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Trump’s 2017 tax cuts expire soon − study shows they made income inequality worse and especially hurt Black Americans
Trump’s 2017 tax cuts favored corporations, worsening racial and economic disparities, especially affecting Black taxpayers’ wealth.
Beverly Moran, Vanderbilt University
The Tax Cuts and Jobs Act, a set of tax cuts Donald Trump signed into law during his first term as president, will expire on Dec. 31, 2024. As Trump and Republicans prepare to negotiate new tax cuts in 2025, it’s worth gleaning lessons from the president-elect’s first set of cuts.
The 2017 cuts were the most extensive revision to the Internal Revenue Code since the Ronald Reagan administration. The changes it imposed range from the tax that corporations pay on their foreign income to limits on the deductions individuals can take for their state and local tax payments.
Trump promised middle-class benefits at the time, but in practice more than 80% of the cuts went to corporations, tax partnerships and high-net-worth individuals. The cost to the U.S. deficit was huge − a total increase of US$1.9 trillion from 2018 to 2028, according to estimates from the Congressional Budget Office. The tax advantage to the middle class was small.
Advantages for Black Americans were smaller still. As a scholar of race and U.S. income taxation, I have analyzed the impact of Trump’s tax cuts. I found that the law has disadvantaged middle-income, low-income and Black taxpayers in several ways.
Cuts worsened disparities
These results are not new. They were present nearly 30 years ago when my colleague William Whitford and I used U.S. Census Bureau data to show that Black taxpayers paid more federal taxes than white taxpayers with the same income. In large part that’s because the legacy of slavery, Jim Crow and structural racism keeps Black people from owning homes.
The federal income tax is full of advantages for home ownership that many Black taxpayers are unable to reach. These benefits include the ability to deduct home mortgage interest and local property taxes, and the right to avoid taxes on up to $500,000 of profit on the sale of a home.
It’s harder for middle-class Black people to get a mortgage than it is for low-income white people. This is true even when Black Americans with high credit scores are compared with white Americans with low credit scores.
When Black people do get mortgages, they are charged higher rates than their white counterparts.
Trump did not create these problems. But instead of closing these income and race disparities, his 2017 tax cuts made them worse.
Black taxpayers paid higher taxes than white taxpayers who matched them in income, employment, marriage and other significant factors.
Broken promises, broken trust
Fairness is an article of faith in American tax policy. A fair tax structure means that those earning similar incomes should pay similar taxes and stipulates that taxes should not increase income or wealth disparities.
Trump’s tax cuts contradict both principles.
Proponents of Trump’s cuts argued the corporate rate cut would trickle down to all Americans. This is a foundational belief of “supply side” economics, a philosophy that President Ronald Reagan made popular in the 1980s.
From the Reagan administration on, every tax cut for the rich has skewed to the wealthy.
Just like prior “trickle down” plans, Trump’s corporate tax cuts did not produce higher wages or increased household income. Instead, corporations used their extra cash to pay dividends to their shareholders and bonuses to their executives.
Over that same period, the bottom 90% of wage earners saw no gains in their real wages. Meanwhile, the AFL-CIO, a labor group, estimates that 51% of the corporate tax cuts went to business owners and 10% went to the top five highest-paid senior executives in each company. Fully 38% went to the top 10% of wage earners.
In other words, the income gap between wealthy Americans and everyone else has gotten much wider under Trump’s tax regime.
Stock market inequality
Trump’s tax cuts also increased income and wealth disparities by race because those corporate tax savings have gone primarily to wealthy shareholders rather than spreading throughout the population.
The reasons are simple. In the U.S., shareholders are mostly corporations, pension funds and wealthy individuals. And wealthy people in the U.S. are almost invariably white.
Sixty-six percent of white families own stocks, while less than 40% of Black families and less than 30% of Hispanic families do. Even when comparing Black and white families with the same income, the race gap in stock ownership remains.
These disparities stem from the same historical disadvantages that result in lower Black homeownership rates. Until the Civil War, virtually no Black person could own property or enter into a contract. After the Civil War, Black codes – laws that specifically controlled and oppressed Black people – forced free Black Americans to work as farmers or servants.
State prohibitions on Black people owning property, and public and private theft of Black-owned land, kept Black Americans from accumulating wealth.
Health care hit
That said, the Trump tax cuts hurt low-income taxpayers of all races.
