Question

4. (2.5 points) In 2017, the U.S. Congress voted to approve the tax cut proposed by the Trump administration. Carefully explain how that policy change affected the U.S. balance of trade.

Answer 1

Question : In 2017, the U.S.Congress voted to approve the tax cut proposed by the Trump administration.carefully explain how that policy change affected the US balance of trade.

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Introduction

The Tax Cuts and Jobs Act (TCJA), passed in December 2017, made several significant changes to the individual income tax. These changes include a nearly doubled standard deduction, new limitations on itemized deductions, reduced income tax rates, and reforms to several other provisions. In all, these changes simplify the individual income tax by eliminating the need for millions of households to itemize their deductions.

President Trump, surrounded by congressional Republicans, speaks about newly passed tax reform legislation in Washington, DC, on December 20, 2017. Brendan Smialowski/AFP via Getty Images

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1) The Tax Cuts and Jobs Act of 2017 made several significant changes to the individual income tax, including reforms to itemized deductions and the alternative minimum tax, an expanded standard deduction and child tax credit, and lower marginal tax rates across brackets.

2) These changes simplify the individual income tax for millions of households, as 28.5 million filers would be better off taking the newly expanded standard deduction, instead of itemizing various deductions, reducing compliance costs.

3) The Internal Revenue Service estimates the average time to complete an individual tax return will decrease by 4 to 7 percent. Converting this to dollar terms, we estimate compliance savings could range from $3.1 billion to $5.4 billion

4) Under the new tax law, new limits apply to some itemized deductions, including deductions for state and local taxes paid and mortgage interest, which broadens the tax base and reduces distortions in the tax code.

5) The individual income tax changes are scheduled to expire after December 31, 2025. If permanent, the income tax provisions would reduce federal revenue by $165 billion per year on a conventional basis, but when incorporating economic growth and feedback, on a dynamic basis, they would reduce federal revenue by $115 billion a year.

6) Cutting tax rates for companies like Apple and hundreds of other stocks they own was one of many ways Republican lawmakers enriched themselves after they passed the tax law, according to a Center for Public Integrity analysis of the 186-page law and members’ financial disclosure forms. Democrats also stood to gain from the tax bill, though not one voted for it; all but 12 Republicans voted for the tax bill.

7) In 2018, stock buybacks exceeded $1 trillion for the first time ever, according to Trim Tabs, an investment research firm. Net corporate dividends reached a new high in 2018 of more than $1.3 trillion, nearly 6 percent more than the previous year. The result, analysts say: The buybacks boosted stock prices, and bigger dividends put even more money in the pockets of stockholders.

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