When Congress passed the Tax Cut and Jobs Act in 2017, it dramatically reduced corporate tax revenues. In the past three years, corporate tax collections have fallen to their lowest level since World War II: 1% of gross domestic product. Many of the country’s largest companies did not pay federal income taxes in 2020.
TCJA proponents said the US would get something in return for these tax cuts. Lower interest rates, the argument goes, would attract production and investment to our shores, but that didn’t happen – and for an obvious reason: other countries see what we are doing and react. When they see us lowering our prices, they lower theirs to undercut us. In the end, no nation is more competitive. The result is a global race to the bottom: who can lower their corporate rate further and faster?