Former President Donald Trump promised to renew expiring tax cuts for billionaires and billionaire corporations during a spring campaign dinner where donors gave a record $50.5 million. House Majority Leader Steve Scalise has proposed using budget reconciliation to renew these tax cuts without bipartisan consensus. Trump’s 2017 Tax Cuts and Jobs Act dramatically increased the national debt and disproportionately benefited the top 1% of earners.
Extending the TCJA in full is estimated to cost over $3.3 trillion through 2033. The pass-through deduction, favored by hedge funds and private equity firms, would increase the debt by an estimated $700 billion with little economic benefits. The Council of Economic Advisors found that deficits and revenues were unusual in 2023 due to the 2017 tax cuts’ “revenue-reducing impact,” leaving less to invest in critical infrastructure and innovation.
While the 2017 tax cuts may have benefited billionaires in the short run, the long-term consequences are significant. The U.S. Treasury has already accumulated over $34 trillion in debt, leading to higher future taxes, lower future spending, lower wages, and an increasing share of tax dollars paying interest. Extending tax giveaways for the wealthiest donors is seen as detrimental to the country’s economic growth and exacerbates wealth inequality and political instability.
Investors should consider policies that promote long-term economic growth rather than short-term gains for the wealthy. Extending tax cuts for billionaires may not be financially responsible, as it would further increase the national debt and limit investments in key areas. While there may be times when taking on debt is necessary for economic growth, extending tax giveaways for political donors is not a wise decision in the long run.
The focus should be on policies that benefit the majority of investors and promote equitable growth. Investing in critical infrastructure and innovation are proven drivers of sustained economic growth that benefit all investors. Extending tax cuts for billionaires and wealthy political donors may not be in the best interest of the economy or the majority of investors, and could ultimately lead to long-term economic and political instability.
