Now Republicans should have a reasonable comeback at the ready: We never said the tax cuts would immediately alter the growth path of the $21 trillion economy. We never said corporate America would immediately start massively investing. Let’s give the tax cuts time to work, please.
Except Republicans pretty much promised the business tax cuts would have a sudden impact because the new tax law would encourage companies to bring back and invest trillions in foreign earnings held overseas to avoid the formerly sky-high U.S. corporate tax rate. “Over $4 [trillion], but close to $5 trillion, will be brought back into our country,” Trump said last August. (The actual amount of overseas cash was closer to $3 trillion, and even that overstated what could realistically return, but, you know, Trump.)
Instead, as many Democrats have been pointing out, companies have been mostly using that dough for stock buybacks or dividends rather than fresh investment. But the repatriation argument was always a politician’s argument, not an economist’s. Despite what many GOP pols and pundits predicted, moving money from a foreign subsidiary’s bank account to a parent company’s bank account was never going to be how the tax cut eventually boosted growth. Again, the lower tax rate and the expensing provision were supposed to be the real juice.