One way they did so was by abolishing the individual mandate requiring all Americans to have basic health insurance. The Affordable Care Act, passed under President Barack Obama, launched new, government-subsidized health plans and penalized people for not having health insurance.
Department of the Treasury data shows almost 50 million Americans were covered by the Affordable Care Act since 2014. After the individual mandate was revoked, between 3 million and 13 million fewer people purchased health insurance in 2020.
Ending the mandate triggered a large drop in health insurance coverage, and research shows it was primarily lower-income people who stopped buying subsidized insurance from the Obamacare exchanges. These are the same people who are the most vulnerable to financial disaster from unpaid medical bills.
Going without insurance hurt all low-income Americans. But studies suggest the drop in Black Americans’ coverage under Trump’s plan outpaced that of white Americans. The rate of uninsured Black Americans rose from 10.7% in 2016 to 11.5% in 2018, following the mandate’s repeal.
The consumer price index conundrum
The Trump tax cuts also altered how the Internal Revenue Service calculates inflation adjustments for over 60 different provisions. These include the earned income tax credit and the child tax credit – both of which provide cash to low-wage workers – and the wages that must pay Social Security taxes.
Previously, the IRS used the consumer price index for urban consumers, which tracks rising prices by comparing the cost of the same goods as they rise or fall, to calculate inflation. The government then used that inflation number to adjust Social Security payments and earned income tax credit eligibility. It used the same figure to set the amount of income that is taxed at a given rate.
The Trump tax cuts ordered the IRS to calculate inflation adjustments using the chained consumer price index for urban consumers instead.
The difference between these two indexes is that the second one assumes people substitute cheaper goods as prices rise. For example, the chained consumer price index assumes shoppers will buy pork instead of beef if beef prices go up, easing the impact of inflation on a family’s overall grocery prices.
The IRS makes smaller inflation adjustments based on that assumption. But low-income neighborhoods have less access to the kind of budget-friendly options envisioned by the chained consumer price index.
And since even middle-class Black people are more likely than poor white people to live in low-income neighborhoods, Black taxpayers have been hit harder by rising prices.
What cost $1 in 2018 now costs $1.26. That’s a painful hike that Black families are less able to avoid.
The imminent expiration of the Trump tax cuts gives the upcoming GOP-led Congress the opportunity to undertake a thorough reevaluation of their effects. By prioritizing policies that address the well-known disparities exacerbated by these recent tax changes, lawmakers can work toward a fairer tax system that helps all Americans.
Beverly Moran, Professor Emerita of Law, Vanderbilt University
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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Southern California is extremely dry, and that’s fueling fires − maps show just how dry
In early January 2025, Southern California faced deadly wildfires due to extremely low soil moisture and dry conditions, raising concerns about future drought amid changing weather patterns.
Ming Pan, University of California, San Diego
Dry conditions across Southern California set the stage for a series of deadly wind-driven wildfires that burned thousands of homes and other structures in the Los Angeles area in early January 2025.
Ming Pan, a hydrologist at the University of California-San Diego’s Center for Western Weather and Water Extremes, tracks the state’s water supplies. He put Southern California’s dryness into perspective using charts and maps.
How dry is Southern California right now?
In early January, the soil moisture in much of Southern California was in the bottom 2% of historical records for that day in the region. That’s extremely low.
Hydrologists in California watch the sky very closely starting in October, when California’s water year begins.
The state gets very little rain from May through September, so late fall and winter are crucial to fill reservoirs and to build up the snowpack to provide water. California relies on the Sierra snowpack for about one-third of its freshwater supply.
However, Southern California started out the 2024-25 water year pretty dry. The region got some rain from an atmospheric river in November, but not much. After that, most of the atmospheric rivers that hit the West Coast from October into January veered northward into Washington, Oregon and Northern California instead.
When the air is warm and dry, transpiration and evaporation also suck water out of the plants and soil. That leaves dry vegetation that can provide fuel for flying embers to spread wildfires, as the Los Angeles area saw in early January.
So, while Northern California’s water and snowpack conditions are in good shape, Southern California is much drier and its water storage is not doing so well.
The Southern Sierra snowpack was starting to dip below normal in early January.
What can California expect for the rest of 2025?
The U.S. Climate Prediction Center’s seasonal outlook through March suggests that drought is likely to develop in the region in the coming months.
