Treasury Secretary Steven Mnuchin said that President Trump’s tax cuts are on course to pay for themselves.
“I’ll stick with my projections that the tax deal will pay for itself,” Mnuchin said Tuesday at the World Economic Forum in Davos, Switzerland.
He said, however, that the United States would run deficits of approximately $1 trillion for the next two years because of certain parts of the 2017 Tax Cuts and Jobs Act, such as provisions allowing businesses to write off new investments.
Mnuchin said the first two years of the tax cut, between 2017 and 2019, have seen the deficit grow nearly 50% but that those shortfalls are “right in line” with his projections that revenues will pick up in the years ahead, thanks to faster economic growth.
In 2017, Mnuchin said the economic growth from the Republican’s proposed tax cuts would bring in enough to revenues to offset the taxes forgone because of the rate cuts.
“The plan will pay for itself with growth,” Mnuchin said at an event in 2017.
Yet federal revenues have not come in, so far, as would be expected if the tax cuts were to pay for themselves.
If the tax cuts were to pay for themselves, the first few years would see greater deficits, as companies take savings from the first few years of the tax cuts to pay for the investments that would generate economic growth and revenues in the later years. Treasury data shows, however, that revenues were even lower in 2019 than would be consistent with a temporary drop leading to greater future economic growth.
