If first quarter tax revenues are any indication, Trumponomics is operating much like Reaganomics and producing the same kind of results: lower taxes and deregulation resulting in more economic growth and, thus, more tax revenues.
In the first quarter after the Republican-passed, Donald Trump-signed reform bill — which will save taxpayers and corporations $1.5 trillion in taxes over ten years — tax revenues actually increased by $18 billion (5.2%) over the previous year, resulting in the government running a $51-billion surplus.
The CBO notes that not all employee tax withholdings have been updated under the new policies; companies have until mid-February to do so. However, as Investors Bureau Daily underscores, the CBO’s numbers suggest that gains in wages and salaries are likely to continue and even “accelerate” due to the tax cuts:
The [CBO report] says that revenues for the first four months of the current fiscal year — which started last October — were $46 billion higher than the same period the year before.
Individual income and payroll taxes, it says, rose by $68 billion. “That change largely reflects increases in wages and salaries,” the CBO says.
Those gains in wages and salaries are likely to continue, if not accelerate, under the tax cuts.
The increase in tax revenues corresponds with the positive economic news of the last few months. Trump’s aggressive approach to slashing regulations — more aggressive, in fact, in than Reagan so far — appears to be paying dividends. The Atlanta Fed’s recent forecast for the first quarter of 2018 indicates a dramatic increase in GDP of an estimated 5.4%.
Other great economic developments that have impacted tax revenues is a near 45-year low unemployment rate and a 2.9% increase in earnings.
Though Trump’s liberal leanings on some social issues and untested stance on conservative economic principles were major questions leading up to his election, he has governed as a strongly conservative president. In fact, the Heritage Foundation’s recent assessment of his first year in office found that he governed more conservatively than Reagan. The New York Times provides some key takeaways from the Heritage Foundations analysis:
Heritage said that 64 percent of those items were enacted by the administration either through executive order or another means of enforcement, or included in Mr. Trump’s budget, which has not been voted on by Congress.
In Reagan’s first year, only 49 percent of Heritage’s wish list items were embraced by the president or enacted. At the time, Heritage identified a familiar problem for why the administration’s policies were wanting. In almost every federal agency, Heritage said in November 1981, “delayed appointments, unqualified or misqualified appointments, or the appointment of individuals who are not committed to the President’s goals and policies” had delayed or thwarted policy changes.