The outlook takes into account forecasts for La Niña, an ocean temperature pattern that was on its way to developing in the Pacific Ocean in early 2025. La Niña tends to mean drier conditions in Southern California. However, not every La Niña affects California in the same way.
One or two big rain events could completely turn the table for Southern California’s water situation. In 2023, California saw atmospheric rivers in April.
So, it’s hard to say this early in the season how dry Southern California will be in the coming months, but it’s clear that people in dry areas need to pay attention to the risks.
Ming Pan, Senior Research Hydrologist, University of California, San Diego
This article is republished from The Conversation under a Creative Commons license. Read the original article.
STM Daily News is a vibrant news blog dedicated to sharing the brighter side of human experiences. Emphasizing positive, uplifting stories, the site focuses on delivering inspiring, informative, and well-researched content. With a commitment to accurate, fair, and responsible journalism, STM Daily News aims to foster a community of readers passionate about positive change and engaged in meaningful conversations. Join the movement and explore stories that celebrate the positive impacts shaping our world.
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Consumer Technology Association forecasts $537 billion sales in 2025; tariffs could cut U.S. consumer purchasing power of tech up to $143 billion
The Consumer Technology Association forecasts a 3.2% growth in the U.S. tech industry for 2025, but proposed tariffs by President-elect Trump may significantly reduce consumer purchasing power and hurt the sector’s competitiveness.
LAS VEGAS – January 5, 2025 – Announced at the agenda-setting CES® 2025 Tech Trends to Watch, the Consumer Technology Association (CTA)® projects record retail revenues as the U.S. consumer technology industry grows 3.2% over 2024 to $537 billion in 2025. This signals growth in consumer spending on tech products and services, according to CTA’s U.S. Consumer Technology One-Year Industry Forecast.
Meanwhile, updated CTA research shows the tech products consumers love and rely upon, including smartphones and laptops, are threatened by President-elect Trump’s tariff proposals. CTA’s updated report: “How Proposed Trump Tariffs Increase Prices for Consumer Technology Products” shows:
- Tariffs on technology products could lead to a $90-$143 billion decline in U.S. consumer purchasing power.
- Purchases of laptops and tablets could decline by as much as 68%, consumption of gaming consoles could decline by as much as 58% and consumption of smartphones could decline by up to 37%.
“The tech sector is America’s economic engine, driving global innovation and job creation,” said CTA CEO Gary Shapiro. “Our positive forecast reflects the industry’s strength, but proposed tariffs threaten the deflationary power of tech in the global economy. Tariffs are a tax on American businesses and consumers. We urge the incoming administration and Congress to prioritize an Innovation Agenda that fosters growth.”
“The incoming administration must address how tariffs impact American businesses and consumers,” said CTA Vice President of Trade Ed Brzytwa. “Retaliation from our trading partners raises costs, disrupts supply chains, and hurts the competitiveness of U.S. industries. U.S. trade policy should protect consumers and help American businesses succeed globally.”
If you missed the CES Research Trends presentation, watch the replay of CES 2025 Trends to Watch, presented by CTA at 10 a.m. PT, Monday, January 6.
Methodology
CTA’s U.S. Consumer Technology One-Year Industry Forecast is updated twice a year, informed by qualitative and quantitative input from CTA members, industry experts and third-party data sources.
How The Proposed Trump Tariffs Increase Prices for Consumer Technology Products was commissioned by CTA and undertaken by Trade Partnership Worldwide LLC (TPW). TPW employed a modeling strategy that enables the researchers to estimate the cross-country impacts of changes in trade policy (applying increased tariff rates on top of existing tariff rates) for detailed product categories.
Sign up for CTA Research Insights.
About Consumer Technology Association (CTA)®:
As North America’s largest technology trade association, CTA is the tech sector. Our members are the world’s leading innovators – from startups to global brands – helping support more than 18 million American jobs. CTA owns and produces CES® – the most powerful tech event in the world. Find us at CTA.tech. Follow us @CTAtech.
About CES®:
CES is the most powerful tech event in the world – the proving ground for breakthrough technologies and global innovators. This is where the world’s biggest brands do business and meet new partners, and the sharpest innovators hit the stage. Owned and produced by the Consumer Technology Association (CTA)®, CES features every aspect of the tech sector. CES 2025 takes place Jan. 7-10, 2025, in Las Vegas. Learn more at CES.tech and follow CES on social.
