#TrumpTaxCuts

Refers to the Tax Cuts and Jobs Act (TCJA) enacted in December 2017 during the presidency of Donald Trump. This legislation represented the most significant tax reform in the U.S. since 1986, aimed at stimulating economic growth through tax reductions for both individuals and corporations.

Key features of the TCJA:

- Reduction of the corporate tax: The maximum corporate tax rate was reduced from 35% to 21%.

- Changes in individual taxes: The standard deduction was increased and personal exemptions were eliminated, simplifying tax filing for some taxpayers.

- Deduction for “pass-through” income: A 20% deduction was introduced for certain income from entities such as partnerships and sole proprietorships.

- Limitations on state and local deductions (SALT): A cap of $10,000 was established for the deduction of state and local taxes, affecting taxpayers in high-tax states.

- Elimination of the individual mandate of the ACA: The penalty for not having health insurance was reduced to zero, weakening a key component of the Affordable Care Act.

Economic and fiscal impact:

According to the Joint Committee on Taxation, it was estimated that the TCJA would increase the federal deficit by approximately $1.5 trillion over a decade. Although it was anticipated that the tax cuts would spur economic growth, various analyses, such as those from the Tax Policy Center, suggest that the benefits were concentrated in high-income households and that the impact on business investment and wages was limited.