of Trump tax cuts

ATLANTA — The tax cuts President Donald Trump steered through Congress in 2017 will save the average Georgia household more than $39,000 over their lifetime, a new study has found.

But according to another broader study of tax cuts in multiple countries going back to 1965, tax cuts provide a huge windfall to big corporations and wealthy individuals without producing long-term economic growth or sustained business investment.

A study released this month by Boston University professor Laurence Kotlikoff to coincide with the third anniversary of the Trump tax cuts comes on the heels of an earlier study by the Federal Reserve Bank of Atlanta that estimated the gain for Georgia families at $22,676 on average because of the impact of personal income tax reductions.

The new study, funded by the Goodman Institute for Public Policy Research, a free market think tank, includes the effect of reducing corporate taxes.

Lower corporate tax rates attract capital from abroad, raise wages and create greater economic expansion in Georgia and in other states, said John Goodman, the institute’s president.

“We used to have one of the highest corporate tax rates in the world,” Goodman said. “High corporate taxes drive capital offshore and that’s bad for American workers. With the lower rates we have now, we are more competitive.”

The Goodman Institute study comes as Presidentelect Joe Biden prepares to roll back the Trump tax cuts benefiting the wealthiest Americans and businesses. However, the Democrat has vowed not to raise taxes on Americans earning less than $400,000 a year.

Tax policy also has been issue during Georgia’s two U.S. Senate runoff races, with Democratic challengers Jon Ossoff and Raphael Warnock opposing the Trump tax cuts and incumbent Republican Sens. David Perdue and Kelly Loeffler pledging to preserve them.

The Goodman Institute study shows that many Georgians would be better off in the short run if Biden’s economic plan is adopted in full. That’s because of Biden’s proposal for a more generous child tax credit and more generous benefits for low-income seniors.

But Goodman said the Biden plan comes with longterm costs.

“When today’s children become adults, their wages will be lower and the economy will be less prosperous because of the way these benefits are funded,” Goodman said.