STM Daily News is a vibrant news blog dedicated to sharing the brighter side of human experiences. Emphasizing positive, uplifting stories, the site focuses on delivering inspiring, informative, and well-researched content. With a commitment to accurate, fair, and responsible journalism, STM Daily News aims to foster a community of readers passionate about positive change and engaged in meaningful conversations. Join the movement and explore stories that celebrate the positive impacts shaping our world. https://stmdailynews.com/
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The California high-speed rail project, a bold vision aimed at transforming transportation across the state, is making strides in the Central Valley, despite facing a rocky road filled with challenges and delays. On January 6, 2025, California Governor Gavin Newsom joined California High-Speed Rail Authority CEO Ian Choudri to celebrate a significant milestone in the construction of the railhead—a staging area for laying down tracks for the future bullet-train route that will connect cities from Merced to Bakersfield.
What’s Happening at the Railhead?
Located between Wasco and Shafter in Kern County, the new railhead site marks the beginning of laying down steel rails for high-speed trains. This pivotal area will serve as the operational hub for transporting materials necessary for track installation, indicating a promising step towards making the high-speed rail a reality.
“Finally, we’re at the point where we’re going to start laying down this track in the next couple of years,” remarked Newsom, emphasizing the significance of this development. The railhead is not just another construction site; it symbolizes the persistent efforts to change the face of transportation in California.
A Journey Full of Hurdles
The high-speed rail project has been no stranger to controversy and challenges. First conceived to provide swift travel across California, the project’s history tells a tale of fluctuating timelines and ballooning costs. Originally initiated in 2013, the construction has continuously faced delays, with the anticipated completion date pushed from 2018 to 2026 for the first segments alone.
In a significant contrast to initial expectations, the financial requirements have surged, with costs for construction packages skyrocketing from a combined estimate of well under $2 billion to an updated total that now exceeds $8 billion across various contracts. This upward shift in expenditure has raised eyebrows and concerns, prompting scrutiny from both political figures and members of the public.
For instance, the first construction package, stretching from north of Madera to Fresno, originally bid at under $1 billion, now faces an anticipated completion at a staggering value of over $3.7 billion. Such changes have led to questions surrounding the project’s management and efficiency.
The Political Landscape
Adding complexity to the situation is the shifting political terrain as federal support has been uncertain. With President-elect Donald Trump slated to take office soon, there is apprehension regarding the potential withdrawal of federal funding that has supported California’s ambitious plans. Historical context reigns as the Federal Railroad Administration canceled nearly $1 billion in previously awarded grants during Trump’s first administration. However, the recent Bipartisan Infrastructure Law, passed in 2021, has provided a glimmer of hope by funneling additional funds towards the project.
State leaders, including Governor Newsom, maintain an optimistic outlook despite the political uncertainties. “We are in a very different place at this sacred moment,” he stated, reminding stakeholders of the project’s momentum.
Looking Ahead
The road ahead remains both exciting and uncertain. The California High-Speed Rail Authority is on the cusp of awarding contracts for track installation, alongside contracts for the purchase of trainsets set for testing operations. The goal is to have the Merced-Bakersfield line operational between 2030 and 2033, a target that promises to reshape commuting experiences in California.
As we move closer to achieving this transformative project, it’s essential to keep in mind that progress in such a complex endeavor requires not only engineering feats but also perseverance amid bureaucratic and fiscal challenges. The upcoming years will undoubtedly be pivotal in determining whether this bold vision of high-speed travel will reach its destination, but for now, California is laying the tracks for a new transit future—one spike at a time.
Stay tuned for more updates as we follow the California high-speed rail project through its journey from ambitious dream to infrastructural reality!
California High-speed Rail Related Links:
California high-speed rail California High-Speed Rail Update ( Fresno Bee) https://www.fresnobee.com/news/local/high-speed-rail/article298078633.html
HSR official website: https://hsr.ca.gov/
STM Daily News is a vibrant news blog dedicated to sharing the brighter side of human experiences. Emphasizing positive, uplifting stories, the site focuses on delivering inspiring, informative, and well-researched content. With a commitment to accurate, fair, and responsible journalism, STM Daily News aims to foster a community of readers passionate about positive change and engaged in meaningful conversations. Join the movement and explore stories that celebrate the positive impacts shaping our world. https://stmdailynews.com/
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