The Tax Cuts and Jobs Act moved through Congress swiftly, but it will take more time to see the legislation’s true effects.
“The idea that the tax bill will have a positive economic effect is probably correct,” Greenberg said. “That we’re already seeing a large economic effect from the tax bill at the very least is hard to verify.”
Individuals should see more money in their paychecks starting this month, as less in federal taxes is withheld.
And while roughly 3 million individuals have received bonuses tied to the tax cuts, “it’s a weird argument to claim that the bonuses are proof that the tax bill is working,” Greenberg said.
That is because, in theory, the tax bill will work by increasing companies’ ability to invest, which in turn leads to higher productivity and then higher wages. But it’s too early to see those effects.
“That’s something you wouldn’t expect to see immediately,” Greenberg said.
Trump’s claim that April will be the last time you file under the previous tax system should also be subject to scrutiny, according to Greenberg, as the tax cuts for individuals right now will only last for eight years.
Another Trump claim, “we enacted the biggest tax cuts and reforms in American history,” is also questionable. Greenberg said the tax legislation of 1981 and 1986 could be stronger contenders for that distinction.
“I would disagree with him, but that would be up for debate,” Greenberg said.