# Tax Cuts and Jobs Act **Type:** Federal law (P.L. 115-97) **Signed:** December 22, 2017 by [[Donald Trump]] **Sponsor:** Representative Kevin Brady (R-TX) **Vote:** Senate 51-48 | House 227-203 (party-line) ## Summary The single largest piece of tax legislation since the Tax Reform Act of 1986 — and the **legislative product the entire dark-money infrastructure documented in the vault was built to produce**. The TCJA permanently reduced the corporate tax rate from 35% to 21%, temporarily reduced individual income tax rates (expiring 2025), nearly doubled the standard deduction, doubled the estate tax exemption (to ~$11 million per individual), created a 20% pass-through business income deduction (Section 199A), eliminated the personal exemption, capped the state and local tax (SALT) deduction at $10,000, and zeroed out the [[Affordable Care Act]]'s individual mandate penalty. The Act was passed through reconciliation — the procedural vehicle the [[House Budget Committee]] and [[Senate Budget Committee]] control — allowing it to pass the Senate with 51 votes and bypass the filibuster. The reconciliation process also imposed the constraint that made the individual provisions temporary: the [[Byrd Rule]] requires that reconciliation bills not increase the deficit outside the budget window, so the individual tax cuts were set to expire after 2025 to comply (while the corporate rate cut was made permanent, revealing the actual priority). CBO estimated the TCJA would increase the deficit by approximately $1.9 trillion over 10 years. The actual revenue loss has tracked CBO's projection. The promised revenue gains from economic growth ("dynamic scoring") did not materialize at the levels supply-side advocates projected. ## Key Provisions **Corporate rate cut (permanent).** Reduced from 35% to 21% — a 40% reduction. Made permanent because this was the provision the donor class prioritized. The permanence/temporariness split between corporate and individual provisions is the TCJA's most revealing design choice. **Individual rate cuts (temporary, expiring 2025).** Reduced rates across brackets, with the largest percentage reductions at the top. The top marginal rate dropped from 39.6% to 37%. These provisions are expiring, creating the legislative urgency driving the current reconciliation package. **Estate tax doubling (temporary).** Doubled the estate tax exemption to ~$11 million per individual (~$22 million per couple), effectively eliminating the estate tax for all but the wealthiest ~0.1% of estates. This provision benefits exclusively the very wealthy and costs approximately $80 billion over 10 years. **Pass-through deduction (temporary).** Created a 20% deduction for qualified business income from pass-through entities (S corporations, partnerships, sole proprietorships). This provision disproportionately benefits wealthy business owners — particularly in real estate, where Trump's own business empire is concentrated. **SALT cap.** Capped the deduction for state and local taxes (property, income, sales) at $10,000. This provision was designed to punish high-tax blue states (New York, California, New Jersey, Connecticut) by increasing the effective federal tax burden on their residents. The SALT cap is the TCJA's most explicitly partisan provision — a tax increase targeted at the opposition party's geographic base. **Individual mandate zeroing.** Reduced the ACA's individual mandate penalty to $0, functionally eliminating the mandate without repealing it. This was the ACA repeal provision that could pass through reconciliation after the full repeal effort failed. ## KB Significance **1. The donor-class product.** The TCJA is the legislative artifact that makes the vault's thesis about donor-class capture most concrete and measurable. The Act's distributional analysis tells the story: by 2027 (when the individual provisions expire), 83% of the Act's benefits flow to the top 1% of earners (Tax Policy Center analysis). The corporate rate cut — the permanent provision — benefits shareholders, who are overwhelmingly wealthy. The estate tax doubling benefits only the richest 0.1% of estates. The pass-through deduction benefits wealthy business owners. The entire dark-money infrastructure documented in the vault — the [[Koch Network]], [[Heritage Foundation]], [[Cato Institute]], the network of state-level think tanks, the donor-class political apparatus — exists to produce legislation that looks like the TCJA. The Act is the return on investment. **2. The reconciliation precedent.** The TCJA established the template the current "Big Beautiful Bill" follows: use reconciliation to pass major fiscal legislation with a bare Senate majority, accept temporary individual provisions to comply with the Byrd Rule while making the donor-class provisions permanent, and create a future legislative cliff (the 2025 expirations) that forces a subsequent Congress to either extend the cuts or take the political blame for "raising taxes." The [[House Budget Committee]]'s and [[Senate Budget Committee]]'s current reconciliation process is structurally identical to the TCJA process — the same procedural vehicle, the same distributional dynamics, the same deficit consequences. **3. The "starve the beast" mechanism.** The TCJA added $1.9 trillion to the deficit — a deficit that is now being cited as justification for cutting Medicaid, SNAP, and other social programs in the current reconciliation package. This is the "starve the beast" strategy in its purest operational form: Step 1 — pass tax cuts that reduce revenue. Step 2 — point to the resulting deficit. Step 3 — use the deficit to justify cutting programs that serve the poor and middle class. Step 4 — use the savings from those cuts to offset the cost of extending the tax cuts. The [[House Ways and Means Committee]] and [[Senate Finance Committee]] are the institutional stages where this cycle repeats. [[Grover Norquist]] described the strategy explicitly: "I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub." **4. The supply-side falsification.** The TCJA was sold on [[supply-side economics]] — the claim that tax cuts would stimulate economic growth that would partially or fully offset the revenue loss ("the tax cuts will pay for themselves"). Treasury Secretary [[Steven Mnuchin]] claimed the Act would generate enough growth to produce a revenue surplus. CBO and the Joint Committee on Taxation projected the growth effects would offset only a fraction of the revenue loss. The actual results confirmed the nonpartisan projections: corporate revenue fell dramatically after the rate cut, individual revenue tracked CBO estimates, and the deficit increased as projected. The TCJA is the most expensive controlled experiment in supply-side economics — and the results falsify the theory. The data is unambiguous; the policy persists because the theory serves the interests of the people funding it, not because the evidence supports it. **5. The SALT weapon.** The SALT cap — limiting the deduction for state and local taxes — is the TCJA's most nakedly partisan provision. The deduction's benefits are concentrated in high-tax states that are overwhelmingly Democratic: New York, California, New Jersey, Connecticut, Illinois. By capping the deduction, the TCJA effectively raised taxes on residents of these states to partially offset the cost of cutting taxes for corporations and the wealthy. The SALT cap's geographic targeting is so explicit that its repeal or modification has become a central negotiating point in the current reconciliation package — moderate Republicans from blue-leaning suburban districts (particularly in New York, New Jersey, and California) have demanded SALT cap relief as a condition for supporting the "Big Beautiful Bill." ## See Also - [[House Ways and Means Committee]] — committee that originated the TCJA - [[Senate Finance Committee]] — committee that rewrote and passed the Senate version - [[House Budget Committee]] — reconciliation process that made passage possible - [[Supply-Side Economics]] — the theoretical framework the TCJA falsified - [[Grover Norquist]] — "starve the beast" strategist - [[Koch Network]] — donor infrastructure that produced the TCJA - [[Heritage Foundation]] — policy blueprints the TCJA implemented - [[Affordable Care Act]] — individual mandate zeroed by the TCJA - [[CBO Baselines and Scoring Windows]] — the counterfactual and the time horizon a budget estimate is measured against — both chosen, both decisive - [[Dynamic Scoring]] — incorporating macroeconomic feedback into budget estimates, and how a modeling choice relocated a political fight into an assumption - [[Index Choice and Chained CPI]] — how the choice of inflation index quietly redistributes trillions, and why chained CPI is a policy decision disguised as a technical correction