16

The GOP recently released their final tax plan this week, after going to a conference committee to reconcile the House and Senate versions of the bill.

US President Donald Trump has frequently claimed that the tax reform is the "largest-ever tax cuts in US". He also mentioned this in a few White House remarks, – 1, 2, 3 (possibly more).

So, is the final1 tax plan the largest ever in the history of the US?

1As the Senate and the House passed different versions of the tax plan, I'm asking about the final reconciled version of the bill.

Improve this question
2
  • 9
    Since the last massive cut was, IIRC, in the Reagan administration, one probably needs to consider whether the measures would be in absolute dollars, or in terms relative to the US GDP or the federal budget or some such.
    – Daniel R Hicks
    Commented Dec 18, 2017 at 4:40
  • 2
    (One also needs to consider how "real" any stated amount is. Estimates for the actual size of the proposed cut are all over the map.)
    – Daniel R Hicks
    Commented Dec 18, 2017 at 5:46

1 Answer 1

Reset to default
17

A Reuters article, Trump's tax cut won't be the biggest in U.S. history looked at this claim in early November, 2017.

They do consider various definitions that might be used.

Corporate

If it were measured only by percentage points off the top corporate rate, it would be the largest:

The president and his fellow Republicans in Congress propose cutting the top corporate tax rate to 20 percent from 35 percent. If they succeed, it would be the largest American corporate tax cut since the modern corporate tax began more than a century ago.

As proposed by the Republicans, the corporate rate would fall 43 percent, compared with the second-largest such cut of 26 percent under Republican President Ronald Reagan in the 1980s.

However, they dismiss this because it isn't the claim:

Trump would be on target if he were talking only about corporate taxes, but he has included other taxes in his boast.

Individual

If it were measured only by percentage points off the top individual rate, it would not be the largest:

Some Republicans in Congress are backing away from cutting the top individual tax rate, now 39.6 percent. But even if they did cut it as low as Trump wants, to 35 percent, the president would not even come close to winning bragging rights.

[...] the huge tax cuts of President Warren Harding and President Calvin Coolidge, both Republicans, take the prize. In 1922, the top tax rate was 73 percent. By 1925, it was only 25 percent, almost a 66 percent decline. Coolidge alone was responsible for a 57 percent cut in taxes.

Tax Revenue

If it were measured only by the total tax takings, the question becomes rather murky, because the takings depend on the economic activity, and the taxes themselves will likely affect that - to what degree is disputed.

However, they have one estimate that suggests it won't be the biggest ever:

The Committee for a Responsible Federal Budget, a bipartisan Washington think tank, estimated the Trump tax cut could be the fourth-largest as a percentage of gross domestic product, or GDP, a measure of national economic output.

A link to that committee's blog [Hat-tip to @tim for the link.] shows that Reuters appear to have made an error in citing that statistic.

CFRB estimated that it would be the eighth-largest as a percentage of GDP. It would be fourth-largest in inflation-adjusted dollars.

Improve this answer
2
  • 4
    It would be interesting to know where Reuters got the CRFB number from. Because other news outlets report different numbers. According to their own blog post, it would be the 8th largest cut considering GDP. It might be 4th or 5th looking at total dollars though (using their measurement).
    – tim
    Commented Dec 18, 2017 at 12:57
  • 1
    @tim: You are a champion. Great find. Thank you. It reveals that Reuters made a mistake, confusing the two statistics. I have updated with a note.
    – Oddthinking ♦
    Commented Dec 18, 2017 at 13:08

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .