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By Robert Duquette, CPA

Since my tax reform review was published in August 2019, there have been a few meaningful economic updates to the original analysis, which I have since incorporated into the piece. Yes, we continue to have a strong economy in terms of being at full employment, having consistently low inflation, and seeing a stock market at record highs, but our national real GDP growth rate is only about 2% this year. This is below the 2.5% rate in 2018 (the first year after tax reform), the 2.8% rate in the year before tax reform, and well below the 5% to 6% that was promised by advocates of the Tax Cuts and Jobs Act.

GDP growth is a reflection of how large the economic base is. The larger the economic base, the greater the tax receipts and the lower our annual federal deficit would be. The fact is that our current GDP growth is anemic. The federal debt is over $23 trillion, and it is growing with increases of over a trillion dollars a year.

Personally, I had hoped that the Tax Cuts and Jobs Act would have been more successful at producing the kind of growth promised. By doing so, it would have perhaps served as a prescription for the far greater growth numbers we need to begin taming trillion dollar deficits before an inevitable financial day of reckoning is upon us.

I encourage you to read my analysis of the Tax Cuts and Jobs Act, and if you already have done so, I encourage you to look at it again with my updates.

This article originally appeared as a five-part CPA Now blog that posted July 29, 2019, through Aug. 2, 2019. It was most recently updated Dec. 15, 2019.

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